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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Last week, I attended a range of seminars and workshops as part of the Melbourne Writers Festival, an annual event held in my home town of Melbourne.

One such event was a forum held last Friday about ethical journalism in the changing world of online media. This forum was followed up by a roundtable discussion on the same topic that afternoon.

As a young writer, the opportunity to hear from and chat with those at the cutting edge of ethical journalistic practice in Australia was a worthwhile and rewarding experience. Today, I would like to share a couple of the main points to come out of the discussion.

[The forum featured: Dr. Dennis Muller (forum chair), a former journalist and now Principal of policy and social media consulting firm Dennis Muller & Associates; Paul Chadwick, Director of Editorial Policies at the Australian Broadcasting Commission; Chris Chapman, Chairman and Chief Executive of the Australian Communications and Media Authority (ACMA); and Julian Disney, Chairman of the Australian Press Council.]

 
Core values still relevant …
One of the most important themes which resonated not only from yesterday but also throughout other journalism related events during the week was that the basic principles of ethical journalism have not changed, but that developments within the media environment present both new opportunities and new challenges in this area.

Journalism has, at its core, a set of basic fundamental principles regarding professional conduct. Ethical journalists must:

• ensure, to the extent possible given resource and time constraints, that information they present is properly researched and factually accurate;
• report in a manner which is fair and free of bias;
• give due regard to matters of privacy and confidentiality, balancing these factors against any public interest considerations associated with disclosure of information; and
• act with courage and integrity, refusing to be influenced by inducements or intimidation.

These principles will never change. They form the basis of ethical journalism now and will continue to do so regardless of how the media landscape might evolve in the future.
 

… but new challenges ahead
Nevertheless, the shift toward new mediums for information delivery presents both challenges and opportunities with regard to ethical journalistic practice.

Some of the areas where changes might occur include:

 
• Breaking stories.

In print media, journalists typically have several hours between the time of significant events occurring and the deadline for submission of their report.

This is not the case in the online world, where increasing pressure for up to the minute online information about breaking stories raises challenges in the area of fact checking and investigative journalism. With these stories, journalists and media organisations face a significantly greater challenge in the online world when compared with print media in balancing considerations relating to speed against those related to quality of reporting.

 
• Comment moderation.

Whilst increased capacity for reader discussion in the online news environment is a positive development overall, the ability of anyone armed with an internet connection to hit ‘post comment’ makes it more difficult to filter out offensive or inappropriate comments.

Media organisations must devise strategies to effectively moderate online forums without unduly inhibiting the natural flow of reader commentary and discussion. 

 
• Error correction.

One of the positive aspects of online news relates to the ease with which online publications can place notes relating to error correction within the original article or report itself – something which is obviously not possible with print media articles once they have gone into circulation.

Correction of archived reports is not only possible in the online world, it’s necessary. As a result of the ease with which archived information can be discovered online, the consequences of inaccurate information are more serious than ever before. This raises the stakes with regard to the duty of care for media organisations to correct any factual mistakes in past reports.

Online publications have the ability to correct erroneous information within source articles. They also have the obligation to do so.

 
• Links to source information.

One of the great benefits about online news is the ability to allow readers to access source information via hyperlinks.

Some degree of reluctance about hyperlinks on the part of journalists and editors is understandable – they do direct visitors away from newspaper sites. Hopefully, however, media organisations will over time become increasingly comfortable with their use as means of enhancing journalistic credibility and accountability.

 
• Regulation.

This was one of the key aspects which Chris Chapman from the ACMA talked about on Friday.

The constant evolution of online media platforms creates ongoing challenges for lawmakers and regulators. For one thing, there is the prospect of existing rules being rendered inadequate or no longer appropriate as a result of new developments (Mr. Chapman points out that terms like ‘street view’ – referring to a technology featured in Google Maps and Google Earth which allows for a street level view of many locations around the world – were not in existence when the legislation creating the ACMA was drafted). Then, there is the issue of online media organisations operating outside the jurisdiction state or country on which they are reporting – a positive in many respects but potentially a negative when it comes to some matters such as protection of privacy. Finally, there’s the issue of regulation across different media platforms. Are different rules required for different platforms? How about regulatory authorities? Should all journalism, regardless of the medium, be supervised by the same regulatory bodies?

These are just some of the areas where the changing media environment may impact ethical journalistic practices within the near-term future.

Your thoughts?

With a federal election scheduled for this coming Saturday, things are reaching a climax in the political climate in my home country of Australia.

One hot topic: plans of the current Labour government to require cigarettes to be sold in plain packaging from the middle of 2012 onwards.

With reservations, I support this plan. Governments do have a responsibility regarding public health, and this does include undertaking appropriate measures to curb cigarette consumption. 

Nevertheless, the proposal does raise disturbing questions about intellectual property rights and how far governments should go in terms of intervening in standard commercial practices.

 
About the plan:
Announced last April, the plan represents the latest development in efforts on the part of the Australian government to curb cigarette consumption.

