Argument No.2: Even with a $500 deduction, foreign domestic helpers (FDHs)
in HK will still have the highest pay in the region.
In Singapore, the monthly wage is around HK$ 1,400, in Malaysia
it is HK$1,130.
 It is presumed that minimum
wages, including the MAW in Hong Kong, are scientifically calculated on
the bases of various factors, including the cost of living in a
particular country.
The Wall Street Journal Salary
Calculator indicates that an income of US$ 64,000 in Singapore, US$
56,000 in Malaysia or US$ 63,000 in the Philippines is equivalent to US$
100,000 in Hong Kong. In
other words, a person must earn more in Hong Kong on account of its
higher cost of living.
According to the latest survey
by Mercer Human Resource Consulting, published in July 2002, Hong Kong
is now the world’s most expensive city.
Singapore is twelfth on the list, over 40% cheaper than HK, while
Kuala Lumpur is sixteenth, with prices almost half that of HK’s. To compare a maid’s wages in Hong Kong, therefore, to those
in Singapore and Malaysia is a flawed proposition.
Argument
No.3:
FDHs are not worse off than 351,400 ordinary HK residents whose
monthly earnings amount to about HK$4,000.
The latter have to pay rent, feed and clothe a family, pay
utilities, etc.
If
residents belonging to the lowest income bracket would not be covered by
the proposed revenue measures aiming to balance Hong Kong’s budget,
FDHs should be accorded the same consideration in the interest of
fairness and equity. 
FDHs
are covered by especially restrictive rules that apply exclusively to
them. First, they do not have the right to remain in HK indefinitely, as
their stay is completely dependent on their work. Second, they are
brought in to work for a specific person and they can only work for
those persons; they are not allowed to find or shift to any other kind
of work. Third, they can never gain residency in Hong Kong or bring in
their dependents.
Then
there is the matter of labor-related complaints involving
pre-termination of contracts, underpayment, refusal of the employers to
allow workers to take the day off during Sundays and other statutory and
public holidays, substandard accommodation and food, and being told to
do work other than that stated in their contracts, not to mention
documented complaints ranging from maltreatment and physical abuse to
sexual harassment, indecent assault, and rape.
In addition to the physical and emotional strain felt by overseas
workers, their employment abroad takes a huge toll on their families and
the society they belong to at large.
Above
premises considered, it is incorrect to state that FDHs are not worse
off than the 351,400 Hong Kong residents referred to by Mr. Tien.
Argument
No.4:An amah could keep all of her pay to sustain an
extended family in RP. Every
$ she earns could be saved. There
are no household bills or rent to pay.
She is better off than a large section of HK society.
The fact of the matter is a Filipino worker in
HK does not save her entire salary.
A survey conducted by a local Filipino newspaper revealed that
about 55% of a Filipino worker’s income is re-injected into Hong
Kong’s domestic economy. After
all, a worker has to spend for basic necessities in Hong Kong such as
food, clothing and transport, in addition to phone cards and other goods
for loved-ones in the Philippines.
Argument
No.5: The drop in the MAW is offset by deflation in the past
5 years. 12% of $3,670
amounts to $440 per month.
In
an article dated 14 November 2002 on the causes of deflation, no less
than the Chief of the Hong Kong Monetary Authority, Joseph Yam, cited
the fact that residential property prices and rentals have fallen by
around 60% and 40%, respectively, from their peak levels.
Mr. Yam added that the decline in the price of rentals has
accounted for about half of the total decline in the Composite Consumer
Price Index.
His statement makes it
clear that, for the most part, deflation is caused by a general drop in
prices in the property sector – a situation that cannot be attributed
to FDHs. Hence, the
proposal to tax FDH wages as a response to the fall in expenditure
exclusive to Hong Kong residents stands on shaky ground.
For its part, Business
Week observed in July 2002 that “prices haven't fallen enough to
fully revive Hong Kong's competitiveness…Hong Kong's price index has
dropped nearly 11% since the deflation began, and wages have fallen by
almost as much. The trouble is, other Asian currencies depreciated
sharply with the 1997-98 financial turmoil. That means Hong Kong still
looks expensive compared with the rest of the region.”
It is, in fact, the world’s most expensive city according to
Mercer Human Resource Consulting.
Even as price indices
continue to drop, Hong Kong’s Census and Statistics Department
recorded in November 2002 a renewed increase in the prices of clothing
and footwear which are basic necessities purchased locally by FDHs.
Argument
No.6: RP has suffered a severe currency depreciation.
The peso has depreciated by 50% relative to HK$ in the last 5
years. On 1 Nov 1997, HK$ 1
was worth PHP 4.5811 whereas on 1 November 2002, it is equal to PHP
6.8273
 The
median Philippine annual family income in 1997 was PHP 74,146.
In 2000, it was 88,782 per annum.
