Hong Kong's government plans to raise the city's minimum wage by 7.1% as a measure to help citizens squeezed by inflation and the world's highest home prices. This is the first increase of the minimum wage since it was introduced on May 2011, benefitting around 10% of the working population. The minimum hourly wage will go from HK$28 ($3.60; £2.18) to HK$30 on May 1, 2013, stated Labor Secretary Matthew Cheung.
This proposal is part of Chief Executive Leung Chen-ying's efforts to tackle Asia's biggest wealth gap, after being buffeted by student protests and low popularity since taking office on July 1. While the division between the poor and the rich widened to its worst since at least 1971, inflation jumped to 5.3% last year, and may be 3.9% this year.
The initiative will boost the wages of about 327,200 employees, or 10% of the city's workers, according to an earlier report by a government commission. “The income of employees at grass-root level has shown a significant improvement since the minimum-wage policy was carried out last year,” Cheung said. “The proposed increase is reasonable and balanced.”
Likewise, an economist at Australia & New Zealand Banking Group Ltd. (ANZ), Raymond Yeung, stated that a 7.1% increase over two years is reasonable.
112,000 people took the streets the day Leung took over, July 1 –which is also the 15th anniversary of Hong Kong's handover to China. The causes of the protests included minimum wages, income disparities and human right abuses in the country.
The segment of the population at the lower end of the income spectrum increasingly struggle with sky-high property prices and a dramatic escalation in the costs of living. The average gross household income of the poorest 10% of the population fell 16% to HK$2,170 a month in 2011 in the last decade. In contrast, the comparable income of the richest 10% jumped to HK$137,480 a month, a 12% increase.
Home prices in Hong Kong have rocketed to become the world's most expensive, propelled by record low interest rates and an influx of mainland Chinese buyers. As a response to this situation, the government imposed a 15% tax on foreign home buyers and increased a re-sale duty.