The Hong Kong General Chamber of Commerce expressed its concern over the legislation of standard working hours, saying that it will not alleviate the problem of excessively long working hours, and risks lowering the flexibility of the labour market.
After attending a consultation forum organized by the Standard Working Hours Committee, Chamber CEO Shirley Yuen said the issue of long working hours is due to the severe labour shortage, and the solution to that problem is increasing our labour force. Hong Kong’s latest unemployment rate stood at 3.2%, and the underemployment rate dipped to 1.4%. She said these data clearly show Hong Kong is suffering from a severe labour shortage, and stipulating standard working hours will only make it more difficult for companies to survive. Moreover, overseas experience shows that standard working hours generally forces employers to hire more part-time or casual employees, which will fragment jobs and exacerbate underemployment.
Yuen suggested that the government should uphold the free-market economy principles on which Hong Kong has thrived. Rather than standardizing working hours through legislation, employers and employees should draw up contracts based on the demands of work in individual sectors, stipulating job requirements, duties, working hours and arrangements for over-time pay.
With small companies already struggling to cope with talent loss, increasing costs and cash-flow constraints, standard working hours legislation will deliver a double blow to SMEs. Yuen proposes to introduce a very simple two-tiered profits tax structure. “We propose immediately reducing the standard profits tax rate to 15% and further reducing the rate imposed on the first HK$2 million of taxable profits to 10%,” she said. According to 2011-12 government data, profits tax charged on the 75,500 companies with taxable profits of less than HK$2 million was HK$5.57 billion, accounting for just 4.7% of total profits tax revenue.
She added that the adjustment will not complicate our simple tax system. Instead, it will reduce SMEs’ tax burden and the increased cash flow will allow them to expand their businesses. Moreover, the proposal is unlikely to result in significant revenue loss for the government, because when SMEs expand their businesses, their profits will also increase and with the growth so will the amount of tax that the government will collect.
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