For Immediate Release
The Hong Kong General Chamber of Commerce opposes legislating standard working hours, because we believe it will not alleviate the problem of excessively long working hours, and risks lowering the flexibility of the labour market, as well as constraining Hong Kong’s competitiveness and economic development. To boost the economy, the Chamber urges the Government to use the upcoming Budget to be announced at the end of this month to reduce the profits tax rate and implement a two-tier tax system to ease SMEs’ tax burden.
Chamber CEO Shirley Yuen and the Chamber’s Representative on the Labour Advisory Board Emil Yu, together with representatives from various business sectors, attended a consultation forum organized by the Standard Working Hours Committee today and expressed opposition to legislating standard working hours.
After the meeting, Yuen said the issue of long working hours is due to the severe labour shortage, and the solution to that problem is increasing our labour force. According to Government statistics released last month, Hong Kong’s unemployment rate stood at 3.2% in the October-December quarter last year, and the underemployment rate dipped to 1.4%. She said these data clearly show Hong Kong is suffering from a severe labour shortage, and stipulating standard working hours will only make it more difficult for companies to survive. Moreover, overseas experience shows that standard working hours generally forces employers to hire more part-time or casual employees, which will fragment jobs and exacerbate underemployment. We do not believe introducing legislation for standard working hours will solve the issue of long working hours.
Yuen suggested that the Government should uphold the free-market economy principles on which Hong Kong has thrived. Rather than standardizing working hours through legislation, employers and employees should draw up contracts based on the demands of work in individual sectors, stipulating job requirements, duties, working hours and arrangements for over-time pay.
On protecting our grassroots workforce, Yu explained that since the introduction of the Statutory Minimum Wage, low-income workers’ wages are calculated based on the number of hours worked, and their right to overtime pay is protected under the minimum wage law. The impact of standard working hours will have far-reaching consequences for both low-income employees and the entire workforce.
He pointed out that the 300,000-odd SMEs in Hong Kong currently account for more than 98% of local businesses, and they hire about 1.2 million employees. With small companies already struggling to cope with talent loss, increasing costs and cash-flow constraints, standard working hours legislation will deliver a double blow to SMEs.
To ease pressure on SMEs, Yuen believes the time is right to introduce a very simple two-tiered profits tax structure. “We propose immediately reducing the standard profits tax rate to 15% and further reducing the rate imposed on the first HK$2 million of taxable profits to 10%,” she said. According to 2011-12 Government data, profits tax charged on the 75,500 companies with taxable profits of less than HK$2 million was HK$5.57 billion, accounting for just 4.7% of total profits tax revenue.
She added that the adjustment will not complicate our simple tax system. Instead, it will reduce SMEs’ tax burden and the increased cash flow will allow them to expand their businesses. Moreover, the proposal is unlikely to result in significant revenue loss for the Government, because when SMEs expand their businesses, their profits will also increase and with the growth so will the amount of tax that the Government will collect.
Given that SMEs are the backbone of our economy, the Chamber hopes the Financial Secretary’s upcoming Budget will focus on addressing the concerns of the business community, enhancing Hong Kong’s competitiveness and promoting economic growth. This will ensure more resources will be made available to contribute to the well-being of the general public.