With this amount, the Philippine-based family has to pay rent and
other living expenses. Even if the levy is imposed, the annual income of a Filipino
working in HK would be PHP 259,000 or 3x the median annual income.
Coupled with the 12% deflation, a maid’s local purchasing power
is greater than it used to be.
This
argument does not directly address the crux of the matter and that is
the efficacy of the proposed measure in solving HK’s budget deficit
and high unemployment rate.
It should be pointed out that the effect of
currency depreciation is high interest rates.
This monetary tool is applied to stem off speculative activity in
the local currency. Consequently, with high interest rates come
inflationary pressures. Thus,
while it is true that the Philippines did suffer depreciation in its
currency, its effects to the consumer are negated by the accompanying
increase in the prices of goods which has diluted any salutary effect of
the currency depreciation. Besides, a Filipino domestic helper spends
more than half her salary in Hong Kong.
The goods and services she pays for are priced in Hong Kong
dollars. In sum, the
depreciation of the Philippine peso does not necessarily correspond to
an increase in the purchasing power of the Filipino domestic helper in
Hong Kong.
In
any case, the currency depreciation argument is a non sequitur.
The Hong Kong Government is not expected to raise FDH wages if,
say, the Philippine peso appreciates.
Argument
No.7:
Those guilty of exploitation are the owners of
unscrupulous employment agencies and employers paying below the MAW.
Imposing a levy would then be akin to a double
fault.
Argument
No.8:
In spite of exploitation, thousands are still eager to
work in HK.
It is true that thousands
are eager to work in Hong Kong in spite of exploitation.
This fact can be explained by the disparity between wages they
would command at home and abroad.
In
the same vein, it can also be argued that there is a rising demand for
their services in the face of worsening economic conditions in the SAR.
Consider the charts below evidencing the increase in FDHs
numbers, high unemployment or low growth notwithstanding.
Source: HK
Census and Statistics Department
Foreign
Domestic Helpers (FDHs) Population in Hong Kong
Source: Office
of the Philippine Labor Attaché, Philippine Consulate General, HK SAR
Argument
No.9:
If HK is in crisis, we must sink or swim together.
They ought to be prepared to make a sacrifice not just for HK but
to safeguard their own long term interests.
That Hong Kong
residents should make sacrifices in light of the SAR’s difficult
economic situation is understandable. The HK Census and Statistics
Department confirms that the average monthly salaries of middle-level
managerial and professional employees in most sectors registered
decreases ranging from 0.3% to 8.3% in nominal terms in June 2002.
A $500 effective diminution in FDHs’ salaries, however,
translates to a disproportionate reduction of almost 14% in the MAW.
FDHs would get the worst of any salary reduction since the
marginal utility of each dollar is much greater for the FDH than for her
employer.
It
is also unjust for FDHs to share Hong Kong’s pain but not its gain.
Graph I (attached), which tracks changes in the MAW, Monthly
Household Income and GDP since 1982, shows that an FDH’s salary has
lagged behind the growth in Hong Kong’s GDP and median monthly income.
In the meantime, wage levels for cleaners in sanitary services
working 8 hours a day rose from HK$ 5,062 in 1999 to HK$ 5,430 in 2001
while workers in Chinese restaurants working 9 hours a day received
HK$6,782 in 1999 and HK$ 6,873 in 2001.
In contrast, there was no increase in wages of FDHs working 16
hours a day, six days a week, from 1999 to 2001 as Chart I (also
attached) illustrates.
A
tax or levy on FDHs’ salaries could be deemed fair if the rights and
privileges of other taxpayers accrue to them as well.
As it is, FDHs do not have real long-term interests in Hong Kong,
especially since they are not entitled to the right of abode, a fact
regarded by some as discriminatory.
Argument
No.10:
If HK does not work out of its present difficulties,
fewer families will be able to afford the luxury of hiring an FDH.
Demand will decline.
While
it is true that FDHs have a stake in Hong Kong’s economic recovery, it
is unreasonable to look to their wages as part of the solution. The
imposition of the levy is not a panacea for HK’s economic woes. It is a placebo.
With HK’s economic predicament, more families
may need the spouse to work for the added income.
With the spouse employed, an FDH has to be hired to look after
the children and perform various chores.
To immediately conclude that demand will decline as a consequence
is specious.
Argument
No.11:
There is pressure to admit workers from poorer regions
of the Mainland.
As previously pointed
out, there is an ever-increasing demand for FDH because Hong Kong
residents place a high premium on value for money.
It is an acknowledged fact, for instance, that FDHs work longer
hours for less. Many Filipino workers are also known to tutor their wards in
some school subjects and help put into practice Cantonese children’s
knowledge of the English language.
For
the ninth consecutive year, Hong Kong was named the world's freest
economy by the Heritage Foundation in its 2003 Index of Economic
Freedom. Hong Kong thrives
on its commitment to growth through a free economy.
