Wealth gap will break Hong Kong if we don't change the economic order
Paul Yip says an economic system that enriches the rich and impoverishes the poor, as Hong Kong seems to have, will one day tear apart our social fabric if we do nothing to change it
In his book, Capital in the Twenty-First Century, French economist Thomas Piketty suggests that in a capitalist system, the rate of return on capital is often greater than the rate of economic growth, and therefore those with wealth do much better than those who live on their salaries alone. Despite some queries raised recently about the data used, the observation seems applicable to Hong Kong.
In the past decade, Hong Kong's gross domestic product has grown by about 50 per cent, but median household income has risen by only about 10 per cent. Those who own property have done much better than those who do not. However, the proportion of home ownership here has remained at 50 per cent in the past decade.
The implementation of a minimum wage has helped to narrow the income gap; however, the recent proposed wage rise for civil servants would only see the rich-poor gap widen again; those in the high-income group would get a 5.96 per cent rise; those on low incomes have been offered only 3.8 per cent.
Hong Kong's high Gini coefficient, already comparable to some developing economies in Africa and South America, looks set to remain high. A report by the Credit Suisse Research Institute showed that in Hong Kong, the assets of a few tycoons account for 60 per cent of our wealth, while 30 per cent of households have assets of less than HK$80,000.
Our poverty study shows that the expenditure of the bottom 30 per cent of households exceeds their income. Those living in public housing do feel slightly better off as they are protected from private rental costs.