'One-fifth of Hong Kong poor'

HONG KONG - One-fifth of Hong Kong's population lives in poverty, says a report that establishes an official poverty line in the affluent Chinese territory for the first time.

The finding underscores the challenge Chief Executive Leung Chun-ying faces in seeking to narrow a record wealth gap.

About 1.3 million people, or 19.6% of the population, were below the poverty line last year, according to the report released on Saturday.

The benchmark, determined for the first time, was set at half of the territory's median household income, excluding the impact of taxes and welfare transfers, the report said.

The median income last year for a single person was HK$3,750 (15,000 baht) a month, according to data from the Hong Kong Council of Social Service.

The figure was HK$8,000 (32,000 baht) for a two-person household and HK$14,650 (58,600 baht) for a family of four.

The report, commissioned by Leung, may give him the backing needed to ask for more spending and overcome objections to further increases to the minimum wage, currently the equivalent of 970 baht a day.

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 the rich and the 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," said Chung Kim-wah, an assistant professor at The Hong Kong Polytechnic University. "It will 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 territory 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 on Saturday.

"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."

If accounting for recurring cash benefits, the population living in poverty falls to 1 million, or 15.2%, the report said.

To lift all of these people up to the poverty line would require HK$14.8 billion, according to Chief Secretary Carrie Lam.

"We don’t take the view that alleviating poverty means to narrow the wealth gap," Lam said.

"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."

The average gross household income of the poorest 10% of the population fell 16% to HK$2,170 a month in 2011, from 10 years earlier, according to a government report. The comparable income for the richest 10% jumped to HK$137,480 a month, a 12% increase.

Hong Kong’s wealth inequality may increase as the population ages. The proportion of people aged 65 and older reached 14% last year and is expected to account for 30% by 2041, Financial Secretary John Tsang said in February.

Leung this year restarted the sale of subsidised public housing, a programme that was halted in 2004 by his predecessor.

A government committee studying the city’s long-term housing plan has recommended building 470,000 new homes over the next decade, of which 60% should be public housing, Anthony Cheung, secretary for transport and housing, said this month.

Hong Kong increased the minimum wage 7.1% to HK$30 an hour (the equivalent of 970 baht for an 8-hour day) on May 1. The raise will bolster the salaries of about 327,200 employees, or 10% of the territory's workers, according to a report by a government commission before the new ruling.

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Writer: Bloomberg News