Good Honest Dollar $$

It may have taken seventy-eight years, but the debate over whether or not Hong Kong should have a minimum wage has finally been settled.

The result is a sensible outcome. At the expected level (see below), the new minimum wage will not compromise the city’s competitiveness or place an unreasonable burden on employers. Yet it will help address Hong Kong’s persistent problems associated with income inequality and the growing number of ‘working poor’ families.

But it is disappointing that domestic workers have been excluded from the legislation.

 
Background
In July this year, the Hong Kong government passed legislation guaranteeing minimum wages for the vast majority of employees within the city.

(According to The Economist, the idea of minimum wages in Hong Kong has been debated since 1932.)

Under the legislation, members of a task group chosen by the city’s chief executive will propose a minimum wage level, which the legislature will then accept or reject. The new wages, which will come into force next year, are to be reviewed every two years (AFP).

Whilst the precise rate for next year is yet to be confirmed, a level of close to HKD28 per hour (USD3.61) is widely anticipated (The Epoch Times).

The new law does not, however, cover domestic workers employed as live in help for Hong Kong families. These workers, many of whom are Filipino or Indonesian immigrants, are guaranteed a minimum monthly HKD3,580 as well as accommodation under existing law (Sydney Morning Herald).

 
A sensible decision ..
At the expected rate referred to above, those on the minimum wage will earn about HKD1,120 for a forty hour work week. This equates to a monthly income of HKD4,853.

To put this in perspective, the Hong Kong Council of Social Services puts the monthly income required for a single adult to remain above the poverty line at HKD3,300 (Epoch Times). And that’s just for a single: families obviously cost more. A family of say, four, could probably scrape by on HKD4853 per month – but only just.

Given this, a minimum wage at the expected level is hardly excessive. Nor is it overly burdensome on employers. In a rich world economy, wages that only just cover the cost of living are not too much to ask.

And it’s hardly as though the new law will compromise the city’s competitiveness: compared with elsewhere in the rich world (American dollar equivalent hourly minimum rates stand at $9.26 in Britain, $14.06 in Australia and a whopping $56.44 in Japan), Hong Kong workers on a minimum wage of USD3.61 per hour will still be dirt cheap.

(In native currency terms, minimum hourly wage rates in the above-mentioned countries stand at GPB5.93, AUD15, and JPY4,712 respectively.)

Nor will it cause much business to go elsewhere. The main types of workers who are expected to benefit (restaurant workers, security guards and cleaners) are not employed in sectors where operations can be relocated easily.

But it is necessary. Hong Kong ranks last in income equality out of thirty-eight countries and territories, according to the United Nations Development Programs 2009 Human Development Report (Sydney Morning Herald). Worse still, despite an unemployment rate of just 4.2%,  Hong Kong Council of Social Services estimates that 17.9% of the city’s population are poor (The Epoch Times). This means that a significant portion of Hong Kong’s residents live below the poverty line despite being employed.

That shouldn’t happen. Surely in any rich world city, those who work full time should have the right to expect to make enough money to provide basic necessities for their family.

 
.. but pity about the domestic workers
Nevertheless, the exemption of domestic workers from the new law is a great pity.

[As mentioned above, these workers are already granted a minimum wage under existing law (HKD3,580 per month plus accommodation).]

Granted, families who employ the services of these workers may not be enterprises or businesses. But they are still employers nonetheless. Those who work for them are as much employees as workers employed in any other sector of the economy. There is no reason why these workers should be entitled to the same minimum wage as everyone else.

Hong Kong’s new minimum wage law is sensible and should be welcomed. Pity it doesn’t apply to everyone.

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In last week’s discussion, I wrote about the importance of the concept that male and female staff should be entitled to receive substantially similar levels of remuneration when performing work of a substantially similar nature.

Today, I would like to briefly examine some evidence relating to the magnitude of the problem of gender based discrimination in remuneration practices.

 
A simple, but not so useful measurement
The simplest and most common measurement of gender based equality in remuneration levels compares the Average Weekly Earnings for full time female staff with their male counterparts. In this regard, the average earnings of women employed on a full time basis in America is equivalent to just seventy-five per cent of that of a full time man. (refer article)

At first glance, it would be tempting to look at this statistic and conclude that gender based discrimination in remuneration practices is rampant across America.

But the above measurement paints a somewhat misleading picture, and the gender based pay gap which it implies does not necessarily represent incontrovertible evidence of discrimination in remuneration practices.

