Look beyond pay to reduce inequality

PUBLISHED : Sunday, 06 June, 2010, 12:00am
UPDATED : Sunday, 06 June, 2010, 12:00am

The level of the minimum wage is important, but more as a matter of human dignity than as a key means of reducing the shocking level of income inequality. In most circumstances, if employers cannot afford to pay more than HK$30 an hour they should not be hiring - just as households on modest incomes should not be allowed to hire foreign maids and pay them half the legal level.

Equally, it is obvious that the income needs of, say, a married person with two children are different from those of one approaching retirement who is more concerned with keeping busy.

So let us look at means other than a minimum wage to reduce inequality. In no particular order of importance:

Address the issue of the 150-a-day new one-way permit holders. These are mostly unskilled and contribute to the social problems in remote estates. The Basic Law gives the mainland the power to determine the number entering for permanent settlement, but 'after consulting with' the Hong Kong government. How much consulting has there been over the number and identity of these settlers? Why not insist that the mainland apply some qualification hurdle, as do mainland cities? And maybe include mainland wives, enabling them to stay permanently without increasing the total flow? Failure to do anything on this front is yet another example of the slovenly attitudes of job-for-life senior civil servants.

Drastically raise direct payments for children - not tax allowances which go to those who least need them. The extraordinarily low, socially undesirable birth rate is the result of the very high direct and opportunity costs of having children. It also condemns low-income, single wage-earner families to poverty levels that create social problems which defy solutions.

Spend much more on child-care facilities so that both parents can work, thereby enhancing the income of low-wage earners. The net cost will be nil as social welfare payments will be correspondingly reduced.

Reverse the idiocy of semi-privatising the MTR Corporation and use its profits on property development to subsidise public rail transport. If the usual vested interests in the Legislative Council and the bureaucracy prevent that, use government funds at least to subsidise routes (not individuals) to remote destinations far from work where the government likes to dump so many low-income households.

Recognise the responsibility of government in using policy to help create the 'harmonious society' it pretends to want. That means not always putting land revenue considerations and the interests of property tycoons and approved monopolists first. Focus urban redevelopment on improving conditions for existing occupants, including those in 'cage homes', and use urban land close to jobs for public housing.

Stop pretending that, as a matter of culture, Chinese families always look after the older generation. In many cases this is simply not true, or offspring have emigrated or divorced, or because accommodation is, thanks to official policies, so expensive that there is no space for grandparents. In future, family self-support is likely to be further reduced because the percentage of old people will rise dramatically.

Look around the world at harmonious small societies and you will find them characterised by high levels of transfer spending to reduce income inequality but low levels of government interference in commercial activities, other than to prevent monopolies and protect the environment. And modest salaries for civil servants.

Contrast that with Hong Kong's spending on tiny amounts of transfers but owning ever larger chunks of the economy and pouring billions into projects such as the high-speed railway and Macau bridge with no commercial justification and benefit to only a small number of citizens - and those mostly from the higher-income groups.

Philip Bowring is a Hong Kong-based journalist and commentator