Labour Issues

Op-Ed / Column

Unintended Consequences


The fact that we are one of the world's top two or three business centres is due to our flexible, diligent and savvy entrepreneurial work ethic that is admired the world over. We don't just get the job done; we do it better than most.

This is why companies from around the world continue to set up offices here. In the first six months of this year, 352 non-Hong Kong companies - almost 60 firms a month - set up business here. Of course, our rule of law, free press, low tax regime - things we tend to take for granted - are a significant factor in swaying companies' decision to choose Hong Kong over some of our neighbours. But being able to tap an educated, flexible workforce with a "can-do" spirit is equally important.
Would regulating how many hours employees should work solve the problem in the first place?
However, labour unions calling for the government to legislate standard working hours to address the problem of our long working hours could significantly change businesses' decisions to invest here, which over the longer term would affect employment prospects. Would regulating how many hours employees should work solve the problem in the first place?
The Labour Department's "Report of the Policy Study on Standard Working Hours" points out that legislation should not be taken as a panacea for all problems arising from long working hours.
The report also flags a wide range of potential unintended consequences if Hong Kong does decide to go ahead with standard working hours. Supporters of legislation argue that the business community is merely using scare tactics to oppose it.
The same argument was used when the chamber warned of unintended consequences during the debate on the statutory minimum wage. We highlighted the fact that such a move would push up the cost of living, particularly for people on the lower end of the pay scale. Now that the effects of the minimum wage have filtered into the economy, basic food, even a simple meal at a cha chaan teng costs considerably more as businesses have had to increase their prices to pay higher wages.
We do agree that the lower income groups should be protected and the statutory minimum wage should serve as a safety net for them, but at the same time there are consequences that the whole of society has to understand and be prepared for. Management and cleaning companies are simple examples of how increases in pay have affected everyone in Hong Kong.
The unintended consequences of standard working hours would be far more significant for everyone in Hong Kong. There are many important issues that need to be studied carefully, such as whether the move could stifle business development, undermine labour flexibility and weaken Hong Kong's competitiveness. If companies have to limit the number of hours that staff can work, then their business and consequently our economy run the risk of contracting.
Moreover, experience of other economies shows that standard working hours results in the fragmentation of work and underemployment as employers turn to part-time or casual workers.
There is also the possibility that companies would reduce their services or operating hours. Would we be able to go shopping in the evening, or meet family or friends for a meal? This may seem like a ridiculous question, but for anyone who has visited a country that does strictly enforce working hours, you cannot go shopping after work or go to a restaurant because many operate the same hours as offices. Companies' profits would as a result be lower, which in turn would lower the government's income from profits tax.
Then there is the very high probability of more labour disputes. Companies would be required by law to track the hours employees worked, which is bound to give rise to ill feeling and disputes.
While implementing standard hours obviously raises labour costs, tracking employees' hours will also increase the administrative burden on companies.
Any new legislation that the government implements costs on average 6 per cent of a company's total wage bill, according to the Labour Department. Businesses may try to absorb part of that extra cost or pass it onto customers, which would affect our competitiveness.
We believe these unintended consequences are just the tip of the iceberg that will grow, should Hong Kong go down the path of legislating for standard working hours.
Obviously, employees cannot be expected to work longer and longer hours indefinitely. However, standard working hours would only address a small part of what could become a far larger problem for Hong Kong.
Shirley Yuen is CEO of the Hong Kong General Chamber of Commerce
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