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For once, Hong Kong's beleaguered government led by Tung Chee-hwa made a decision that the rest of the world can applaud. On Jan. 31, it announced that it won't cut the minimum wage for the territory's roughly 230,000 domestic helpers -- a rare triumph of empathy over market forces in a city whose madness for money sometimes makes Wall Street look like a bastion of compassionate capitalism.
The news is especially good news for the city's thriving Filipino community. About 154,000 of the 180,000 Filipinos in the city are domestic helpers -- about 2% of Hong Kong's total population. They and the Indonesian, Thai, and Nepalese women who work as domestics are the Cinderellas of the city. They typically work 15-hour days, 6 days a week, to support families back home -- caring for other people's kids in order to put food in their own children's mouths.
The minimum wage of $470 a month works out to just $1.25 an hour, based on the 15-hour days that many of the domestics work. Even city toilet cleaners do better, making about three times as much per hour. And their wages have been increasing, unlike those of maids.
PRICES IN FREE-FALL. The minimum wage was cut 5% in 1998, when Hong Kong was in the midst of the Asian financial crisis. That put it back to the level it was at in the early '90s. But Hong Kong's economy, and its median household income, have both grown by about one-third since then.
Hong Kong's decision isn't popular among many of the city's 7 million other residents. Leaders of the move to cut wages were stunned by the setback. The city has been going through a terrible economic patch for some time now, and many apartment owners had hoped that they could save on their monthly maid-service bill.
Prices fell in December, the latest month for which figures are available, for the 38th consecutive month. The corrosive effect of more than three years of falling prices has hit property owners especially hard. Property values have declined an incredible 60% since their 1997 peak, when they were among the highest in the world.
JOBS OF LAST RESORT. About half of Hong Kong's population lives in public housing. It's the other half, those who can afford to own property and are more likely to employ maids, who are being particularly hard hit by asset deflation. But from the beginning of the campaign to cut domestic wages, it was far from clear what another 5% cut -- $23 a month, less than $1 a day -- would do to boost the local economy. What's clear is that the money would have come out of the pockets of those who could least afford to lose it.
The minimum wage for domestics is an anomaly in Hong Kong, where other workers aren't covered by similar requirements. But most locals don't want to work as domestics. Even the majority of the 150 mainland Chinese who are allowed to emigrate to Hong Kong each day -- 54,000 a year -- don't want those jobs.
Unfortunately, for every Hong Kong native or Chinese immigrant who doesn't want the job, there are thousands of other immigrants who can't get by without this work. The brutal reality is that even if the wage were cut in half, there would still be a queue of workers lining up to work in Hong Kong households. And these people hardly have a powerful lobby on their behalf. So it's a refreshing change that Tung and his administration held the line -- and helped out some of the city's lowest-paid workers.
Clifford is bureau chief of BusinessWeek's Hong Kong office Edited by Beth Belton
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Copyright 2002, Bloomberg L.P.
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