In line with this principle, the free market should be allowed to determine the supply
of FDHs.
Argumnet
No.12:
No one can be exempt from sacrifice.
HK offers work and freedom in a city with a high standard of
living and freely available facilities.
By and large, Hong
Kong’s high standard of living is hardly affordable insofar as FDHs
are concerned. They do not enjoy the amenities of expensive restaurants nor
the luxury of fancy cars, clothes and jewelry, and exclusive clubs.
In
his speech at the Budget Sitting in April 2002, Secretary for Health and
Welfare Dr. E K Yeoh told the honorable members of LegCo that recurrent
public expenditure on social welfare is $32 billion in 2002-2003 or an
increase of 58% over the $20 billion spent in 1997-98.
He noted that social welfare is the third biggest expenditure of
the Hong Kong Government, accounting for 14.6% of total recurrent public
expenditure in 2002-2003.
A
good portion of the increase in social welfare spending went to the $22
billion allocation for the Comprehensive Social Security Assistance (CSSA)
Scheme and Social Security Allowance (SSA) under which some 400,000
needy residents, 457,600 elderly and 102,600 disabled persons are
receiving assistance. FDHs
are not entitled to such assistance.
Neither do they benefit from other welfare programs seeking to
strengthen the family, help young people, or assist the disabled.
It
is disingenuous to say that FDHs can avail themselves of
“freely available facilities”.
The actual range of this privilege is limited to such facilities
as stadia, community halls, museums and public hospitals.
For use of these facilities, they pay necessary fees just like
regular Hong Kong residents. The
same is true with legal aid. Aided
persons, including FDHs, are required to repay the Legal Aid Department
all sums paid or payable on her behalf out of claims won.
 In many cases, FDHs could not even access
services provided by some NGOs owing to language barriers.
If at all, support systems are provided by self-help
organizations created within the ethnic community itself. There are
precious few programs dedicated to migrant workers such as those
initiated by the International Social Service (ISS-HK).
Raising revenues from FDHs’ wages in order to
stem Hong Kong’s widening budget deficit is thus a gratuitous measure.
Argument
No.13:
They can spend free time in many parks and gardens
provided out of city coffers. Street
cleaners work extra hours to clean up the debris.
FDHs
do not have many options as to how they spend their day off.
There are not enough social/community centers to physically
accommodate the multitude of foreign domestic helpers in Hong Kong.
City
parks and gardens are a public good.
Also called collective goods, these
are a very special class of goods which cannot practically be withheld
from one individual consumer without withholding them from all.
The inability of potential providers (in this case, the HK
government) to exclude people who refuse to pay for consuming and
benefiting from a public good usually means that many of the consumers
of the good will act as free
riders and choose not to help pay for its provision.
Human
use and enjoyment is the central purpose of public parks. Parks provide relief from an urban industrial landscape by
creating spaces free of dense building, opportunities for recreation,
and places of congregation. To
a certain extent, they have a public health function as a venue is
provided for people to share their problems thereby saving HK funds that
would have been otherwise used for psychiatric treatment.
The provision of open public spaces to which everyone has a right
to access is a human purpose that public parks serve.
Since economics focuses on improving ways in
which we use scarce resources to satisfy our wants, public parks are
beneficial because they serve important human needs and desires.
Instead
of dwelling on the supposed extra working hours of street cleaners, it
is suggested that policymakers consider the extent of commerce and local
employment generated by activities of FDHs on Sundays.
In conclusion, FDHs should not be regarded as a burden
to HK’s economy and society. The truth of the matter is that their
services have contributed, in no small measure, to Hong Kong’s
progress. Hong Kong
government officials themselves roundly acknowledge this fact.
It is earnestly hoped that the Hong Kong government would back
these words with deeds.
N.B.
The
foregoing counter-arguments were culled from an e-discussion among Vice
Consul Flerida Ann Camille P. Mayo, Third Secretary & Vice Consul
Emil T. Fernandez of the Philippine Embassy in Caracas, Venezuela and
Mr. Gerardo
G. Pablo, Asia-Pacific Equities, Deputy
Head of Sales, Core Pacific Yamaichi, HK.
Other Sources:
ü
Does the Free Market Undermine Culture?, D. Eric
Schansberg, Indiana Univ.
ü
Will Lowering Wages Create More Jobs?, Grant
Belchamber, Committee for Economic Development of Australia
ü
The Ugly Truth About the Minimum Wage Law, Jim Cox
ü
The Imaginary Evils of Deflation?, Christopher
Mayer
ü
The Economic Foundations of Public Parks, Thomas
Michael Power
ü
Finfacts Worldwide 2002 Cost of Living Survey
ü
TDC Trade.com Economic Forum, content provided by
HK Monetary Authority
ü
1997 Country Profile: HK, Migrant Workers Snap Shot
ü
Oanda.com Currency Site
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