A lawmaker and a representative of small and medium-sized firms on Tuesday welcomed the new way of calculating Hong Kong's minimum wage, which now takes into account the city's economic development and consumer prices.

Danny Lau, the honorary chairman of the Hong Kong Small and Medium Enterprises Association, said the shake-up is fair for business operators and workers, but it is unreasonable there is no chance of the minimum wage being reduced if times get tough for businesses.

"The only thing that we worry is you can only [increase it], you cannot decrease the minimum wage," he said.

Under the new changes, the minimum wage would not be reduced but frozen even if the formula produces a negative number.

Asked if it would put pressure on bosses in small and medium-sized firms when the economy is not doing well, Priscilla Wong, who chairs the Minimum Wage Commission, said a balance needs to be struck.

“These are the people with the lowest ability to bargain, the least bargaining power. And as a society, we are hoping that their wages do not go through vertically down and go down to the point that we lose our wage floor,” she told a media briefing.

Unionist lawmaker Lam Chun-sing welcomed the new mechanism, but he told RTHK the administration should give greater weight to GDP in the calculations.

"We hope the proportion that [accounts for] the growth in GDP can be more. This means if we have a large growth of the GDP and then we can have an increase in minimum wages level, that's very important because it allows our grassroots workers to share the fruit of economic development," he said.

Liberal Party's catering sector lawmaker, Tommy Cheung, earlier said the minimum wage could hurt the SAR's competitiveness, calling on authorities to scrap it altogether.

But labour minister Chris Sun dismissed the suggestion, saying the new changes ensure there is room for low-paid workers to maintain their purchasing power.

“The design of the formula is to make sure that while we remain competitive, we have to also take care of the needs of those at the very low level. We're just talking about a small number of workers. And as a society, we should help them to make sure that at the very low level, we have enough room for them to be able to earn.”