Men and women are not the same. Overall, neither gender is superior or inferior to the other. Nevertheless, each exhibits differing tendencies with respect to a wide range of employment related matters and decisions. Such differences include, but are not limited to, the type of industries in which they are employed, educational qualifications, levels of managerial responsibility and authority, family related decisions, preferences for part time or full time work, and time spent in and out of the workforce.

As a result of these differences, one would not expect the average earnings of women and men to be equal, even in absence of any form of discrimination based upon gender. Accordingly, measurements which merely tell us what we would expect (that a gender based pay gap exists) are of limited value in terms of understanding the impact of gender based discrimination upon modern remuneration practices.

 
A more revealing study
In order to gain a clearer picture with respect to the gender based pay gap, it is necessary to examine its nature and composition in greater depth, and to attempt to identify and quantify any factors which are known to contribute toward the gap.

In this regard, an American study completed in 2007 by AAUW researchers Judy Goldberg and Catherine Hill is of significantly greater value.

In this study, the researchers attempted to explain away the pay gap using twenty-six variables which are known to affect remuneration levels. Their conclusions – even after excluding the effects of such factors, the average American woman who is employed on a full time basis still earns approximately five per cent less than her male counterpart one year after completion of her studies. This pay gap increases to twelve per cent ten years after graduation.

Accordingly, it would appear that average remuneration levels of American women are below those of their male counterparts even when performing work of a substantially similar nature.

 
Does this necessarily indicate discrimination?
Probably, but not necessarily.

It is likely that a portion of the gender based pay gap referred to above can be attributed to discriminatory practices in remuneration. But it is also possible that unknown factors, or factors for which the effect is not possible to estimate or quantify also account for some portion of the unexplained gap.

For example, Goldman and Hill themselves acknowledge the possibility that part of the gap could represent a manifestation of the individual bargaining process as opposed to gender based discrimination. For example, it is possible that women have an overall tendency to: (a) be less assertive than men during salary negotiations; (b) have lower salary expectations than men; or (c) prefer remuneration arrangements which are less competitive in nature, as opposed to the ‘winner takes all’ schemes which are preferred by some men.

To the extent that such tendencies contribute to the gender based pay gap, they do not necessarily represent a form of unfairness or injustice. In any form of bargaining, those who adopt a more assertive negotiating position tend to derive more favorable outcomes than those who don’t.

Salary negotiations are no exception, and individual staff may achieve varying results according to the manner in which they negotiate, even when compared to others in similar roles within the same industry or even within the same firm.

It’s not necessarily unjust – it’s simply the nature of the bargaining process.

 
But surely some discrimination is occurring
Nevertheless, given the results of the Goldman and Hill’s study, I find it very difficult to believe that modern remuneration practices are completely free of gender based discrimination, particularly in America and probably in many other parts of the western world.

To the extent that this is indeed the case, such practices represent a breach of the human rights and not be considered to be acceptable.

Christine Kwapnoski had every right to feel somewhat miffed about public assurances from senior management at Wal-Mart with respect to the fairness of its labor practices.

When working as a dock supervisor for Sam’s Club, a Wal-Mart subsidiary, Ms. Kwapnoski discovered that she was earning no more than one of the men under her supervision. Later, according to a New York Times report in 2006, she was promoted without a raise, even though accompanying pay raises were offered to men who also received promotions.

Her case highlights an important point – that despite legislation which disallows gender based discrimination in remuneration practices, women in the US (and no doubt in other parts of the world) can still find themselves receiving less pay than their male counterparts even when performing work of a similar nature.

 
Equal pay mini series
This discussion is the tenth discussion in my (albeit interrupted) series of discussions about worker rights and responsibilities in the modern workplace.

Today, I would like to turn attention toward the issue of gender based discrimination in terms of remuneration practices, and the fundamental right of both women to receive substantially similar levels of remuneration to those which are awarded to men for the performance of work which is similar in nature.

I would like to examine this topic in some depth and thus have decided to split this topic into a three part mini-series. Today’s discussion will focus on why the concept of equal work for equal pay is so important. Discussions about evidence relating to gender based pay discrepancies (and the causes of such discrepancies), as well as what should be done in order to address such discrepancies will follow over the next two weeks.

 
Defining the objective
I feel that it is very important to clearly define what our goal should be in this context.

I do not believe that our goal should be equality of the full time average weekly earnings for women to equal that of men. Instead, the goal should be that women and men who perform work of a similar nature, should be entitled to receive similar levels of remuneration.

