The wealth gap can't be ignored any longer

PUBLISHED : Saturday, 28 April, 2007, 12:00am
UPDATED : Saturday, 28 April, 2007, 12:00am

Ten years after the handover, Hong Kong's lower-paid workers have little to celebrate. A trade union's study of official wage statistics shows that many are worse off than in previous years. Workers in 20 occupations earned less last year than in 1997. They are the losers in a free labour market unregulated by a minimum wage.

The question whether there should be a wage floor continues to divide opinion. These figures will sharpen the argument. The debate should take account of whether the growing economic disparity is in the best interests of society. Doing nothing or little to address the wealth gap will not advance the objective of social harmony.

The case for an unregulated, flexible labour market remains fashionable in a world obsessed with productivity and competitiveness. It becomes socially contentious, however, when the wealth that is generated is not shared fairly. The government is rightly protective of Hong Kong's good name as one of the world's freest economies. Officials have long argued that a minimum wage would be counterproductive because it would sacrifice labour-market flexibility, inhibit growth and lead to job losses for the low-skilled.

The Federation of Trade Unions has seized on the figures to support its call for a minimum wage. However, the economic arguments for it remain dubious. There seems little doubt it would result in some who are prepared to accept very low wages being unable to find any work at all.

Socially and politically, the argument for a minimum wage is difficult to resist. Even though Hong Kong has a welfare regime that ensures no one goes without food or shelter, it is distressing to see some members of our society not being able to make ends meet with the meagre pay they get after a hard day's work. As Hong Kong goes down the path of electoral democracy, it also will be only a matter of time before politicians will fall for a minimum wage as a

vote-grabbing measure.

Indeed, despite the sound economic arguments against it, a consensus in favour of a minimum wage on social and political grounds is growing. After all, many other countries in different stages of economic development have such legislation, including the mainland.

The business community is right to argue that there are other means of helping the poor and unskilled without forcing employers to pay higher wage bills that would undermine competitiveness. But in the current social and political environment, they will have to go one step further in making their case.

If a minimum wage is not the best way, perhaps we should be looking at other approaches such as boosting education and training to lift the earning power of the low-skilled, underpinned by a pay market that dovetails with welfare assistance. It must be structured to encourage people to work rather than depend on welfare payments indefinitely. The issue requires further research and debate, not least to reassure those who are fearful of the consequences of tinkering with a recipe for economic success that has stood the test of time.

Hong Kong's growing disparity of wealth is untenable if we are serious about maintaining a harmonious, compassionate society. Tackling the wealth gap one way or the other cannot be put off much longer. The buying power of workers whose wages have not kept up is now so much less than before that we must do something to help.