Under the plan, which the governing Labour Party claims is a world-first, the following requirements will apply to the packaging of all cigarettes sold in Australia from 01 July 2012 onwards:

 • all cigarettes will be sold in plain packaging (the government will specifically develop and test packaging design that will make cigarettes less attractive – especially to young people);

• tobacco industry logos, brand imagery, colors and promotional text (other than brand names in a standard colour, position, font style and size) will not be allowed on cigarette packaging; and

• graphic health warnings displayed on packaging will be expanded and updated.

 
The positive side – reduced consumption
Contrary to claims by the Alliance for Australian Retailers (ARR), a lobby group for Australian retailers supported by the tobacco industry, the plan is likely to discourage smoking and help reduce overall cigarette consumption.

For one thing, the extent to which retailers and big tobacco have opposed the plan (the AAR was created specifically for the purpose of campaigning against plain packaging) does appear to contradict their claims. Indeed, the fact that they are so opposed to the idea indicates that they fear just how effective it might be.

Moreover, the idea of plain packaging resulting in lower levels of cigarette consumption than would otherwise be the case does make sense. For any given product, cigarettes included, cleverly designed packaging makes buying more attractive – vice versa for merchandise packaged in plain or unattractive colours.

That matters. According to the World Health Organization, smoking kills more than five million people worldwide each year, accounting for one in every ten adult deaths.  And this is not to mention the pain and suffering endured by those who contract smoking related diseases whilst they are alive. Nor does it account for broader economic costs associated with tobacco related illnesses, particularly in terms of health related expenditure and lost productivity.

 
The negative side:
Nevertheless, the proposal does raise two key areas of concern:

 
• Intellectual property rights.

In a submission to a senate enquiry, the Property Rights Alliance (PRA), a global organisation dedicated to the protection of physical and intellectual property rights, asserts that the proposed legislation would violate the intellectual property rights of tobacco manufacturers under two international treaties: the Agreement on Trade Related Aspects of Individual Property Rights (TRIPS) and the Paris Convention.

Without a legal background, I am in no position to make informed comment as to whether or not PRA’s assertion is correct.

What I will say, however, is that this is a serious matter. Without exception, all rights granted under international treaties, including those of cigarette manufacturers, must be respected and upheld. Any violation with regard to these agreements is serious, and before plain packaging is introduced, the government must obtain strong legal advice to ensure that any associated legislation is in full compliance with both of the above agreements.

 
• Unprecedented intervention.

The second area of concern relates to questions about the extent to which governments should intervene in standard commercial practices.

Cigarettes are a consumer product, and governments are right to intervene in some aspects of their packaging – mandatory inclusions about health warnings being a prime example.

But government intervention in packaging design is unprecedented. Labour’s plan to meddle in this area does raise questions about the freedom of companies to package merchandise using the design of their choice and whether or not government prescription of specific packaging design is going too far.

Close call. I support plain packaging, but with reservations.

Your thoughts?

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According to an article in The Australian a couple of weeks ago, executives of Goldman Sachs told managers earlier this month to ensure that reaction inside the bank was subdued regarding the announcement on July 15 of a settlement concerning the firm’s highly publicised dispute with the Securities Exchange Commission (SEC).

Cheering or other forms of celebration, they feared, would damage the firm’s reputation beyond what had already occurred since the announcement of the SEC action last April.

(The settlement, under which the bank agreed to a penalty of $US550millon, represented the largest fine ever imposed on a Wall Street firm to-date.)

Good thing too. The settlement has removed a great deal of uncertainly for Goldman. But it was not a cause for celebration, especially given the prospect of further legal action – not to mention the damage which the bank’s reputation has suffered as a result of these events.

About the settlement
Announced on July 15, the settlement relates to charges against the firm brought about by the Securities Exchange Commission (SEC) in April for defrauding investors by misstating and omitting key information about ABACUS 2007-AC1 (ABACUS), a financial product it sold to two institutional investors as the American housing market was faltering in 2007.

Under the terms of the settlement, Goldman has admitted that marketing materials relating to the transaction in question contained incomplete information. The bank has accepted a fine of $550 million and has also agreed to undertake appropriate remedial action with regard to practices in its offering of mortgage securities.
 

Worries not over
To be sure, from Goldman’s point of view, the settlement does remove a great deal of uncertainty. Better yet, they actually got a fairly good deal: the amount paid is well below worst case scenario predictions (some analysts were tipping $1billion or more – refer article) and no departures at senior levels were required. Things could have been worse.

Still, their problems are a long way from over. For one thing, there are obvious concerns about the settlement serving as encouragement for further legal action from investors who lost out on other Goldman products. Already, Australia’s Basis Capital is asking for $US1billion in damages plus recoupment of initial capital relating to the sale of Tiberwolf securities in 2007 (refer article).  Royal Bank of Scotland (RBS), too (whose subsidiary ABN Amro lost $841 million through the provision of credit insurance on the ABACUS transaction), is widely rumored to be considering its options.