Men and women make different choices and exhibit different tendencies with respect to a wide range of employment related characteristics, such as education levels, field of study and employment, family related decisions and levels of managerial responsibility, just to name a few. Because of these differences, it would not be reasonable to expect the average income of full time working men and women to be equal, nor should that be our goal.

But all other things being equal, women who perform work of a similar nature to that of their male counterparts have every right to expect to receive similar levels of remuneration.

Same qualifications, same performance, same responsibility – same pay.

That should be our goal.

 
Why it matters
There are several reasons why the receipt of equal pay for equal work is important, but the first and most obvious reason relates to the basic principle of natural justice.

 
• A fundamental human right.

The right of women to receive equal pay for the performance of work of a substantially similar nature (and vice versa for men) represents a fundamental human right which is not only enshrined as such in the Universal Declaration on Human Rights (article 23(2)), but is also given recognition as a legal right in the United States and no doubt across the vast majority of the civilized world.

It is a right which is beyond any form of reasonable dispute.

 
• Practical implications for working women.

Then there are the practical implications for working women, particularly for those who are not married or who are the dominant income earners within their families.

Gender based discrimination with respect to remuneration practices represents an unfair hindrance on working women and their families to afford a comfortable life style, attain financial security and plan for a comfortable retirement.

Also, in the case of married women, such discrimination may also have an adverse impact upon their career development where economic circumstances dictate that the lower income earner within the marriage partnership assume the bulk of the responsibility with respect to domestic or family related matters.

 
• Implications for other family members.

In addition, the implications extend beyond working women themselves and have an effect upon other family members.

Gender based discrimination in remuneration practices has an unfair impact upon the well being of children in the cases either of single motherhood or where the mother is the pre-dominant income earner. And some fathers, too, may wish to sacrifice work hours in order to spend additional time with children, but may feel prevented from doing so for financial reasons in cases where their wives are not able to earn the similar amounts of income for each hour worked.

 
• Economic implications.

As noted above, gender based discrimination in remuneration practices represents a hindrance to the career development of working women.

Not only is this unfair for women, it is also detrimental from the perspective of the broader economy, through its impact upon both the size and skill of the available workforce.

 
Summary
The right to receive similar remuneration for the performance of work of a similar nature is a fundamental right to which all women and men should be entitled.

This is the ninth discussion in my (albeit interrupted) series on worker rights.

Today, I would like to discuss the extent to which expatriates of western countries or other foreign employees should be expected to tolerate employment practices in their host country which would not be acceptable in their home countries.

Broadly speaking, I feel that acceptable employment practices should be defined according to the laws and customs of the host country, and that it is the responsibility of expatriate staff to adapt and fit in with their host culture.

But there are limitations to this, and expatriates should not be expected to tolerate work practices or conditions which are either represent a breach of contractual or human rights or are otherwise unreasonable.

 
Working overseas – a rewarding experience
Working in a foreign country can be a wonderful experience, both for expatriate employees and their host employers.

Such arrangements offer the opportunity for expatriate employees to experience full immersion into a culture and way of life which is different from that of their home country, whilst at the same time providing the host employer with fresh perspectives, exposure to global best practice, professional expertise (which may potentially be lacking at a domestic level) and a better understanding of target markets within the developed world.

Personally, my experience in Korea, where I have taught English in a public school for the past three and a half years, has been easily the most rewarding experience in my (albeit short) career to-date, and one which I will no doubt cherish for the rest of my life.

 
Cultural clashes
Problems can arise, however, where cultural values clash, and expectations of what is acceptable differ between expatriate employees and their host employer.

In such circumstances, I feel that both parties have a responsibility to exercise a considerable degree of flexibility, and to adopt a position of mutual respect toward the cultural values of each other.

Nevertheless, as stated above, I feel that the laws and cultural values of the host country should take precedence over those of the home country of the expatriate in terms of defining acceptable employment practices, and that it is primarily the responsibility of the expatriate employee to adapt to the ways and customs of his or her host employer, not the other way around.

 
Some practices not acceptable
But there are limitations to this, and there are certain practice which in my view should never be considered to be acceptable, regardless of cultural considerations.

Such practices include.

• any practices which constitute an abuse of human rights;
• failure on behalf of the employer to honor contractual obligations; or
• any practices which are otherwise plainly unreasonable or unfair.

