Helping underclass requires vision

PUBLISHED : Wednesday, 27 June, 2012, 12:00am
UPDATED : Wednesday, 27 June, 2012, 12:00am


Hong Kong has become more prosperous over the decades and emerged from financial crises in better shape than most places. Yet inequality has grown. The latest evidence is difficult to refute. The city's Gini coefficient index, an internationally respected measure of income inequality, has risen in recent years to be highest in the developed world. And official figures show the median income of the city's poorest 10 per cent, including people on social security assistance, has fallen from HK$2,250 five years ago to HK$2,070, while the top 10 per cent have nearly HK$19,000 more in their pockets with HK$95,000.

These are opposite ends of the spectrum. Many more, including families, have been condemned by a combination of high property rents and prices, inflation and low wages to subsistence, with scant prospects of improving their situation.

Due to an ageing population, income disparity can be expected to worsen in coming years as more people leave the workforce. Over the past five years, the number of households without an active breadwinner has risen nearly 50 per cent to 420,000.

The assumption that economic growth would benefit every level of society has proved flawed. The poor and less well off have not only missed out, but piecemeal government relief measures have failed to make any sustained difference to their plight.

Chief executive-elect Leung Chun-ying, who has appointed a committee to prepare the way for revival of the commission on poverty, says the issue is to lift the incomes of the poor through welfare services. Members of the committee have foreshadowed initiatives, such as better retirement protection, expansion of eligibility for social security assistance, and dedicated health and education subsidies for low-income families.

Such ideas are bound to raise fears of welfarism instead of the self-reliance on which the city's success is founded, at the cost of inroads into the fiscal reserves that underpin economic stability. But they must be weighed against a rising tide of destabilising social discontent. The anti-poverty commission should consider how enhanced social security can be dovetailed with a living wage floor so that it does not remove the incentive to work.

Growing income disparity is a developed-world phenomenon. While Leung is right to try to help the poor, he should not overlook a growing middle underclass that is neither poor enough to qualify for help nor well-off enough to save for a home, and at least a degree of economic independence. In the long run, the most effective remedy for inequality, while maintaining our economic freedoms, lies in visionary housing, health, education and population policies.