And let’s not forget the ongoing criminal investigation into the bank and its employees by US federal prosecutors either.

Credibility damage
Moreover, the settlement does serve as a blow to Goldman’s credibility.

Granted, the settlement did not constitute an admission of guilt. Nevertheless the fact that Goldman were willing to settle for that amount of money does suggest that they had a case to answer. And given how quickly they caved in, the firm’s initial response (where they dismissed the complaint as being ‘unfounded in law and fact’) does now look a little nonsensical.

For Goldman, this matters. Ranked eighth in Fortune’s 50 Most Admired Companies (refer Goldman Media Awards site), the firm’s standout reputation amongst its peers, along with the prestige associated with its name, has long been a crucial source of competitive advantage.

Hold the Celebrations
Throughout its history, Goldman has had many achievements to celebrate.

In the past six months alone, these include awards such as Euromoney’s Best Global Investment Bank (Jul 2010) and Investment Dealer’s Digest’s Bank of the Year (Jan 2010) as well as inclusion in Business Week’s 20 Best Companies for Leadership (Feb 2010) – and these are just to name a few.

These awards are a credit to Goldman (as are the stellar returns the firm delivers to shareholders so consistently). Celebrations relating to achievements like this are more than justified.

Not so for the ‘award’ from the SEC of Wall Street’s largest ever financial penalty. No matter how much of a relief the settlement might have been, its announcement was no cause for celebration. Any cheering would rightfully have caused further damage to the bank’s reputation.

Goldman was right to be relieved. It was also right not to open the champagne.

That should only happen at times worthy of celebration.

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In the modern business climate, manners and etiquette are a crucial aspect of maintaining a positive corporate reputation – especially in the course of handling difficult issues.

Good manners cost next to nothing. Yet a little courtesy goes a long way.

Last month in my neighborhood there was a perfect example of a situation which was handled poorly but could have easily been handled better with a little effort – much better.

The situation in question concerns the closure of the Croydon Market, a flea market which operates not far from my house in an undercover car park area adjacent to the Centro Croydon shopping centre.

PCL Prattcorp, which bought the shopping centre and the market site in May, closed the market last month, apparently citing concerns relating to insurance and safety (refer article).

 
A badly handled situation
This was never going to be an easy situation. The market opened in 1908 and has been operating in its present location since the end of World War I. Its closure was always going to be met with sadness. Not to mention the impact on stallholders, who depend on this market and other markets for their livelihood.

But what made things worse was PCL’s handling of the situation. Rather than being given advance notice of the closure, stallholders were not told at all. Instead, on Sunday June 28, they loaded up their gear and made the trip to market as normal, hoping for a good day of sales. (Some came from as far away as Horsham, four hours to the west, where markets had been held the previous day.) Alas, they arrived to find the gates closed and security guards turning them away. Their entire effort had been wasted. Worse still, those dealing in perishables were left with unsaleable stock.

Hardly any better was the company’s handling of the media. Enquiries from the Maroondah Leader, a local newspaper, were referred by PCL’s head office to management of the centre itself. Centre management, in turn, handballed those same queries back to head office. No one, it seems, wanted anything to do with this.

 
What should have happened
This situation could easily have been handled better with only a small amount of effort on the part of PCL.

Two simple steps would have gone a long way:

 
• Advance notice.

Giving stallholders advance notice of the closure would have been basic common courtesy.

Even a short period of notice – say, six weeks or even a month – may have enabled stallholders to arrange to set up at different markets in alternative locations, thereby minimising the disruption of the closure to their operations.

Advance notice would also have allowed them to clear unsold stock in the final weeks of trading.

(Even if safety concerns were a factor in the decision, as the company insists, the suddenness of the closure hardly seems necessary. The market has been operating in the same location without incident since World War I, surely it has not suddenly become so unsafe to the point of needing to be closed without advance notice.)

 
• Coordinated media strategy.

Given PCL’s size – it paid $31.5 million Australian dollars [$USD 26.5 million (approx)] for the centre – its absence of a strategy for handling media enquires is staggering.

It would not have been hard, for example, to prepare a short media statement about the closure. Nor would it have been difficult to arrange a designated contact point for media enquires. Yet either of these measures would have gone a long way toward making PCL look more professional.

(The company did make a media statement in the end. But that did not come until July 02 – almost a week after all the drama. Too little, too late.)

 
Simple steps, big impact
None of this would have been hard or costly. But better handling of the situation would have gone a long way toward enhancing PCL’s reputation.

Stallholders are businesspeople, and have a right to expect advance notice of decisions affecting their operations.

Moreover, the poor handling of this situation reflects badly upon PCL as a company, and this has adverse consequences for the company in terms of community reputation and staff morale. Pity. Even a little forethought on its part would have made a world of difference.

Etiquette and manners are essential when dealing with difficult situations.

Thoughtfulness and consideration hardly cost anything. But a few simple steps can go a long way.

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