Tuesday, June 19, 2012

Hong Kong, Put a Lid on This Gini

The South China Morning Post has reported this morning that Hong Kong’s Gini co-efficient (the scale between 0 to 1 that measures wealth inequality, with higher numbers denoting wider gaps) has continued to climb inexorably. In 2011, it reached 0.537, versus 0.533 five years ago, and 0.451 in 1981. Hong Kong’s figure is among the highest in the developed world – Singapore is at 0.482 and the US (which is also considered high) is at 0.469. Any number above 0.50 should set policy alarm bells ringing. More middle-class oriented countries such as Korea, Japan and Western Europe tend to have Gini figures in the high 0.30s or low 0.40s.

To make matters worse, the Census department statistics showed that the median monthly income for the city’s poorest actually dropped over the past five years, from US$290 per month to US$266 per month for the bottom 10%. Meanwhile, the median monthly income for the city’s top 10% during that period rose, from US$9,800 per month to US$12,211.  Given the rise in inflation due to imported fuel costs, exorbitant rents and general commodity prices, the economic hardships facing those in the bottom bracket is almost unimaginable.

The city has over 1 million people (or 14%, according to Oxfam) living in poverty as well as a disproportionately high number of Forbes’ Asian billionaires (38 of them, or 14%). It has the world’s highest retail and residential rents as measured on a per-square-foot basis. It has Rolls Royce dealerships doing business across the street from urban squalor.  It has tax policies that benefit the wealthy – a maximum personal income tax of 15%, no capital gains tax and relatively absent luxury tax. It did not have minimum wage legislation until 2011. These are facts and statistics more associated with third-world countries, not advanced nations.

The Chief Executive-elect CY Leung has highlighted anti-poverty measures as a key focus for his administration. Let’s hope that he’s got real ideas and resolve to create a more sustainable social welfare model, rather than simply a lamp that he rubs to make a wish come true.

No comments:

Post a Comment