Letters | Billions for big business but freeze in minimum wage: why Hong Kong is caught in an inequality trap
The city needs to forge a new social consensus – something this government seems incapable of doing. It needs to start by challenging the domestic philosophy that vilifies those in poverty and attributes their condition to personal failure
Inequality is a major fault line in Hong Kong, with adverse social, political and economic ramifications. With a growing number of people below the poverty line, the need for a stronger, fairer welfare system cannot be ignored. Poverty has always been viewed as a by-product of free-market capitalism, but Hong Kong desperately needs to re-evaluate the balance between economic growth, taxation, social needs and welfare.
With public trust in the government at rock bottom, Chief Executive Carrie Lam Cheng Yuet-ngor could have highlighted in her policy address that people’s needs matter to those ostensibly representing them. With healthy fiscal reserves and regular budgetary surpluses in previous decades, the government could have proposed policies to reduce inequality. Instead, it made things worse by parsimoniously freezing the minimum wage.
Hong Kong’s faulty philosophy has always patronised big businesses in the garb of a free-market economy. With neither the Basic Law nor the structure of the city’s fiscal system advocating wealth redistribution, government revenues have always heavily depended on land sales, thus incentivising bureaucrats to constrain supply and maintain high property prices. Rich tycoons and business leaders have always called the shots while the vulnerable sections of society have no advocacy.
Our city needs a new social contract and the forging of a social consensus – something the current government seems pathologically incapable of accomplishing. Hong Kong needs to start by challenging the domestic philosophy that, instead of supporting the weak, has always vilified those in poverty and attributed their condition to personal failure.
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The Comprehensive Social Security Assistance (CSSA) scheme is intended to supplement income for the poor. However, despite awareness of issues such as single parents, the elderly and the unemployed, the CSSA’s means- and asset-tested structure excludes way too many. The amount disbursed under the CSSA is negligible, too. The pandemic brought some extra financial assistance, but this was dispensed through employers, some of whom absorbed a significant portion of the aid.
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Jobless struggle to make ends meet in Hong Kong as city battles coronavirus and recession
Jobless struggle to make ends meet in Hong Kong as city battles coronavirus and recession
Hong Kong is caught in an inequality trap where yawning disparity and the lack of wealth redistribution make setting up socially beneficial programmes increasingly difficult. Among other things, Hong Kong needs to start by broadening its revenue base through policies such as taxes on capital gains and dividends and looking at possibilities such as a wealth tax and progressive goods and services tax.
