By Tan Ee Lyn
Mon Feb 20, 10:44 PM ET
Taken from:
http://news.yahoo.com/s/nm/20060221/bs_nm/economy_hongkong_inequality_dcHONG KONG (Reuters) - Hong Kong's economy might have grown by an estimated 7 percent last year and outshone many others in the region, but for insurance agent Ngai Wai-wang, that is immaterial.
Ever since the Asian economic crisis of 1997, his earnings have fallen sharply and he can only afford to eat out with his wife and two sons once a week. Exotic vacations are now just a memory in their photograph albums.
"We choose cheaper destinations in Asia now, like Thailand. My mortgage eats away half my salary, and my two sons, 12 and 14, are growing up and they need more money," said Ngai, 51.
Ngai takes home around HK$50,000 (US$6,400) a month and is a middle-income earner in Hong Kong. Unlike 40 percent of wage earners in this city who pay no income tax, he pays taxes but has not seen his wages rise appreciably since the late 1990s.
"I don't see any improvement in our lives. We have few benefits and we are taxed very heavily. The recovery is superficial and due to more Chinese tourists arriving. That's good for the retail sector. But no one else benefits," he said.
"If the economy was benefiting us, we would spend lavishly like before, but we count every penny now. The government should cut taxes. That way we consume more and that's good for society."
Hong Kong is set to announce a second straight budget surplus for the 2005/06 fiscal year on Wednesday, thanks to strong economic growth and higher asset prices.
NO RELIEF FOR THE POOR
But economists, unionists and social workers say Hong Kong's economic recovery has benefited only the rich.
Hong Kong's overall jobless rate has dropped to a four-year low of 5.2 percent, but unemployment among low-skilled workers is on the rise as manufacturers move to cheaper offshore locations, such as the Chinese mainland.
At the same time, immigration of unskilled workers from the mainland is growing, keeping a lid on wages for the poor.
Even the middle class is not exempt from feeling the pinch, as unrelenting rises in interest rates over the past year have inflated mortgages.
Lee Fong goes to the market just before it shuts for the day so that she can get discounts on whatever is left. Living in a tiny rented room with her teenage daughter, the new immigrants from mainland China get by with help from a charity.
"Every few weeks, we get free rice, oil and other provisions. Otherwise we won't be able to survive," said Lee, who gets HK$4,000 a month for doing odd jobs at a jewelry store.
Lee is a constant reminder of a worsening income disparity in this former British colony, which returned to Chinese rule in 1997. For all its gleaming skyscrapers, world famous restaurants and swanky retail outlets, one in four children live in poverty.
Christine Fang of the Hong Kong Council of Social Service said social welfare and services, which were cut in recent years because of the economic downturn, should be reinstated.
"We have a section of society scrambling around to make ends meet. These people do not see an improved economy helping them ... If we have more money, we should improve services and let people share in the improving economy," Fang wrote last week in the South China Morning Post.
Unionist and legislator Lee Cheuk-yan said even middle-income earners are becoming victims of the wealth gap. Many small businesses have folded because landlords have demanded sharply higher rents with the recovering economy.
"The government should not reduce expenditure in social welfare but give more in the areas of health and education," legislator Lee said. "Health welfare is very important, such (cuts in) spending can kill the middle class."
