SCMP Friday, March 9, 2001


Low-earners feel the disadvantage of prudence

ANALYSIS by FERNANDO CHEUNG CHIU-HUNG

As expected, Mr Tsang delivered his most conservative Budget speech in wrapping up his prudent career as Financial Secretary.
Prudent, maybe, if you are part of the establishment. But if you belong to the lowest 20 per cent income group, you may not find his prudence useful. According to Mr Tsang, there is a fairly good chance (40 per cent) that you will stay in your low-income group for another 10 years. Although he recognised the problem of the widening income gap, he brushed it off as a necessary and common trend among developed and developing countries. His measures for helping the disadvantaged groups have little to do with poverty reduction.
Mr Tsang's welcome gestures include increased residential care and other support for the disabled and a small increase in funding for adult education.
While these are necessary steps to begin to catch up with the growing needs of the disadvantaged, they are far from sufficient. In order to address the growing income gap, negative income tax must be considered. In fact, negative income tax and a minimum wage together have been proven as the most effective measures in poverty reduction overseas. Even Premier Zhu Rongji, delivering China's 10th Five-Year Plan, spoke of the need to improve the social security system and to redistribute wealth through various types of social insurance and by setting up a minimum wage policy.
Inequality in Hong Kong has reached a dangerously high point. Our income gap is worse than that of China and many developing countries, not to mention the developed nations. With rapid globalisation and China entering the World Trade Organisation, local low-income workers will find themselves in a more disadvantaged position. If our political leaders choose to ignore them continuously, they should not be surprised to find a society that is highly fragmented with anger breaking out everywhere.
Dr Fernando Cheung Chiu-hung is a lecturer in the department of applied social studies at Polytechnic University.