Launch Recently, starting from May one particular, 2013, Hk had given an increase from the Statutory Lowest Wage (SMW) from $28 to $30.
Setting SMW at an ideal level is vital to stunning the balance between the objectives of forestalling excessively low wages and minimising losing low-paid careers, while sustaining Hong Kong’s economic expansion and competition (“2012 report of the minimum wage percentage, ” 2012). To satisfy this aim, the government are determined to increase the minimum salary rate for the people receiving the low-paid careers to have a more fair salary. This conventional paper will initially discuss regarding the stakeholders that will be impacted by the increase in the wage rates namely the employees earning the SMW costs, the employees earning above the minimal wage, the firms, the government and the world as a whole.
All the effects of this social plan, both positive and adverse that will be implied to these stakeholders will be mentioned. Then, the consequence of this interpersonal policy will probably be compared with Ur. Titmuss’ theories in the goals of a sociable policy.
Finally, an evaluative comment of what the government should have done to maximise some great benefits of this policy and minimising its downsides will be given as a summary. Effects in Stakeholders Employees The 1st stakeholder that will be most afflicted with this interpersonal policy is definitely the workers living by the SMW rate. These kinds of workers usually are blue-collared staff whose jobs require minimal requirements and manual labor.
The minimum income is used to provide a wage floors for them to never be exploited by the businesses, but these employees are usually nonetheless the lowest paid out amongst the society. They are termed as the working poor in which the staff are still living below the lower income line of Hong Kong even when they already have a job. While shown by simply Lam (2013) At the document which has been released by the Commission of Low income, Hong Kong experienced just implemented the low income line in which a one-person home is living at beneath HK$3, six-hundred, two-person households living below HK$7, 700, and four-person homes living beneath HK$14, 300 monthly.
In Hong Kong, about 19. 6 percent of the population had been living with less than the low income line in the year 2012. By the boost of the bare minimum wage by simply roughly 7%, the government planned to tackle the challenge of the functioning poor particularly with the increasing costs because of inflation and rapid embrace the price of terrain.
According to the Trading Economics (2013), from the 12 months 1981-2013, Hong Kong’s inflation rate have got averaged by 4. six percent as the Global Property Guide (2013) showed the price of properties in Hong Kong got skyrocketed by 73% in the last 3 years. These types of rising costs had brought problems for the workers moving into the SMW as they usually do not experience a rise in their salaries if the federal government does not get involved. Their living standards will constantly fall every year and in order to prevent that from happening, the Hong Kong government applied the increase in the SMW by May 1, 2013. The first time Hong Kong had provided the Statutory Minimum Wage of $28 are at 2011.
In respect to Oxfam’s report upon April 18, 2012, “59. 5 per cent reported no improvement with the introduction in the Ordinance”. Oxfam (2012) described that even when 70 percent of the low income personnel experienced elevated wage prices, the employers reduced the remuneration plans, paid rest days, and working several hours. Overall, that leads to similar income if the Ordinance have not been launched which will not lead to any increase in the normal of living of the operating poor.
This might reoccur while using increase with the SMW, as the employers would want to cut back on the costs. The rise of the minimal wage in Hong Kong may not lead to a rise in the total income of the staff, but might only bring about a short working hours or even a reduction in their total income. Companies Another stakeholder that would be affected by the increase from the minimum wages are the companies, especially the small to medium sized ones. Because most of their ecuries are generating minimum income, the organizations will possibly need to both reduce the working hours with their employees or face a rise in the labour cost.
If the businesses would be to reduce the staff or the working hours, the quality of the products or services offered will most likely weaken over time because of the lack of time. On the other hand, maintaining the same amount of labour and working hours will bring about an increased cost. In order for the firms to keep their profitability, the prices of the product or services will likely be increased. This will lead to the reduction of the competitiveness of small and medium companies compared to the large firms.
