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The Living Wage and the Minimum Allowable Wage

22 September 2019


By Cynthia Tellez

Every year, the Asian Migrants’ Coordinating Body (AMCB) submits to the Labour Department its position and demands during the yearly review of the Minimum Allowable Wage (MAW). Every year, it submits a well-written position paper including the bases for their demands for wage increase. The AMCB is demanding a living wage, basing it on the definition of the International Labour Organization (ILO) of the UN that says:

‘The idea of a living wage is that workers and their families should be able to afford a basic, but decent, life style that is considered acceptable by  society at its current level of economic development. Workers and their families should be able to live above the poverty level, and be able to participate in social and cultural life.’

This is the internationally recognized living wage. But what is its relation to the MAW that the Hong Kong government is using in increasing (or decreasing) the monthly wage of migrant domestic workers?

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We have fellow migrant workers who do not fully understand the difference or relation between the Living Wage and the MAW. In fact, some jeer at or insult AMCB during its rallies without really knowing what the issues are. We will try in this article to explain the issue and in so doing discuss wage protection too.

Let us discuss first the Living Wage (LW).

‘Anker’s ILO working paper reviewed more than 60 descriptions of the LW, the characteristics of 86 municipal LW laws in the United States and 99 national minimum wage laws from around the world. He summarised the constitution of a LW into the points below. He says, it:
i. is a right according to the international community;
ii. needs to be sufficient to support a decent standard of living for a specific time and place;
iii. needs to be sufficient for a worker to support a family;
iv. needs to be based on the concept of take-home pay; and
v.  needs to be earned during normal working hours and not require employees to work overtime.’

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The living wage is at the core of the AMCB campaign for migrant workers and their families to live a decent and humane life. As described, it is a right. It is the affected sector who directly experience whether their earnings are enough or not. When we say enough, we mean as was defined above: Able to afford basic necessities. If not, then it is your right to voice out your demands that the MAW increase is way below what is called a living wage.

The MAW is not equivalent to the living wage. The computation for an increase or decrease (remember when the wage of the migrant domestic worker was reduced by HK$400) is based on MAW; how the new wage is computed is only known to the concerned department of the HK government. 

In the first place, there is no such thing as minimum wage for migrant domestic workers in Hong Kong. Minimum wage is usually legislated or passed in the Legislature as a law. So no one can change it except through legislation. So, the minimum allowable wage is in a flux, depending on the economic situation of Hong Kong. It is not something that is fixed. It can be increased, and it can be decreased.

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The living wage is pegged on the premise that in whatever situation, the wage should be enough for the worker to live a decent life. So wage cannot go down for it is just enough to meet the basic necessities of a family.

I hope that the above explanation has clarified the two issues on wages:
One, that MAW is offered by the Hong Kong government and is not necessarily internationally acceptable as far as standards for wages is concerned.

The other one is the LW which is internationally acceptable and is premised on the actual or basic needs of the worker and his/her family. And this is the core of the issue on wages being fought for by the AMCB.

But while the living wage is continuously being fought for, the current wages of migrant domestic workers must be protected. It is very much below the living wage and yet, is further pushed down by unscrupulous employers through illegal deductions, uncompensated extra work like in the house of relatives and friends, paying for accidentally broken items, etc.
At the moment, once the MAW is stated in the employment contract, your wage is fixed by the contract and it cannot be changed during the contract except at the employer’s decision. If there is a sudden policy increase or decrease on wages, the wage in the contract will prevail.
If the employer is pursuing a deduction for whatever reason, the deduction (assuming it is a legitimate one) should not be more that ¼ of the monthly wage. The wage must be given promptly. It should not be given late, say more than one week from the cut-off date.

The Mission, in some cases, encounter complaints about non-payment of wages as a punishment or underpayment of wages for agency fee “paid in advance” by the employer to the agency. The two examples are violations of the law.

Withholding of wages as a form of punishment is a violation under the protection of wages. Even if the employer went bankrupt, your wage is protected under the insolvency fund. You might be able to get only a maximum of four months’ unpaid wages; nevertheless, you will get your compensation.

Payment to an agency as placement fee is illegal if it is more than 10% of the first month’s salary of the domestic worker. The agency fee, including the processing fee and other expenses incurred related to processing must be shouldered by the employer.  The only thing the domestic worker pays for is her/his passport.

If you have further questions, please don’t hesitate to call the Mission For Migrant Workers at 2522-8264.
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This is the monthly column from the Mission for Migrant Workers, an institution that has been serving the needs of migrant workers in Hong Kong for over 31 years. The Mission, headed by its general manager, Cynthia Tellez, assists migrant workers who are in distress, and  focuses its efforts on crisis intervention and prevention through migrant empowerment. Mission has its offices at St John’s Cathedral on Garden Road, Central, and may be reached through tel. 2522 8264.
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