The government is aiming to usher in a base wage of 28 Hong Kong dollars (3.60 US) from May next year -- lower than the 33 Hong Kong dollars which labour activists have been demanding and far less than other major cities.

The controversial issue has divided business and labour groups for more than a decade, with business groups warning a that a wage floor would lead to widespread job losses among poor workers.

The southern Chinese financial hub is famous for its stunningly wealthy tycoons whose business empires cross all sectors of Hong Kong's economy and span the globe.

But the densely populated city of seven million is also home to hundreds of thousands of workers who live on hourly wages sometimes as low as two US dollars an hour.

Concern about Hong Kong's growing income gap -- which the UN Development Programme last year pegged as the world's biggest among wealthy economies -- prompted the government to introduce the wage floor.

The city's labour department said the new wage would benefit almost 315,000 Hong Kong workers, boosting their pay by 16.9 percent on average.

"This is a new and noble thing for Hong Kong," Matthew Cheung, secretary for labour and welfare, told a news conference.

"I appreciate it will take time for the community to adjust to it. The aim is to protect grass-roots workers in Hong Kong -- employees are the most valuable asset to enterprises," he added.

Regulations specifying the figure will be tabled in Hong Kong's legislature next week for official endorsement.

The law introducing the measure in principle was passed in July, but the actual pay rate involved was unveiled only on Wednesday.

Lee Cheuk-yan, a unionist legislator and secretary of the Confederation of Trade Unions, criticised the pay floor as "unreasonable".

"We want the government to review this minimum wage as soon as possible so it will represent a fairer wage," Lee said, according to local Cable TV.

Unions have warned that anything less than 33 Hong Kong dollars an hour would fail to cover basic living expenses, which have been rising sharply.

Many countries already have minimum wage legislation in place, with hourly rates in New York and London set between 7.25 and 8.80 US dollars.

But Teresa Cheng, chairwoman of the government committee tasked to fix the minimum wage, said minimum wage of 33 Hong Kong dollars would hurt many small-to-medium sized enterprises.

"We have to balance the interest of workers and ensure businesses can continue to operate," she told the news conference.

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