The business sector is now facing immense difficulties while unemployment rate soars, the economic outlook of Hong Kong seems gloomy. As a large proportion of SMEs plan to have their pay frozen in the coming year, we are suggesting to keep the Statutory Minimum Wage (SMW) rate and make no amendment at $37.5 per hour.

Since the second half of 2019, Hong Kong’s economy has been deeply affected by Anti-Extradition Bill Movement as well as the Coronavirus Disease 2019. In the 1^st quarter of 2020, the real GDP dropped by 8.9% over a year earlier, with merchandise exports and imports decreasing by 9.7% and 10.9% respectively, and the exports and imports of service declining by 37.8% and 25.4% respectively. The unemployment rate also reached 5.2% in April.

As the dispute between China and the US continues and intensifies, Hong Kong as the bargaining chip bears the brunt and will continue to face economic instability brought by the struggle. Although the overall situation of the epidemic is relatively stable in Hong Kong and the Mainland, many other countries have yet to contain the disease effectively. Work is not fully resumed in many parts of the world while companies have insufficient orders, business operation is seriously affected. In spite of setting up the Anti-epidemic Fund, the Government’s support is utterly inadequate in helping companies deal with labour costs and land rents. Some enterprises are forced to reduce wages, take unpaid leaves, or even to halt their business. The future of enterprises is uncertain.

On the other hand, according to the Census and Statistics Department’s announcement on May 21, the Composite Consumer Price Index in 2020 April increased by 1.9% over the same month of the year earlier. Netting out the effects of all Government’s one-off relief measures, the basic inflation reached 2.3%. High inflation with economic headwinds continues to bring challenges.

A rise in minimum wage level will inevitably increase business costs, and forcing more companies to lay off employees or even to close their business, which will further increase the unemployed population, both sides suffer. However, a lower minimum wage level also affects the locals’ daily lives. In light of this, the association thinks the SMW shall remain unchanged at $37.5 per hour, such that employees and employers work hand in hand to ride out challenges.

The Hong Kong Chinese Importers’ & Exporters’ Association
28 May, 2020