Sustainable Living Hong Kong

The Hong Kong government seems to become more and more confused by the day.

The Chief Executive has said that there is little the city can do to combat inflation because it is a global problem with global causes, and yet, almost within the same breath, Mr Donald Tsang promptly announced a series of anti-inflationary measures.

If he expected applause and an improvement in his rating, though, boy oh boy was he surprised: domestic helpers are up in arms against the suspension of the maids’ levy (because their wages have not been raised in line with inflation and the partial suspension has led to a number being immediately terminated by those keen to take advantage of the savings) and so are their employers (because the suspension only applies to new contracts).

The electricity charge subsidy has upset environmentalists and prompted low-income residents to ask, given that they pay landlords a flat fee that covers rent and utilities, how they stand to benefit from it. And as this ezine has pointed out (in a Chinese entry though), the textbook subsidy would only fuel inflation as publishers know the consumer will now be able to afford price increases.

But what about the HK$100 million earmarked for short-term food assistance services? Considering the sharp rise in food prices, surely this will benefit poor families? The trouble with this measure, though, is the fact that what Hong Kong is dealing with is structural poverty rather than a short-term issue with more expensive food. A recent study conducted by the Hong Kong Council of Social Service shows that the income of the poorest 50% of Hong Kongers makes up only 16% of the city’s total household income, even though the city’s GDP has been growing steadily.

Figures presented at the “Conference on Social Inequality and Social Mobility in Hong Kong”, which was held at the Chinese University of Hong Kong in March, show a worrying picture. Not only is Hong Kong’s Gini coefficient (an indicator of the wealth gap with 0 representing perfect equality and 1 representing total inequality) among the worst in the world (see chart presented by University of Science & Technology associate professor of social work Wu Xiaogang below), it has been steadily deteriorating, from 0.43 in 1971 to 0.476 in 1991 and then 0.533 in 2006, according to data provided by University of Hong Kong social work associate professor Ernest Chui.

Interestingly, the conference was co-organised by the government’s Central Policy Unit, so it can hardly be unaware of the problem. Do not expect long-term solutions anytime soon, however, because entrenched interests that hold so much sway in the corridors of power prefer the status quo. See, for example, what the chairman of the General Chamber of Commerce has to say about the minimum wage not being a good idea. And let’s not forget how income distribution has been distorted by the high land price policy.

Someone has described the anti-inflationary measures as the government handing out yet another round of sweets; in practice, it’s more like opening another can of worms, as the subsequent social agitation shows. The replacement of stop-gap measures with well thought-out policies is long overdue, but this requires a government with vision and intellectual vigour as well as the readiness to confront powerful lobbies. Do we have that in Hong Kong? Don’t hold your breath.