Tuesday, 03 Jul 2012
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Hong Kong Economy: Hong Kong’s Widening Wealth Gap – June 2012
British Embassy Consulate General Hong Kong
The government’s latest study (released 18th June) on Hong Kong’s household income distribution shows that Hong Kong’s Gini coefficient rose from 0.533 in 2006 to 0.537 in 2011. On this measure, Hong Kong’s wealth gap has reached its widest since 1997 and is the highest amongst developed Asian economies (Singapore 0.482, Australia 0.428, UK 0.52, US 0.469). Commentators are looking to the new administration of CE-elect CY Leung to reverse this trend.
In the five year period between 2006 and 2011, median income for low income families increased to HK$7,000 a month last year from HK$5,500; whilst the high income earner’s income surged to more than HK$100,000 a month in 2011 from HK$82,500.
The government has pointed to socio-economic and demographic changes, in particular ageing population, as the key drivers for the increasing disparity. They argue, however, that the implementation of the minimum wage legislation and various government policies in the areas of housing, healthcare, education and social welfare has helped mitigate the problem. The government has said it will continue to assist low income groups in order to raise the overall living standards of the poor (including the working poor).
On the same day as these numbers were published, Mr Leung named new members for the new Poverty Commission’s preparatory task force. The task force will advise Leung on the functions of the new commission and member appointments. Mr Leung says that one of the priorities of his administration will be to create more job opportunities for the poor and increase their income.
The out-going administration has been accused of failing to address social issues. While social inequality is a problem arising in many developed countries, the present administration has been criticised for failing to put in place long term policies to address social issues such as housing and education, instead focusing on short-term handouts at successive budgets. With the new inequality numbers coming out, departing Chief Executive Donald Tsang admitted that he had failed to address the problem properly, saying “theory and practice were not the same”, and such problems were not easily resolved.
Mr Leung, for his part, has said that his main focus will be “not so much about the wealth gap” but on “the absolute income and living condition”. Under his administration we are more likely to see a focus on incremental increases to the minimum wage and other measures to help the working poor.
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