Unless you count yourself among Hong Kong's wealthiest citizens, it's likely that you fell behind economically in the last few years - and fell hard. Between 2005 and 2010, Hong Kong's gross domestic product grew by 26 per cent, and the top earners did well. The average household income of the top 10 per cent of the population increased by 21 per cent, to HK$104,900 a month, according to Hong Kong Census and Statistics Bureau. But incomes for the lowest-earning 10 per cent of households dropped by HK$100, to an average of HK$2,500 in 2010. And the 80 per cent of the population in between saw their incomes grow only marginally, well below the 14 per cent increase in the Consumer Price Index. 'There is hardly a middle class in the city at all,' said statistician Dr Paul Yip Siu-fai, a senior lecturer at the University of Hong Kong. A Hong Kong household earning HK$55,000 a month or above could be classified as middle class, Yip said. Yet only about 10 per cent of the 2.4 million households in the city earn that much, according to government figures (an average household has 3.2 persons). 'Our GDP increased by more than 25 per cent, but wages for most people, even the middle class, have not risen at all,' Yip said. 'And they are constantly living in fear that they may be out of a job any time.' Most Hong Kong people were not sharing the success of the city's economic growth, he added, but were instead continuously exploited by property developers and the very rich. The slide coincides with the term of Chief Executive Donald Tsang Yam-kuen, who took office in 2005. It explains why so many people in the middle class - the core of Hong Kong's social fabric traditionally regarded as apolitical - are today resentful and restless. Many believe Tsang's policies have overly favoured big business and created uneven growth, often at their expense. 'It seems that we have not gained anything from that economic growth, and there has not been a single government policy dedicated to our needs,' says Johnny So Chun-man of New Century Forum, a middle-class advocacy group. The middle class believed the government had done little to address their problems, So said: 'We pay taxes but we get nothing from the government. We have to take care of everything on our own - housing, education and medical care.' A family earning HK$55,000 a month hardly means a comfortable life in Hong Kong, one of the world's most expensive cities. According to the Hong Kong Monetary Authority, the income-gearing ratio (defined as the ratio of mortgage payments for a typical 540 sq ft flat to the median income of households living in private housing) reached 53 per cent in June this year, compared with 51 per cent six months earlier. That ratio, which indicates how much of one's income is spent on housing, is 'pushing toward [its] 1997 peak', the HKMA said. The government has imposed some measures to rein in rising property costs, such as raising the minimum down-payment requirement for some mortgages and conducting more public land sales. But these have proved no match against low interest rates and rising demand for real estate driven by inflation and a surge of buyers from the mainland, all of which have helped push prices higher. 'A decent apartment now costs about HK$5 million,' So said. 'If a buyer pays HK$1.5 million first and borrows the remaining HK$3.5 million, he has to repay the bank about HK$18,000 a month, even though interest rates are at record low levels.' The result: 'Most of our hard-earned money goes to property developers.' Soaring property prices affect many aspects of life beyond rents and mortgage payments. 'Many restaurants charge more only because of the rent,' Yip said. 'Their operators, in fact, are earning so much less every year that some are forced out of business.' Much of the city's retail sector felt similarly squeezed and was shifting their rental burden on to customers. Another looming problem for Hong Kong is a birth rate that ranks among the world's lowest, and a rapidly ageing population. In 2005, Donald Tsang raised the ire of many families when he suggested they have three children. 'Many of the middle class do not dare even have one child, let alone three,' So said. It doesn't help that schools fees are rising, he added. 'Many good schools have been turned into direct subsidy scheme schools, so together with other items like extra-curricular activities and private tutoring, the cost of raising a child can be HK$10,000 a month.' Many of Hong Kong's middle class climbed the social ladder by studying hard, believing education was the way to success. 'What many of us fear,' So said, 'is that even if we are willing to pay high school fees for our children, and they work hard after they graduate, they still may not be able to afford to live on their own. 