WE HAVE HAD a lot of talk recently about Hong Kong's widening income gap and most of it immediately confuses wealth and income. Let's get it straight immediately, particularly for people such as Financial Secretary Antony Leung Kam-chung who cannot seem to make the distinction, that we may have a widening income gap but we have a narrowing wealth gap and the two are not the same. How a narrowing wealth gap? Simple. Just look at the record of property prices since mid-1997 and the performance of the stock market over that time. It is in Hong Kong property that most Hong Kong people have tied up their wealth and they are now poorer (or less wealthy if you want) than they were four years ago. Take note here that this attenuation of wealth has been proportionately greater for wealthier people although we shall shed no tears for the truly wealthy. They can easily take care of themselves. But the sandwich class, those people we could rank between levels of 50 to 80 on a wealth scale of zero to 100, have been badly struck and it is they on whom our prosperity and public revenues crucially depend. People in the levels between 10 and 50 on our scale have been little affected. They live in public housing, pay little if any tax and are given a wide range of essential services free of charge or heavily subsidised. Studies already indicate that many of them have more disposable income than the sandwich class. With so much done for them they have little need to save and they have suffered proportionately the least attenuation of wealth. So let us just drive that point home. The wealth gap has narrowed. Now to that income gap. Through something called the Gini co-efficient, the latest census shows that disparity in incomes has grown and, given the work that has gone into the census, we can accept these figures as read. Mr Leung may wish to scratch his head about the reasons for it but one clearly stands out. We are taking in 55,000 immigrants a year from across the border and surveys of them show that only 3 per cent have any tertiary education and 35 per cent of the men describe themselves as construction workers. Cities in any case have wider income disparities than the countryside and we can only make ours worse with this flood of unskilled labour. But it has another and even more pernicious effect on the income gap. It allows employers to keep wages down and cheat Hong Kong labourers of the fruits of their past efforts. Now you may say that our economic growth and competitiveness would suffer if wages went up but I, for one, do not buy the argument. In the first place, what is the point of economic growth if the people who generate it do not benefit from it? Second, wages kept artificially low prevent an economy from moving to the next stage of development. They give an illusion of competitiveness at the cost of undermining that economy's evolution later on. And third, if you think low wages are good for us then let us not hear a peep from you about how sad it is that income disparity has grown. So when Mr Leung recommends more training of unskilled workers as a way to fix the income gap he misses the point. All he will get is low paid skilled workers instead of low paid unskilled ones if he does not at the same time address that basic problem of too heavy a labour inflow. He also offered his usual evasive answer to such questions - it should be up to the community to decide whether to reduce the inflow. Please, Mr Leung, let the community indeed make that decision and those doors at the border would be slammed shut tomorrow.