Because large organizations can almost certainly afford the increase of the minimum wage, they might not need to push the prices up to keep their demands. This can be disadvantageous to Hong Kong in general if it contributes to the closure of the small , and medium organizations which leaves huge industrial sectors as monopolies in the industry. Greeting card (1995) mentioned that the minimum wage includes a “ripple effect” in many firms, leading to pay increases intended for workers in the beginning earning more than the fresh minimum income. Because of this, the consequences previously mentioned will be amplified possibly to businesses which pay out slightly over a new SMW even before the rise.
Government In the government’s perspective, the increase with the minimum salary policy will help reduce the federal government expenditure in a country. In line with the Social Well being Department, Hk has a scheme called the Comprehensive Social Reliability Assistance Plan to help those who does not have got sufficient income to cover their expenses (“Comprehensive social security, ” 2013). For example , an able-bodied adult aged underneath 60 will receive HK$2, 070 if he does not have a relatives. When the federal government increased the SMW, the income in the working people increases and the amount of people that might need the federal government subsidies to hide their bills can lower.
This way, the government can use more expenses on other aspects including better education or real estate for the poor. Society This new legislation will also bring a number of impacts within the Hong Kong world as a whole. First of all, it has been pointed out that the maximize of the lowest wage price of Hk will cause the elevated cost of firms and ultimately the consumers.
Since a lot of the goods that can be found locally is manufactured by workers employed in a minimum income, the increase of the SMW will likely inflate almost all of the price for the majority of goods. The general increase in the costs level is going to lead to pumpiing which brings negative effects to the reduced class element of Hong Kong. In line with the Census and Statistics Division of Hk, the pumpiing rate of Hong Kong was written at 5. 30 percent in October of 2013 when compared with October of 2012 (“Monthly report about, ” 2013). The increase of the Statutory Minimal Wage can be described as mere several.
14% because it was first produced at May possibly 1, 2011 while the inflationary pressures will be roughly 4% annually. This shows that the increase of the minimum wage rate is not enough to cope with the inflationary stresses that the workers are suffering from in the culture. On the other hand, the rise of the minimal wage level had decreased the profits inequality possibly by a very small amount.
The Hong Kong government’s economic report at the year 2012 got shown that Hong Kong has a Gini agent of zero. 537 in the year 2011 intended for the original home income (“Half-yearly economic record 2012, ” 2012). This is certainly quite a high figure while the Central Intelligence Company (CIA)’s universe factbook declares that Hong Kong is positioned at the eleventh place pertaining to the countries with the highest Gini coefficient. Singapore however, had a lower Gini coefficient of zero. 478 in the year 2012 and it is ranked 26th in the world (“The world factbook, ” ). These statistics shows that Hong Kong is one of the most severe countries in terms of income equal rights whereas the income from the rich considerably outweigh poor people.
By elevating the Lawful Minimum Salary rate, the citizens with low incomes will be damaged as their profits will increase as the citizens with high income are hardly affected by this legislations. This will likely then reduce the wealth gap even just by a very touch and Hong Kong’s Gini coefficient might drop by a slight amount down the road. Fajnzylber, Lederman, and Loayza (2002) had concluded within their paper the fact that increase in salary inequality has a significant and robust effect of raising crime rates.
According to the newspaper, when profits inequality is usually high, right after between the potential gains that might be acquired coming from doing a criminal offenses compared with the ability cost of it truly is high. This will lead to an increase in the crime rates within a particular nation where the Gini coefficient is definitely high. By reducing the wealth space, the government is additionally helping the society in minimising criminal offenses as the individuals in Hong Kong will be much less desperate for them into becoming a criminal.
Normally, people resolved into assigning crimes if they cannot fulfil their simple needs, hence the increase with the SMW of Hong Kong is likely to make it much more likely for the low income group to survive which will ultimately bring about the decrease of offences. Objectives of the Social Plan According to R. Titmuss (1974), the objective of social policy is to meet social requirements and enhance social the use and dissuade alienation. Because the increase from the Statutory Lowest Wage is a type of social policy, it may fulfil the three criteria pointed out by L. Titmuss.