'We have been brought up in an environment that is not afraid of hardship - an ethos of 'no pain, no gain'. But the reality that now confronts us is that we must run and run without seeing the light at the end of the tunnel.' A group concerned with the grassroots, the Society for Community Organisation (SoCO), agrees that Hong Kong's middle class is getting a raw deal. 'Rents are now so high. It's common for a middle class family to pay rent or mortgage payments of more than HK$10,000 a month,' said Ho Hei-wah, the group's director. 'A family with a child or two is left with very little disposable income.' 'The middle class must also shoulder most of their own medical expenses. How can they afford to queue up for public medical service? They simply do not have the time because their working hours are very long,' Ho added. The middle class isn't alone in being ignored by the government, Ho said. The government has also failed to help the poor - refusing, for example, to introduce one-off relief measures such as extra welfare payments and waiving public housing rent, Ho said. 'There are about 120,000 people falling into poverty now, compared to 115,000 in 2005 when Tsang came to office,' Ho said. In many countries, a family earning less than half the local median household income is regarded as poor. That threshold in Hong Kong is HK$9,500 a month. Of the city's 2.4 million households, about 430,000 families - or 1.4 million people - earn less than that. It was useless for the government and the welfare groups merely to say more effort should be made to narrow that the wealth gap, Ho said, when the reality was that there were more and more poor people in Hong Kong. SoCO estimates that about 100,000 Hongkongers live in cage homes or partitioned flats. A typical cubicle has no air-conditioning and is about 50 square feet, just enough space for a small bunk bed, a tiny desk and a small television. Another rising trend is the illegal conversion of disused industrial buildings into subdivided housing. These bare-bones spaces are cramped and unsafe, yet command rents as much, per square foot, as luxury housing. Rent for a typical bed space costs up to HK$93 a square foot, compared with HK$72 a square foot for a spacious four-bedroom luxury flat in Stanley. 'Many poor families have to pay a rent that is 30 or even 60 per cent of their income,' Ho said. 'It's insane.' 'There are about 152,000 families, or 320,000 people, waiting for public housing. But the average waiting time for families is three years. The 63,400 single applicants face a wait of 10 years or more.' In last year's policy address, Tsang established the HK$10 billion Community Care Fund, to be financed equally by the government and business sector in the hope of providing support for the needy in areas not covered by welfare. So far, only HK$680 million had been collected from businesses. In 2007's policy address, Tsang reduced the corporate tax rate to 16.5 per cent from 17.5 per cent, while the standard personal income tax rate also dropped from 16 per cent to 15 per cent. That reduced tax revenue by HK$5 billion a year. Despite the introduction of the city's first minimum wage - HK$28 an hour - in May, Ho said conditions haven't changed for the poor. 'The working poor remain very poor as inflation and rising rents erode their increased income,' In order to really help the middle class and poor, Yip and Ho said the government must create more job opportunities. Ho said the government's proposal for infrastructure development wouldn't help much, despite capital works for this year and next estimated to reach a record HK$58 billion. 'These projects don't really help the poor. Rather, they offer more investment opportunities for the rich and employment chances for professionals,' Ho said. 'Only housing construction will create jobs for relatively less skilled and educated workers. It can also solve the housing problem that haunts Hong Kong people.' Wang Guangya , the director the mainland's Hong Kong and Macau Affairs Office, highlighted the need to address Hong Kong's housing problem in June, warning it was an economic and livelihood issue that would become a political one if mishandled. In July, executive councillor Anthony Cheung Bing-leung said much the same thing, maintaining that Hong Kong's next chief executive would have to win back the hearts and minds of the middle class and grass roots. In an article in the South China Morning Post, he indirectly criticised Tsang, saying that whoever took his place would inherit a legacy of public cynicism and dissent. Yip said the government should carry out its plan to develop the six pillar industries it sees as vital to the city's development - testing and certification, medical services, innovation and technology, cultural and creative industries, environmental industries, and education. 'It's sad that in a wealthy place like Hong Kong, the lives of the poor and the middle class have not improved for many years,' Yip said. 'It is about time this government did something to redeem itself.' 36 The number of US-dollar billionaires in Hong Kong as of March 2011, according to Forbes magazine.