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High rents hit bosses more than wage floor

South China Morning Post — 16 August 2011

Only 8pc of businesses polled say the minimum wage has raised operating costs

High rents rather than the minimum wage represent the biggest threat to small and medium-sized businesses, a study shows.

Just 8 per cent of the businesses polled said the minimum wage had increased their operating costs, while more than 90 per cent said ever-rising rents hurt them more.

The survey casts doubt on claims by some businesses that the HK$28 per hour minimum wage, which came into force in May, had increased their operating costs.

The Catholic Commission for Labour Affairs polled the bosses of 100 stores employing fewer than 50 people in shopping malls owned by The Link, which owns 180 properties on public housing estates, and developers Cheung Kong (Holdings) (SEHK: 0001), Sun Kung Kai Properties and Henderson Land Development (SEHK: 0012). It interviewed in more depth about a dozen businesses to gather their views on the minimum wage.

More than 70 per cent of respondents said the wage law had not put them under greater economic pressure. Some 80 per cent said rent was their largest single expense, with 65 per cent saying it accounted for more than 40 per cent of revenue.

More than 90 per cent said staying in business was tough, and most of them attributed their problems to rent.

Law Pui-shan, the commission’s policy research officer, said the findings proved that most small and medium-sized enterprises had not suffered as a result of the law. “Since many such businesses see high rent as unavoidable, they shift their attention to their workers’ wages, sometimes without justification,” she said.

She urged the government to release an assessment of how the minimum wage had affected businesses. She also called on it to find ways to tackle the growing power of property developers. “If not, we don’t see how rents can go down.”

Property developers have been the target of protests in recent months. Organisers of the annual July 1 march made “toppling property hegemony” – the dominance of property developers over the economy and politics – one of its key themes, while activists brought a ParknShop to a standstill in March in a protest against the chain’s owner, tycoon Li Ka-shing.

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