HONG KONG: LABOUR MARKET

Hong Kong has the very antithesis of an over-regulated inflexible labor market. Nonetheless in the last 10 years a considerable amount of labor legislation aimed at improving the working conditions and welfare of the workers has been passed. The main labor ordinance is the Employment Ordinance which sets out the conditions of service in general employment and which includes provisions for paid holiday leave, sickness allowances and severance pay.

There is no legal minimum wage in Hong Kong. Wages can be calculated by the hour, day or month, or by piece rate.

The Employment Ordinance sets minimum entitlements for employees, such as statutory holidays, sick and maternity leave, severance and long-service payments.

It is up to employers whether to provide additional benefits, such as a Lunar New Year bonus (normally equivalent to one month's extra pay), medical allowances, subsidised meals, good-attendance bonus, paid holidays over and above statutory public holidays, subsidised transport to and from work, free or subsidised accommodation.

The Factories & Industrial Undertakings Ordinance aims to strictly regulate the employment practices of the "sweat shop economy" with which the territory has long been associated. Under the provisions of the Employees Compensation Ordinance injured workers can claim compensation for work related injuries. Most employment disputes come before the labor tribunal whose proceedings are conducted in Cantonese and are generally very informal.

A survey in 2002 cast some doubt on the competitiveness of the Hong Kong labour force. Looking primarily at the quality of labour within the Asian region, the results of the poll suggested that inadequate education investment and rising labour costs have meant that although salaries for white collar workers and managerial staff are higher, the quality of service provided is not necessarily any greater than that provided by labour in other Asian countries.

The survey showed that the jurisdiction still excels in terms of language skills, overall professionalism, and technical expertise, but warned that on a comparative 'value for money' basis, the competitive margin between Hong Kong and the Chinese mainland was narrowing, and regional rivals such as Singapore, Taiwan, and India have overtaken the SAR.

The labour market improved in the second quarter 2007, with the seasonally adjusted jobless rate edging down to 4.2%, the lowest since mid-1998. Wages and earnings continued to rise, while job vacancies surged to a post-1997 high in March.

Labour market conditions remained firm in the second quarter of 2008. The seasonally adjusted unemployment rate stayed at a 10-year low of 3.3% and the underemployment rate was stable at 1.9%, with labour earnings and wages on the rise.

In October, 2007, Hong Kong leader Donald Tsang announced new plans designed to ensure that Hong Kong's position as a leading global finance hub is consolidated and strengthened. He observed that China's rapid development and the opening up of its financial sector have presented unprecedented opportunities for Hong Kong's financial-services sector.

Tsang added that with these large-scale development projects, Hong Kong will need to expand its pool of skilled workers, and will "require talented people from everywhere". Consequently, to help attract more qualified people, the Quality Migrant Admission Scheme's requirements will be relaxed and widely promoted. in 2006, 28,000 foreigners came to work in Hong Kong and settled in the jurisdiction, including about 5,500 from the Mainland.