This kind of part of the daily news will speak about how well the increase inside the minimum wage meet the interpersonal needs, advertising social the use, and discourage alienation inside the Hong Kong culture. Meeting the Social Requirements The cultural needs of any society will be the basic fundamentals that the people living in Hk needs. A great way to dissect these needs is employing Maslow’s hierarchy of requires. At the bottom of the triangle plus the very basic important human requirements are the physical needs including basic necessities to live just like food, refuge, and atmosphere.
The cultural policy introduced by the federal government at May 1, 2013 regarding the new Statutory Minimal Wage truly does affect the physiological welfare from the minimum income workers at some aspects. By increasing the SMW, the income of your substantial volume of the workers were expected to rise. This allows them to have the ability to afford more of the basic products to survive just like food, normal water, etc . Due to the increase in all their incomes and so their disposable income, the spending capabilities of these parts of the culture will increase and in addition they should have an improved standard of living.
Yet , the paper had discussed earlier that inflationary pressures can easily reduce and dilute the consequences of the minimum wage increase. The increase in the labour costs, which is one of many factors of production, can result in a cost press inflation where the rising costs are passed on to the customers. Even though the workers earning the SMW may feel richer, the general cost increase can lead to a small or any improvement inside the living criteria. According to Trading Economics (2013), Hong Kong’s Client Price Index (CPI) is definitely reaching the all period high of 116.
8 Index Points in September of 2013. This may even cause a reduction in the living standard of the working poor as most services and goods are becoming higher priced. Another aspect that is associated with the physiological needs of the society can be shelter, or perhaps the rent from the apartments regarding Hong Kong. According to Global Property Guideline (2013), the property prices of land of Hong Kong experienced surged 73% which leads to really high rent rates which will takes up a massive part of a person’s wage.
The introduction of the rise in the lowest wage interpersonal policy does nothing to tackle this problem, which means that the working poor would nonetheless need to use a substantial amount of their salary only to pay for the rent. Although the Hong Kong Casing Authority is currently attending to this particular need, it is insufficient to fulfil everyone’s physiological will need of a decent shelter. The other level of Maslow’s hierarchy of needs is definitely the safety requires of every people. Every doing work men would wish a job that is certainly both secure and regular. They would not want a job it does not ensure a normal income to cover their bills.
When the bare minimum wage price is increased, the companies will try to slice their costs sometimes by making the workers redundant or lowering their working hours. Both of the activities mentioned can lead to an insecure sense by the employees as they may lose their jobs and have a decreased profits. Therefore , the social policy for this circumstance does not increase the social requires of the contemporary society, and even provide a sense of insecurity and panic. The various other 3 facets of the Maslow’s hierarchy of needs the love/belonging, confidence, and self-actualisation, does not submit an application for this social policy because they are more related with employees with higher salary and mainly the white collar employees.
Promoting Social Integration and Discourage Alienation Lastly, L. Titmuss (1974) mentioned about promoting interpersonal integration and discourage alienation. Social integration is a powerful and principled process wherever all associates participate in conversation to achieve and maintain peaceful social relations (United Nations Office of Economic and Sociable Affairs). This focused on both equally equal legal rights and protect social well being.
Even though the increase of the SMW of Hong Kong does not be related to equal privileges, it can encourage a better cultural welfare inside the society. As i have said, there is a immediate correlation among higher income and lower crime rates. Consequently , if the increase in the lowest wage truly does increase the total income of each and every or most individuals working by minimum income rate, there is a high possibility that Hong Kong can easily promote more social incorporation.
When interpersonal integration takes place, alienation will be automatically reduced. When the prosperity gap will be reduced, areas can be easier formed since the social classes will be more integrated towards each other. Bottom line and Analysis As displayed in the newspaper, the increase of the Statutory Minimal Wage in Hong Kong include led to equally positive and negative features in the world. Even though the aspires and goals of this interpersonal policy is definitely favourable and positive, there are plenty of factors which will turn all of them into adverse results. One of the biggest factor is the difference between the inflation level in comparison with the increase inside the wage prices.
