tim's experiment

A campaign is under way to drive down the level of local wages. Of course it is not described like that. Employers may be insanely greedy but they are not stupid. So we are presented with a “manpower shortage”. What this was doing as the lead story on the front page of the SCMP I do not know, but the campaign is gathering steam so we need to consider exactly what it is.

The most eye-catching feature of the Post’s headline was the announcement that “industry leaders” feared the manpower shortage. I thought Hong Kong’s industries had all long since migrated to more congenial environments north of the border where stroppy workers are dealt with properly … and shot. On closer inspection, though, it seemed that “industry” was being used in the more general sense to apply to three pursuits which have to be done here because this is where the customers want the work done: construction, restaurants and old folks homes. These are, apparently, “key sectors recently identified by the government”, which was news to me. How can construction be a key sector? Either a building is needed or it is not. If other industries are prospering then more buildings will be needed, and if not, not. Anyway leaving aside the official status of the three industries where was the evidence for a shortage and what was the government supposed to do about it?

We’ll take the second question first. The government was supposed to reform the importation of labour scheme so that the proprietors of building firms, restaurants and aged homes could benefit from the resulting influx of labour. Among the benefits would be a reduction of wage levels in the industries concerned. This is an elementary feature of those laws of supply and demand on which employers are so keen when discussing minimum wages. More pay, fewer workers. More workers, less pay.

For it is an elementary fact of economic life that there is no such thing as a manpower shortage. This is not only because half the workforce are not men, but also because there can only be a shortage at a particular wage level. The way the invisible hand works is that items in short supply become more expensive, conjuring up more supply. There is no job in Hong Kong that cannot be filled – at C.Y. Leung’s salary level.

And indeed it turned out that the main evidence the “industry leaders” were offering for a shortage was that they were being compelled to pay higher wages.

Let us start with Thomas Ho On-sing, chairman of the HK Construction Association. Mr Ho’s complaint was that “A cement mixer with no experience is getting paid $1,100 a day”. Now I have no idea what a cement mixer does – in normal English it means one of those machines which you shovel materials in and tip cement out of. I suppose Mr Ho is referring to some kind of machine operator, I suppose also that since experience is valued the job involves some skill and judgment. We may also suppose that it is done outdoors in a relatively dirty and dangerous environment. And the question which then arises is: what is wrong with the person doing this job being paid $1,100 a day? The job has some unattractive features and it is only right that these should be offset by generous financial compensation. I have no doubt that Mr Ho could recruit people in Bangladesh – or the Philippines – willing to do it for half as much. Where is the benefit in that for Hong Kong as a whole?

Next up we have Simon Wong Ka-po, President of the Federation of Restaurants and Related Trades, as the food biz now calls itself. Mr Wong fondly recalled the days when you could recruit a waiter for $35 an hour, and complained that it was now necessary to offer $60. So? This means that if you work 40 hours a week, which is enough for most of us (I have been a waiter), then you will take home $2,400 a week or, in round figures, $10,000 a month. Would Mr Wong, I wonder, like to live on $10,000 a month?

The old folks home spokesman did not have any horror stories of being forced to pay decent wages for a change. He was barking up a different money tree. The government “should pledge that a certain percentage of people will be getting a place in subsidised homes”, he said. Oh yes. So much more congenial than giving people a decent pension and letting them make their own choices.

The following day we had a contribution to this chorus from Shirley Yuen, the chief executive of the Chamber of Commerce. Miss Yuen cantered through the usual material: disappointing number of imported workers, why can you not import a waiter, etc. and then got down to the nitty gritty. “The unions say we should protect local workers by not importing workers. But are we protecting them when we do not do so? If we don’t do so, will we even lose the whole industry?” To which the answer is “No”. No ifs, no buts, no maybes. We will not lose a whole industry and the suggestion is a silly scare tactic which will frighten nobody.

Business people are entitled to try to persuade us that what is good for them is good for us. Sometimes no doubt this is true. Exhibitions of shameless greed make this less obvious.