Wednesday, May 11, 2011 Middle class feels the pinch on wages




Middle class feels the pinch on wages
Wealth gap widest in 20 years as rich get richer

Simpson Cheung
Updated on May 11, 2011

Hong Kong's rich got richer over the past five years and even the poor
made more. But for people in the middle, it was not so good.

Middle-income earners - shut out of the private housing market by
sky-high prices but earning too much to qualify for government
assistance - were squeezed even harder, government statistics show.

Their incomes rose the least of the three groups between 2006 and last
year, as the wealth gap became the widest in 20 years - and worst in
the world, according to an international standard.

While the highest and the lowest earners both had increases of more
than a sixth, incomes in the middle rose a little more than half that,
the government figures show.

People in the middle are miserable and frustrated, said Professor Paul
Yip Siu-fai, of the University of Hong Kong's department of social
work and social administration and a member of the government's
Central Policy Unit. "The government always uses GDP per capita to
measure average income, but that does not reveal the problem of uneven
wealth distribution," he said.

Yip said the latest figures, obtained by the South China Morning Post,
further showed the city was at risk of turning into a so-called
M-shaped society, with swelling numbers of rich and poor people and a
diminishing middle class.

Average earnings of the bottom 10 per cent of employees rose 15.56 per
cent between 2006 and last year, from HK$4,500 to HK$5,200 a month.
Even after inflation, there was still a steady annual growth of 2 per
cent, except in 2009 amid the global financial downturn.

The top 10 per cent brought home 15.48 per cent more in five years,
from HK$57,500 to HK$66,400 a month.

Those in the middle gained just 7.84 per cent in the five years, from
HK$10,200 to HK$11,000 a month.

Meanwhile, Hong Kong's Gini coefficient - which measures income
inequality on a scale of 0 to 1, where 0 is perfect equality and 1 is
perfect inequality - rose from 0.518 in 1996 to 0.525 in 2001, and
stood at 0.533 in 2006, the most recent year for which data is
available. The figure showed that wealth disparity in the city was the
most serious in the world.

Figures for family incomes, a different measure than for individuals,
also show a widening income gap.

The median household income of the top-earning 10 per cent of the
population last year was HK$77,000 a month - up HK$7,000 in five
years, according to the Census and Statistics Department.

The poorest 10 per cent of families became even poorer, living on
HK$3,000 a month, HK$100 less than in 2006. Families in the
middleincome bracket brought home HK$500 more a month last year, from
HK$15,000 in 2006 to HK$15,500.

The top household incomes averaged 25.7 times the lowest last year -
the highest in 20 years.

Yip attributed the "M-shape" problem to the government's employment
policy and accused the city's biggest employer of taking the lead in
outsourcing its jobs to contractors, who paid low wages and pulled
down the average employment earnings.

But Nelson Chow Wing-sun, chair professor of the university department
and member of the steering committee of the government-business
Community Care Fund, said there was a need to consider the statistics
for a longer period before concluding Hong Kong was an M-shaped

He also said the widening income gap was not "as serious as we imagine".

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