The second point above is an area where I have seen conflict arise over and over again during my time in Korea, where attempts by host employers to short change expatriate employees on contractual provisions with respect to wages, housing or working hours are all too common. (The former employer of one friend of mine once literally doubled her work hours without providing any increase in pay)

Granted, these problems are usually the result of cash flow issues or simple bastardry, but cultural issues may also be a contributing factor, since contracts do not carry as much weight as they do in western countries.

This should not be tolerated. Any lack of respect for contractual rights of expatriate staff represents a form of manipulative behavior which should not be tolerated, regardless of cultural considerations, and employees who are subject to this form of treatment should not feel obligated to continue in service to their host employer unless an amicable solution can be reached.

(Fortunately for me, I work in the public school system, and have personally experienced any problems in this regard, or else I would have been on the first plane home.

But I have heard plenty of stories from others who have not been so fortunate, particularly those who teach in privately owned academies.)

Given a previous court ruling in their favor, Indian Airlines was probably vindicated in its controversial decision last week to sack nine air hostesses whose weight exceeded company requirements.

Air hostesses should be grounded, in my view, when, and only when, their weight is sufficient either to compromise their ability to perform their duties in effective manner, or pose a legitimate threat to passenger safety.

 
The case in summary
• In December 2005, Air India, a state owned airline, warned air hostesses that those who failed to meet specified weight limits would be grounded.

• In June last year, the Delhi High Court dismissed a legal challenge to this policy, agreeing with the airline about safety concerns.

• Last week, the airline terminated the employment of nine air hostesses, each of whom had been grounded for several years under the policy, on the basis that there were no longer any ground positions available for them.

 
Why airlines do not want chubby hostesses
Whilst I have considerable empathy for the hostesses concerned, the objections of airlines toward chubby flight attendants are somewhat understandable in my view.

Broadly speaking, these objections can be summarized into two categories – beauty related concerns and safety related concerns.

From the viewpoint of passengers, in-flight experience is a crucial factor in distinguishing one airline from another, and the physical presentation of flight attendants, along with their friendliness and efficiency, can be a significant aspect in this regard.

This is particularly so throughout some parts of Asia, where physical beauty is often equated with professional excellence.

Moreover, the role of a flight attendant is somewhat physically demanding, and in order to perform their duties in a safe and effective manner, flight attendants must be able to:
 
• spend long time periods on their feet;
• bend over and or stretch to assist passengers with issues relating to their seats, under their seats or in the overhead lockers;
• move up and down narrow isles without causing undue passenger interference; 
• perform emergency functions as required; and
• not cause undue impediment to passengers during evacuation processes.

Unfortunately, those who cease to be able to perform such functions are no longer fit for in-flight service duties.

 
When should hostesses be fired?
With respect to any position of customer service, it is reasonable to take beauty related considerations into account when assessing prospective new employees.

Existing staff, however, should be retained or terminated solely according to their ability to perform their duties in a safe and effective manner, not because of beauty related concerns.

In a wide range of industries, physical presentation of customer service staff does impact upon customer experience and the perception of the organization concerned.

The aviation industry is no exception, and it would be unreasonable to expect Air India to hire plumpish staff whilst its rivals choose from amongst the ranks of more physically attractive candidates.

But actually firing employees is different, and flight attendants should only be fired only where they cease to be able to perform their duties in a safe and effective manner.

 
Objective, transparent, consistent, fair
What is critical is that any process for dismissing flight attendants based on weight considerations must be (a) based upon objective criteria; (b) fully transparent; and (c) applied in a consistent manner throughout the organization.

Under no circumstances should dismissals occur on an arbitrary basis.

A first step, and one which Air India followed in this case, is the establishment of a table of specific weight limits, which must take into account factors such as the age and height of the employee concerned.

Second, any hostesses whose weight exceeds such limitations should be allowed a reasonable time period in which to reduce their weight. Only after they are unable to do so should grounding be considered.

Finally, in preference to outright termination of employment, grounded hostesses should be offered positions on the ground if such positions are available.

 
So, were the sackings reasonable?
It would appear so to me.

Air India did set specific weight limits, each of the hostesses concerned had exceeded by considerable amounts (between 11 and 32kg), and even then, the hostesses concerned were given several years to reduce their weight.

Moreover, the fact that company’s policy survived a court challenge adds some weight to its claims with regards to the safety concerns associated with the weight of the hostesses concerned.

A tough decision, but a fair one just the same.