Minimum Wage Law – a Blessing or a Curse?

The controversial proposal of minimum wage law has been widely
discussed within the local community. Minimum wage refers to the least
amount of salary paid to workers of a country, either on an hourly,
daily or monthly basis. It can be set at a uniform level applied to all
industries or a tailor-made level for a particular sector. This is to
protect employees from being exploited in the prevailing national
economic and social conditions (“Minimum wage”, 2006). In the world
there are about 90% of countries having statutory minimum wage
(“Minimum wage”, 2006). Such prevalence does somehow acknowledge the
benefit brought about. Though, minimum wage law should in no way be
adopted for its far-reaching adverse impacts to the economy of Hong
Kong.

The very first potential drawback is the likelihood of a surge in
unemployment rate as those with a lower productivity will be driven out
of the market. The situation in America is a perfect proof, with the
number of people employed within the minimum wage level in 2007 dropped
by 4% compared with the previous year (U.S. Department Of Labor, 2007).
In Hong Kong, many low-skilled workers perform labour intensive works
such as dish cleaning and guarding which do not require professional
knowledge. The only criterion which makes those workers capable of the
job is acceptance to low wages. Raising the wage level legitimately may
increase income of some workers, but not all of them. Many of them may
end up losing their jobs as employers would be reluctant to hire as
many labour as at the market level.

Not only would employees suffer, but also employers’ business. Small
businesses will gradually be driven out of the market as they cannot
cover the surge in labor cost which prompts them leave the market.
Again in the U.S., the marketplace ecosystem in the U.S. is altered.
Many small businesses could not sustain as a result of the increase in
cost (Ruwart, 1991). A piece of empirical statistic from the...