To have and have not

Two starkly different economic stories have been unfolding in Hong Kong in recent months. One is optimistic - stocks are up, property prices are rising and the economy is growing briskly. The other is the plight of Hong Kong's poor. Charities report children scavenging through rubbish bins for newspaper or cardboard to sell for a few dollars to supplement their parents' meagre income. And the number of people that used Hong Kong's first city-wide winter food handouts in 50 years way exceeded expectations. Desperation is found in estates such as the one in Tin Shui Wai where the bodies of Kam Shuk-ying and her five- and six-year-old daughters were found last Sunday after being chopped to death. While the circumstances of the deaths of Lee Yin-li and Lee Tsz-wan are still being investigated by the police, it can safely been said that they did not come from money. It came as no surprise when official figures revealed last week that the poorer the district you live in as a woman and mother, the more likely you are to be the victim of domestic violence. Although Hong Kong is one of the world's richest cities, the gap between rich and poor is huge. Almost a quarter of households earn less than $8,000 a month. Compare that with Li Ka-shing's right-hand man Canning Fok Kin-ning, Hutchison Whampoa group managing director, who made $125.28 million last year. For almost a quarter of Hong Kong's households it would take at least 31/2 years to earn what Mr Fok takes home in a day. Hong Kong has the highest level of inequality in the developed world with a Gini coefficient of 0.525 - zero represents perfect equality and one represents complete inequality on this internationally recognised wealth-poverty scale. By comparison, Britain's is only 0.36, which is one of the highest in Western Europe. In rich Western economies most of the poor are unemployed and claim social security. But in Hong Kong, with no minimum wage and low welfare benefits, most of the poor work long hours and live in extremely cramped conditions. Take 49-year-old widow Mrs Chan (who declined to give her real name). She lives in a 360-square-foot flat on a public housing estate in Wong Tai Sin with her three daughters, aged 19 to 23. Until recently Mrs Chan worked as a cleaner at a nearby estate. The job was seven days a week from 7.30am to 5pm for only $3,900 a month. Every day she cleaned floors and windows and removed rubbish from the estate, which often included taking away heavy items such as old furniture. Eventually the workload took its toll and Mrs Chan quit, suffering leg pains. 'There were no rest days except for Lunar New Year,' Mrs Chan said. 'The work was too heavy for me so I quit.' Compare this with Britain, which has a similar income per head to Hong Kong. With Britain's minimum wage, working 160 hours a month - much less than Mrs Chan's hours - would have paid GBP720 (about HK$10,000), more than double her salary. Mrs Chan and her family now live on the combined income of $9,100 from two daughters working as sales assistants. Mrs Chan's experience of low-paid work is by no means unique. Chinese University of Hong Kong assistant professor Wong Hung set a poverty line of HK$3,750 per person a month in a landmark survey of more than 3,000 low-income households. Of the more than 2,000 households in Professor Wong's study which fell below his poverty line, only a quarter had nobody in work. In Britain, 59 per cent of poor households have nobody in work based on a poverty line of 60 per cent of median household income. Furthermore, in Hong Kong nearly 60 per cent of Professor Wong's poor households claimed no social security benefits from the government. So why does a rich city such as Hong Kong have so many people working long hours for low wages to survive? First, welfare benefits are low as Hong Kong's government prides itself on having a small role in the economy. If Mrs Chan and her three daughters were all out of work they would receive welfare of HK$4,830 a month through the Comprehensive Social Security Assistance (CSSA) scheme on top of housing costs - about half of what they would get in Britain. 'The benefits only keep people alive - it cannot help them to find a job, to do anything,' said Sze Lai-shan, community organiser with the charity Society for Community Organisation. But low benefits are not the only problem. Many of Hong Kong's poor view living on state benefits as demeaning and do not claim. Mrs Chan's family earnings are only slightly higher than the amount she would be entitled to under the Hong Kong benefits scheme if nobody in her household was working. Yet Mrs Chan refuses to even inquire about claiming welfare. She believes that if you are fit enough to work you should not live off the state - a view reinforced by peer pressure. 'I don't want to apply [for welfare benefits] because the children have already grown up and they have their jobs,' said Mrs Chan. 'If you claim benefits the neighbours will discriminate against you - the neighbours will look down on you.' Many Hong Kong people share Mrs Chan's reluctance to claim benefits. Hong Kong has 245,000 unemployed but only a fifth claim social security. 'In Hong Kong it is not the culture of dependency - it is the culture of independence,' Professor Wong said. Part of this comes about through Hong Kong's promotion of free markets and a Chinese belief in self-reliance. Oxfam executive director Chong Chan-yau said: 'There is a whole background of unquestioned commitment to free markets and to the Chinese ethic of basically you work for yourself. It's a very strange brand of the two.' People's reluctance to claim benefits is reinforced by the government, which is struggling to reduce the budget deficit. 'The government makes sure that these traditional attitudes against ... a public-sector safety net persist,' Mr Chong said. Earlier this year Rachel Cartland, assistant director of the Social Welfare Department, said benefits could be cut another 3 per cent. 'If we compare [benefits] with the average wage of low-skilled workers, it is not unreasonable,' she said. But social welfare experts say the government does not account for employers further cutting wages for unskilled workers in response to lower benefits, leading to a vicious downward spiral. 'This is a trick the government is playing right now. It has been telling the people in Hong Kong - look, CSSA benefits are getting too generous compared to low wages,' said Fernando Cheung, a lecturer in applied social studies at the Hong Kong Polytechnic University. 'Then they say, wages are still too high compared to people in China, we are losing jobs to them, our competitiveness is hurt ... so they took a bite on it and then they say CSSA is now too high.' Professor Wong claims the government's consumer price index overstates decreases in the cost of goods bought by the poor. 'That kind of price index does not really reflect [social security] recipients' purchasing power. It is not fair.' THE WIDENING GAP Among the world's wealthiest economies, Hong Kong has the biggest gap between rich and poor More than 500,000 households earn less than $8,000 a month Only a fifth of Hong Kong's 245,000 unemployed claim welfare The number of households earning less than $4,000 a month has risen almost a quarter since 1999 to almost 200,000 A family of four unemployed adults can receive $4,830 in benefits on top of housing costs, about half UK levels in Hong Kong dollar terms