Policy Address

Wealth Gap

50.       Social tension in Hong Kong stems partly from the wealth gap.  The most fundamental way to ease such tension is to enable the community to benefit from economic development and share the fruits of prosperity.  Past experience has shown that Hong Kong's poor can have their living conditions improved once the economy embarks on a solid recovery.

51.       The wealth gap is related to economic restructuring.  The forces of globalisation have propelled Hong Kong towards a high value-added service economy to achieve further economic development.  In the transition to a knowledge-based economy, however, the wages of some low-educated, low-skilled workers have continued to lag behind economic growth owing to differences in education and skill levels among the working population.  As a result, income disparity has widened. Less demand for low-skilled workers stemming from our economic integration with the Mainland means that these workers have to face keen competition due to excess supply.  New arrivals from the Mainland have further enlarged the pool of low-skilled workers in Hong Kong, which is another cause of their stagnant wage growth.

52.       The Government can effectively narrow the income disparity through taxation, housing, education, healthcare and welfare measures.  This involves the issue of how public resources should be allocated, which requires a consensus between the Government and members of the public.  Hong Kong maintains a simple and low tax regime.  In drawing up the budget, the Government must also comply with the Basic Law to follow the principle of keeping expenditure within the limits of revenue, keeping spending increases in line with GDP growth and striving to achieve a fiscal balance.

Contents | Next