02-05-2025
Hong Kong minimum wage rises to HK$42.10 as use of pension funds for severance pay ends
Hong Kong has raised its statutory minimum wage to HK$42.10, coinciding with the official end of a controversial arrangement that allowed firms to dip into pension funds for severance payments.
The 5.3 per cent increase from HK$40 in hourly base pay took effect on Thursday, when Hong Kong marked the annual International Labour Day.
Labour groups and NGOs in the city, however, say that the new minimum wage still fails to meet basic living needs, and the monthly income of a full-time minimum wage worker is less than the amount the government hands out to a two-person household under the Comprehensive Social Security Assistance scheme.
The government also officially scrapped the policy that allowed employers to offset long service and severance payments with mandatory contributions under the Mandatory Provident Fund (MPF) system.
Labour unions in Hong Kong had fought for the abolition of the offsetting mechanism for around two decades after the MPF scheme was rolled out in 2000. They criticised the system for depleting workplace pensions and, in some cases, leaving retirees with too little to live on.
The official end of the offsetting arrangement came almost three years after lawmakers passed a bill in June 2022 to amend the Employment and Retirement Schemes Legislation.
Improving labour rights is the responsibility of the government, Deputy Chief Secretary Cheuk Wing-hing told reporters after a Labour Day event on Thursday.
He noted that raising the minimum pay and cancelling the offsetting arrangement on Thursday marked a 'very special day of historical significance.'
Cheuk went on to say that the government also changed the review of the minimum wage from every two years to annually.
This will allow the pay to better reflect changes in the socio-economic landscape and provide better income security for low-income groups, he said.
'Ensuring good job security for workers is the government's duty, and we will continue our efforts in this regard. We hope that through the joint efforts of employees, employers, and the government, we can enhance the welfare of workers across Hong Kong,' Cheuk said in Cantonese.
Hong Kong first introduced the statutory minimum wage in 2011. Before the increase on Thursday, it was last adjusted in 2023 after a four-year freeze.
