Published in Hong Kong News on 02.05.2024

Hong Kong News: Hong Kong Government Implements Annual Review of Statutory Minimum Wage

The Hong Kong government has officially accepted the recommendations put forth by the Minimum Wage Commission (MWC) regarding the review process for the Statutory Minimum Wage (SMW) in the city.

Under the new guidelines, the SMW rate will be reviewed on an annual basis, ensuring that adjustments are made regularly. The MWC has proposed a formula for conducting these reviews, taking into account two key indicators: inflation and the economic growth factor.

The inflation indicator guarantees that the SMW rate will not fall below the headline Consumer Price Index (CPI) inflation. This measure aims to protect the purchasing power of the SMW and safeguard the income of low-income workers.

The economic growth factor allows for a suitable increase in the SMW rate when the Hong Kong economy performs well. If the economic growth in the latest year surpasses the trend growth of the past decade, the SMW rate can be adjusted accordingly.

Chris Sun, the Secretary for Labour and Welfare, expressed satisfaction with the MWC's efforts in enhancing the review process for the SMW. He believes that adopting a formula for adjusting the SMW rate will enhance transparency and predictability. This, in turn, will help reduce disputes within the community regarding SMW adjustments and promote harmonious labor relations.

The new review mechanism will come into effect on May 1, 2026, with the first adjusted SMW rate being implemented at that time. The government will further refine the implementation details and announce them in due course. Additionally, the Chief Executive has instructed the MWC to submit their next recommendation report on the SMW rate no later than October 31 of this year.

The subsequent SMW rate, as recommended by the MWC, will take effect on May 1, 2025.