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One-fifth in H.K. ‘living in poverty’

Bloomberg

A fifth of Hong Kong’s population is living in poverty, underscoring the challenge Chief Executive Leung Chun-ying faces in seeking to narrow a record wealth gap.

About 1.3 million people, or 19.6 percent of the population, were below the poverty line last year, according to a report released Saturday. The benchmark, determined for the first time, was set at half of the city’s median household income, excluding the impact of tax and welfare transfers, the report said.

The report, commissioned by Leung, may give him the backing to ask for more spending and overcome objections to further increases to the minimum wage. Tens of thousands of people protested on July 1, the anniversary of Hong Kong’s return to China, demanding the government address the inequality between rich and poor, which has been exacerbated by the doubling of home prices since early 2009.

“Having an official indicator will help the government define its social welfare policies and will also raise public expectations for something to be done,” Chung Kim-wah, an assistant professor at The Hong Kong Polytechnic University, said by phone Friday. “It’ll put a certain pressure on the administration.”

Hong Kong’s Gini coefficient, a measure of income inequality, rose to 0.537 in 2011 from 0.525 in 2001, the government said last June. The score, a high for the city since records began in 1971, is above the 0.4 level used by analysts as a gauge of the potential for social unrest.

“To alleviate poverty, the government must promote balanced economic development,” Leung said Saturday at a summit. “Poverty is not only an issue of the low-income population’s hardship, but it also affects Hong Kong’s harmony and stability, thus affecting its long-term competitiveness,” he said.

If accounting for recurring cash benefits, the poverty number falls to 1 million, or 15.2 percent, the report said. To lift all of these people up to the poverty line will require 14.8 billion Hong Kong dollars ($1.9 billion), Chief Secretary Carrie Lam said.

“We don’t take the view that alleviating poverty means to narrow the wealth gap,” Lam said at a press conference Saturday. “There may not be a lot of support for Hong Kong, a capitalist society and a free-market, service economy, to go down that path, a more socialist route. The point is to create upward mobility.”

Labor unrest and protests have grown in the past two years as inflation and home prices soared. The average gross household income of the poorest 10 percent of the populace fell 16 percent to HK$2,170 a month ($280) in 2011 from 10 years earlier, according to a government report. The comparable income of the richest 10 percent jumped to HK$137,480 ($17,728) a month, up 12 percent.