Right now, Hong Kong have an increased CPI of 116. 8 which can help reduce the effects of the improved minimal wage costs. I believe the fact that increase from the Statutory Lowest Wage from HK$28 to HK$30 is usually insufficient and really should be additional increased to at least HK$32 to counteract the inflation costs. On the other hand, the Hong Kong federal government should take actions to control the inflationary stresses which will be made out of this improved labour costs.
Fiscal guidelines such as the use of a higher accelerating direct taxes for the citizens with high income can be used to both equally control inflation and increase the government earnings for additional uses. Furthermore, the government also needs to try to deal with other cultural problems that are a big a significant Hong Kong just like the housing trouble. This situation is really as critical because the elevated amount in the working poor and the big wealth inequality and should be countered immediately.
For a interpersonal policy to be beneficial to the society, R. Titmuss (1974) believed that this should cover all the three aspects, specifically the interpersonal needs, social integration, and discourage furor. Therefore , the us government should take accounts of these features and renovate the Lawful Minimum Income, increasing it to a bigger amount. Referrals: Minimum Salary Commission, (2012). 2012 statement of the bare minimum wage percentage. Retrieved coming from website: http://www.mwc.org.hk/en/downloadable_materials/2012MWCReport-Eng.pdf Hu, F., & Yun, M. (2013, September 30).
Hong kong lower income line reveals wealth gap with one in five poor. Retrieved from http://www.bloomberg.com/news/2013-09-29/hong-kong-poverty-line-shows-wealth-gap-with-one-in-five-poor.html Lam, C. (2013, September 30). Hong kong’s initially official poverty line – purpose and value. Recovered from http://www.povertyrelief.gov.hk/eng/pdf/20130930_article.pdf (2013, 12 , 10). Retrieved from http://www.tradingeconomics.com/hong-kong/inflation-cpi Residential prices surging in hong kong!. (2013, February 15).
Retrieved via http://www.globalpropertyguide.com/Asia/Hong-Kong/Price-History Oxfam. (2012, The spring 17). Low income in the hk workforce, regardless of the minimum income oxfam study reveals 70 percent of low income staff and their families have more cash flow, but practically half reside in deprivation. Recovered from http://www.oxfam.org.hk/en/news_1818.aspx Social Wellbeing Department, (2013).
Comprehensive social security assistance scheme. Recovered from site: http://www.swd.gov.hk/en/index/site_pubsvc/page_socsecu/sub_socialsecurity/ Census and Statistics Department, (2013). Monthly statement on the customer price index. Retrieved via website: http://www.statistics.gov.hk/pub/B10600012013MM10B0100.pdf Central Cleverness Agency, (n. d. ). The world factbook.
Retrieved via website: https://www.cia.gov/library/publications/the-world-factbook/rankorder/2172rank.html Hong Kong Economic climate Government, (2012). Half-yearly monetary report 2012. Retrieved coming from website: http://www.hkeconomy.gov.hk/en/pdf/box-12q2-5-2.pdf Hong Kong Housing Authority, (2013). Annual record 2012/13. Retrieved from website: http://www.housingauthority.gov.hk/en/about-us/publications-and-statistics/index.html ALGUN Department of Economic and Social Affairs, Division intended for Social Policy and Creation. (n. d. ). Doing work definition of cultural integration.
Recovered from website: http://www.un.org/esa/socdev/sib/peacedialogue/soc_integration.htm Credit card, D. E. (1995). Fable and dimension: The new economics of the lowest wage. Princeton University Press.
Fajnzlber, G., Lederman, D., & Loayza, N. (2002). Inequality and violent offense. JL & Econ., forty-five, 1 . Titmuss, R. Meters., Abel-Smith, W., & Titmuss, K. (1974). Social insurance plan (pp.
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