Hong Kong government accepts recommendations on reviewing the Statutory Minimum Wage rate annually

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The Government has also agreed to adopt a formula for adjusting the SMW rate.

The Chief Executive (CE) in Council has accepted the recommendations of the Minimum Wage Commission (MWC) on enhancing the review mechanism of the Statutory Minimum Wage (SMW) in Hong Kong.

The recommendations include reviewing the SMW rate once a year (annual review), adopting a formula for implementing such a review, and reviewing the aforesaid new review mechanism five to 10 years after its implementation.

The formula, proposed by the MWC, comprises two indicators, namely inflation and the economic growth factor.

The former ensures that the rate of adjustment in the SMW will not fall below the headline Consumer Price Index (A) inflation, so as to maintain the purchasing power of the SMW and safeguard the employment income of grassroots employees.

The Economic Growth factor enables the rate of increase in the SMW to be suitably higher than inflation when the Hong Kong economy performs well (i.e. economic growth in the latest year is higher than the trend growth in the latest decade).

Chris Sun, Secretary for Labour and Welfare, was pleased with the MWC's accomplishment in studying enhancements to the review mechanism of the SMW. He agreed that the adoption of a formula for adjusting the SMW rate will enhance predictability and transparency. This, in turn, will help to reduce the contention of the community over the rate of each SMW adjustment, and help foster harmonious labour relations.

The first SMW rate derived under the new review mechanism will take effect on 1 May 2026.

The Government will thrash out the arrangements for implementing the new review mechanism and announce them in due course. Moreover, the CE will require the MWC to submit the next recommendation report on the SMW rate on or before 31 October this year.

The next SMW rate recommended by the MWC will take effect on 1 May 2025.

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