Warning as income gap widens

PUBLISHED : Tuesday, 19 June, 2007, 12:00am
UPDATED : Tuesday, 19 June, 2007, 12:00am

Census shows rich-poor divide growing; expert says it will worsen if officials don't act

Hong Kong's widening income gap was brought into sharp focus yesterday by new government figures showing the number of households earning HK$4,000 a month or less has swelled by 80,000 in the past decade, while those on more than HK$40,000 have increased by 100,000.

Further illustration was given by the latest Gini coefficient - a measure in which 0 is perfect equality and 1 is total inequality - which has risen from 0.518 to 0.533 in the same period and remains among the highest in the developed world.

An academic warned that the polarisation would worsen if the government did not change its policies.

But the government rejected suggestions that Hong Kong had become an 'M-shaped society' in which the middle class is gradually absorbed by the upper and lower groups.

The report on household income distribution from the Census and Statistics Department showed the number of individuals who earned less than HK$4,000 increased from 9.9 per cent of the working population to 11.7 per cent last year. Those earning more than HK$15,000 per month rose from 25.8 per cent of the working population to 31.5 per cent.

'The government should be careful in dealing with this. If they don't do anything then Hong Kong could well turn into an M-shaped society,' said Wong Hung, an assistant professor in the Chinese University's social work department.

But Commissioner for Census and Statistics Fung Hing-wang said the disparity could be due to Hong Kong's service industry-driven economy, which employed highly skilled workers, and increases in the number of elderly person households and those with more than one income.

Mr Fung acknowledged that the Gini coefficient was higher in Hong Kong than other places such as Canada and Britain, where the gap has closed during the decade.

'Income disparity in Hong Kong tends to be greater than in those places with a preponderance of manufacturing and agricultural activities,' he said. 'Moreover, there is a common trend towards greater income disparity in many economies. Hong Kong is not unique in moving in this direction.'

Dividing the population into 10 income groups, the figures showed that the median income of the bottom two groups dropped 12.5 per cent from HK$4,000 a decade ago to HK$3,500, while the median income of the top two rose 20 per cent from HK$25,000 to HK$30,000.

Figures showed 9.2 per cent of all households - or 205,515 - earned less than HK$4,000 a month, up from 6.7 per cent a decade ago. In the same period, the percentage of households with a monthly income of more than HK$40,000 rose 2 percentage points, to 17 per cent last year, or 378,473 households.

After government redistribution of income through taxes, and social benefits through housing, health care and education, the Gini coefficient was 0.475, compared with 0.466 in 1996.

Principal government economist Cheung Hok-ying said this showed government measures were working in redistributing income.

The latest figures show the income gap between men and women has also widened. In 2006, the median income of men was HK$10,000, 25 per cent more than women. Last year, the gap widened to 30 per cent, with men's median income standing at HK$11,000 and women's HK$8,500.