SCMP Wednesday, August 29, 2001

Wealth gap 'widest in the developed world'


The gap between rich and poor in Hong Kong has almost doubled in the past decade and is now the largest among the developed nations of the world, according to a union survey released yesterday.
The territory's wealthiest people now earn 20 times more than the poorest. Ten years ago, the richest earned 11 times as much, figures produced by the Confederation of Trade Unions revealed.
Legislator Lee Cheuk-yan said the monthly per-capita income among the lowest-earning 10 per cent of households was $1,400 last year, compared with $27,800 in the top-earning 10 per cent. The findings were drawn from the Government's own census statistics, he said.
In 1991, the lowest earners had a per-capita income of $1,100 while the highest earners received $12,300.
Citing the United Nations Human Development Report 2001, Mr Lee said the richest 10 per cent of the population took one third of the total income, while the poorest 10 per cent had only one per cent.
He said the gap in the SAR was now worse than in Chile and Costa Rica. Mr Lee said the disparity was intolerable and warned that society would be on the verge of disintegrating if the trend continued.
"Hong Kong has the largest income disparity between the rich and poor among the developed nations in the world.
"If the Government insists on raising revenue through sales tax, the widening gap will eventually split society," he said.
Mr Lee urged the Government to put forward measures to stimulate the economy and to give priority to protecting the incomes of grassroots earners.
He proposed the concept of a low-income working family tax credit, similar to negative tax, to subsidise the lower class if their income fell below a certain level.
However, Professor Ho Lok-sang, of the Economics Department of Lingnan University, said the idea of negative tax did not provide an incentive for people to work.
"The most urgent measure the Government should adopt is to create more employment opportunities and provide adequate social welfare services to those in need," he said.
Professor Ho said the income disparity figure failed to reveal the real individual situation as it did not take into account asset devaluation. He said the widening income gap was a "natural phenomenon" given the global economic downturn.
"There are people who have the skills and make use of the opportunities brought about by the rise of a knowledge-based economy. Their income will keep rising given the strong market demand for their skills.
"But there are increasingly more people who lack the skills and their career choices are very limited. Yet they have to compete for the low-income jobs," he said.
According to the latest comprehensive household survey, released yesterday by the Government, there were 318,000 people earning less than $4,000 a month in the second quarter of this year.
This represents 7.9 per cent of the total working population, one per cent more than the same period last year. Yet there were 339,000 people earning more than $30,000 per month, representing 10.3 per cent of the total population.
The working population was 3.28 million in the second quarter of the year, about 80,000 more than in the same period last year.