HKEJ Column | September 27th, 2010 |

Published in HKEJ ” Professional Eye” on 23rd September 2010

George Cautherley

Strategy Committee Member

The Professional Commons

Seething public grievance against government’s performance is at the verge of breaking down. Lower-income class, even employees in the middle class, are suffering from life teeming with despairs arising from low wages, long working hours, difficulty in home ownership, elderly without proper care, so on and so forth. The remuneration system is so unfair that most people are suffering exploitation. Many of them even have difficulty in raising a family with chicken feed salary they get, not to mention sharing the fruits of economic prosperity.

Social justice has been seriously eroded under the highly market-dominated environment in Hong Kong. Economic development has been swerving into the direction opposite to social sustainability. It has been widely noted that there exists extreme disparity between the rich and the poor in our society. Mass consumers are at the mercy of big corporations due to imbalance in information. Big enterprises have insatiable appetite to boost price increase, abuse clients’ personal data for profiteering purposes, and sell flats dishonestly, etc. Even worse, big corporations and conglomerates are always at a vantage point to put public interests out the window in a quest for profit maximization through constructing “walled buildings”, monopolizing the benefits of urban renewal projects, colonizing rural land, and so on. When looking deeply, it should be highlighted that their advantageous position stems from the existing unfair political system and seemingly, more people start to realize their intricate relationship, therefore more supportive to the development of a more democratic political system.

Vacuous vision is our destiny?

In his 2007-08 Policy Address, the incumbent Chief Executive (hereafter CE) proposed his new vision in the form of three guiding principles, but their implementation was far from satisfactory. The Government has been under attack regarding its urban renewal policy, incompetence in safeguarding rural environment from intended damage, etc, which is indeed against the principle laid out in paragraph 7 of said policy address, saying our development should be “sustainable, balanced and diversified”. Disillusion from a tug-of-war situation concerning minimum wages legislation, nil implementation of universal old age pension (hereafter OAP) and reluctance in subsidizing home ownership are all indicative of the hollow nature of CE’s remark “development (should) bring about social harmony with different strata of people sharing the fruits” (para. 8).

If the CE is determined to put his visionary statement into practice, his governance principles should undergo a paradigm shift by admitting the imbalance in socio-economic development. It is of utmost importance to reestablish the Strategy for Sustainable Development to boost social sustainability. In addition, a fairer distribution system, coupled with forceful measures, should be in place to tackle the ever-severe problem concerning disparity between the rich and the poor, so that a fair sharing of the fruits of economic prosperity would be possible.

Working Class Gets Decent Reward

Statutory minimum wage is considered effective in dealing with the source of the problem concerning the existing inequitable distribution system. The suggested range of minimum wage should be between HK$30 and HK$33. In fact, if the salary earned by grassroots is adequate for their basic needs, most of them will not be willing to accept “social welfare”. It is inappropriate for the Government to uphold neutrality on the issue concerning statutory minimum wage. People in the lower-income class are always at a disadvantage and need government’s assistance in order to sustain their life at the minimum level. To this end, a proper remuneration system is of utmost importance to deal with the source of this problem. Even the minimum wage is set at the level of HK$30 per hour, only security and cleaning service sectors might possibly suffer a loss. But in fact, these two sectors are the service industries that are derived from domestic demand, therefore no out-of-territory relocation and replacement is possible. In addition, elements of production will undergo a dynamic adjustment accordingly when the cost structure has to be changed. Cost adjustment will follow by corresponding rise in price, as far as provided service is concerned. To this end, not only can these businesses still operate, they also expect reasonable profit after the necessary adjustment of the above-mentioned price mechanism.

Resumption of Home Ownership Scheme could serve as another remedial measure. Historical evidences clearly showed that HOS has been contributive to improvement in living conditions of middle and lower-income class, as well as their desire for upward class mobility via provision of home ownership chances. In this regard, we suggest these new 8,000 HOS flats would be distributed to green form and white form applicants in the ratio 7:3. By doing so, 5,600 units would be allocated to public housing tenants and those in the queue for public housing. According to the Government’s statistics, rental units surrendered via purchase of first and second hand HOS and Private Sector Participation Scheme flats reached 3,500 and 4,200 in 2007 and 2008 respectively. Given that the remaining 30% is to be allocated to white form applicants, about 2,400 units will be available annually, which is rather close to the gap between the volume of take-up and completion in the past 5 years (about 2,550 units). This quantity of new supply is unlikely to endanger the stability of the property market.

Our existing pension system (mainly Mandatory Provident Fund) is not able to secure the elder persons to live on a decent way of life. In the light of this, the Chief Executive, to put his governing objective of ensuring financial security of the elderly into practice, is advised to revamp the system by introducing a universal Old Age Pension Scheme (hereafter OAP) in his coming policy address. As far as the idea of this scheme is concerned, all permanent citizens aged 65 or above are offered $3,000 of allowance per month, 15 per cent higher than the existing CSSA level. No means test should be imposed. Both employees and employers should share extra contribution for the universal old age pension scheme. Each of them shall contribute the same rate: i.e. 1.9 per cent of employees’ income, but workers who earn less than HK$5,000 do not need to contribute, but their employers are still required to contribute. No capping on maximum contribution. Government contribution is composed of two parts, first the current elderly allowance, and second an injection of a lump sum amount to HK$25 billion every five year.

(See The Professional Commons, Ensure the Financial Security of the Elderly Research – Report on Universal Old Age Pension Scheme, February 2010.


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