Tuesday, July 12, 2011

Minimum wage: the Hong Kong experiment

The government of the day is against legislating minimum wage here. Hong Kong is going ahead with it. By the next GE, we shall know if their experiment work. If it works, there will be an even more strident call to do the same here.

The suggestion that a minimum wage will ignite inflation is simplistic. The structure of the economy matters. For an open economy like HK and ours, where most of our basic necessities are imported, produced by the most competitive sources, i.e., read not by producers on a minimum wage, I strain to understand why it would cause the prices of necessities to rise. Yes, they can still go up. In fact it is going up now, but from other extraneous factors.

I wonder how SMRT and SBS drivers are paid. I don't imagine they are very lowly paid e.g., security guards. A minimum wage structure should not have any impact on their operation. They shouldn't go again to the PTC for a fares hike as a result.

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