The Hong Kong Executive Council on Tuesday approved proposals to overhaul the way of calculating the city’s minimum wage, with a review of the minimum wage every year.
The new formula will consider the special administrative region’s economic growth as well as inflation. The new mechanism is expected to take effect in 2026, the government said.
The formula suggests that the rate of adjustment in the minimum wage should not fall below the inflation rate of consumer price index (A), which is based on households with relatively low expenditures, in an effort to protect the purchasing power of grassroots workers.
Chief Executive John Lee Ka-chiu stressed that the government needs to strike a balance to ensure workers could earn a “reasonable” wage, and the new formula should be understandable to everyone
As for the economic-growth factor, the new formula will enable the minimum wage to increase higher than inflation when the city’s economy performs well.
The annual increase of the minimum wage will be capped at 1 percent, according to the government.
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The proposals approved by the ExCo, which were submitted by the Minimum Wage Commission, also advise reviewing the minimum wage rate every year, instead of the current system of every two years, to make it better reflect socioeconomic changes and safeguard the income of grassroots employees.
Speaking at a news conference on Tuesday afternoon, Secretary for Labour and Welfare Chris Sun Yuk-han said the changes “have struck an appropriate balance between the objectives of forestalling excessively low wages and minimizing the loss of low-paid jobs, while giving due regard to sustaining Hong Kong’s economic growth and competitiveness”.
The calculation update will enhance predictability and transparency and help foster harmonious labor relations, Sun added.
The first minimum wage under the new mechanism will be released in 2026, and the new mechanism is set to be reviewed five to 10 years after its implementation.
Hong Kong's minimum wage currently is HK$40 ($5.11) per hour. The next recommendation report on the minimum will be submitted on or before Oct 31, and take effect on May 1, 2025.
Priscilla Wong Pui-sze, chairwoman of the Minimum Wage Commission, said the proposals are the consensus of the commission, and the new mechanism aims to protect the benefit of the grassroots workers. The minimum wage will not decrease, even under deflation, she added.
Speaking ahead of Tuesday’s ExCo meeting, Chief Executive John Lee Ka-chiu stressed that the government needs to strike a balance to ensure workers could earn a “reasonable” wage, and the new formula should be understandable to everyone.
On the eve of Labour Day, he expressed his good wishes to all hardworking workers and stressed the government has long prioritized the welfare of the workforce.
“We will launch the Re-employment Allowance Pilot Scheme, which was included in the 2023 Policy Address, on July 15 to provide allowances for elderly and middle-aged people who seek to re-enter the labor market, and unleash the potential labor force,” he said.
In February, the Labour Advisory Board agreed to ease the definition of “continuous contracts” by lowering the minimum working hours it requires from 72 to 68 in four consecutive weeks.
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Lee said the government has started legislative work on the amendment of the Employment Ordinance in a bid to allow more laborers working shorter hours to get statutory employees’ benefits sooner.
Under the proposal the Executive Council approved on Tuesday, Hong Kong's mimimum wage percentage increases will be calculated annually by subtracting the city's "economic growth factor" from the consumer price index (A). The economic growth factor will be determined by subtracting the average economic growth over the past 10 years from economic growth over the past year.
