HK income gap 'widest among rich economies'

PUBLISHED : Friday, 23 October, 2009, 12:00am
UPDATED : Friday, 23 October, 2009, 12:00am

The income gap between the rich and poor in Hong Kong is the widest among the world's wealthiest economies, according to a UN report.

The report also shows that the richest 10 per cent in the city enjoy about a third of the total income, while the poorest 10 per cent share just 2 per cent.

The Human Development Report, released by the United Nations Development Programme on October 5, shows Hong Kong had a relatively high Gini index of 43.4 in 2007, the highest among 'very high human development' economies.

Hong Kong is closely followed by Singapore, at 42.5, the US, at 40.8, and South Korea, at 39.2.

The Gini coefficient is a widely used indicator of income inequality. The lower the measurement, the more equal the wealth distribution. A measurement of zero would indicate absolute equality and 100 would mean absolute inequality.

An economy is classified as 'very high human development' when people can expect to be better educated, live longer and earn more than their predecessors.

The mainland, which is grouped among economies of 'medium human development', has a Gini coefficient of 41.5, and India, in the same group, 36.8.

The Census and Statistics Department published a separate series of Gini coefficients two years ago, which showed an increase from 0.518 in 1996 to 0.525 in 2001 and a further increase to 0.533 in 2006. The department uses a scale of zero to one.

This local trend reflects an increasing household income disparity over the period. A Labour and Welfare Bureau spokeswoman said the disparity was a result of the transition of the city towards a knowledge-based economy.

'The increase in the demand for people with higher qualifications and professional, technical or management skills has helped widen the income of different types of employees,' she said.

Chief Executive Donald Tsang Yam-kuen has said that only households earning less than what they would receive in welfare payments could be considered poor. This means a four-member household would have to earn less than HK$9,920 to qualify as 'poor'.

Cuo Hong-si, who came to Hong Kong with four relatives from the mainland three years ago, feels his situation has deteriorated.

'I earned about HK$5,000 for my first job here and I am now earning HK$5,500,' he said. 'But prices have increased much more.'

Cuo said he and his wife had to work long hours just to make ends meet. Although they had a combined income of about HK$11,000, he said they had no time or spare income for leisure.

Professor Wong Hung of Chinese University said income disparity had worsened since 1981.

'Poor people are not benefiting from the economic growth,' he said.

Wong cautioned that if inequality continued to grow, society would become unstable.

Ho Hei-wah, director of the Society for Community Organisation, said the UN report had demonstrated that the government's policy of emphasising economic growth over supporting the poor was wrong.

Hong Kong Council of Social Services business director Chua Hoi-wai said the income gap was widening because the government's economic policy was slanted towards certain businesses or industries.

Those without the skills for those activities could not benefit from the growth. The high cost of land was another factor, he said.

'As rental costs increase, companies have to squeeze staff costs to stay competitive,' Chua said. As a result, workers' wages had stagnated and in some cases fallen, he said.