Trickle-down effect: mere drops in ocean of poverty

PUBLISHED : Saturday, 30 June, 2012, 12:00am
UPDATED : Saturday, 30 June, 2012, 12:00am

Donald Tsang Yam-kuen's inability to tackle poverty and revamp the welfare system during his seven years as chief executive are the main reasons for the city's widening income gap, according to his critics.

Tsang admitted as much two weeks ago, during his final question and answer session in Legco, when he finally acknowledged that his belief in the benefits of the trickle-down effect might not work in reality.

'I used to believe that different social stratums could enjoy the fruits of economic development as a result of the trickle-down effect. However, there were discrepancies between the theory and reality,' Tsang told lawmakers.

For some social workers, his realisation has come far too late, and is of little use to the disadvantaged.

'I repeatedly told him over the years that the trickle-down effect does not work. It was too late for him to admit the problem,' said Nelson Chow Wing-sun, a social work and social administration professor at the University of Hong Kong.

'His misjudgment is probably the main reason for the widening income inequality.

'Many Hong Kong people cannot earn more pay and a better position solely by relying on their own efforts. Public discontent is rampant... but he did not understand why.'

The gap between rich and poor in Hong Kong, as measured by the Gini coefficient, is now at its widest for the past four decades.

The coefficient - a scale from 0 to 1 on which higher scores indicate greater income inequality - has hit 0.537 based on income data from last year, up from 0.534 five years ago. It was 0.43 in 1971.

Government statistics released earlier this month showed that the median monthly income for the city's poorest 10 per cent, including those who receive social security assistance, dropped from HK$2,250 in 2006 to HK$2,070 last year.

Without a proper retirement protection system, Chow said the poorest 10 per cent was mainly the elderly.

Another problem, Chow added, was that Tsang preferred one-off relief measures rather than boosting recurrent expenditure on welfare.

Despite the handout of HK$200 billion in sweeteners over the past seven years, the Hong Kong Council of Social Service found that the poor population reached more than 1.2 million last year, up 61,500 from 2005, when Tsang took over from Tung Chee-hwa.

The council defined the poor as those who live on up to half the median income of the city's households.

Dr Law Chi-kwong, associate professor of the University of Hong Kong's department of social work and social administration, said while the development of the knowledge-based economy also had played a part in the widening gap, the government could have done more to ease the problem.

'The trickle-down effect in which Tsang used to put his faith is ridiculous. The retirees definitely cannot benefit,' he said. 'The less competitive people, like low-educated, low-skilled or older workers, might also see their pay drop.

'As a leader, it was too late for him to wait until he was leaving to admit his fault. But it would have been more of a pity if he had not admitted his mistake.'

But Law said the minimum wage introduced in May last year had helped narrow the income gap.

Social welfare-sector lawmaker Peter Cheung Kwok-che said: 'It dragged its heels over the legislation of the minimum wage. It was forced to legislate only after the two-year voluntary wage protection movement for employees in the cleaning and guarding services sectors received a lukewarm response from companies.

'The welfare system has basically remained unchanged. Tsang didn't seem care over the past few years. As our chief executive, he should not have overlooked the income disparity problem.'

In June 2007, Tsang's government also disbanded the Commission on Poverty - initiated in January 2005 by Tung.

'Had it continued to run, it might have been able to work on more poverty-alleviation projects,' Cheung said. On the Community Care Fund, launched in October 2010, Cheung, who sits as a steering committee member, said it focused on piecemeal measures.

The fund, with the government injecting HK$5 billion and donors supposedly financing another HK$5 billion, has managed to receive just HK$780 million in donations, government figures show.


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