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October 13th, 2011:

SCMP Tsang fails to win the economic legacy he wants

Clear the Air says:  The tycoons and the bankers made more money , the workers made less. The environment continues downhill with unnecessary infrastructure projects pandering to the developers.  Our roadside air quality (lethal fine particulates) is one of the worst in the world being 8 times higher than Vancouver.

Tsang has promised reforms before such as air quality objectives (not legal binding Standards) to be issued by the end of last year after a consultation on the consultation of a further consultation as to whether to have another consultation. Clear the Air has a message for Tsang – Delay No More !

We are now almost at the end of 2011 and in his swansong speech Tsang made no comment on the issue of the still inadequate Air Quality Standards which do not even match the existing EU Standards.

SCMP Tsang fails to win the economic legacy he wants
Tom Holland 
Oct 13, 2011

In his final policy address delivered yesterday, Donald Tsang laid claim to what he hopes will be his economic legacy.

Among the “achievements” he listed in the years since 1997 – during which he served first as financial secretary, then as chief secretary and finally, since 2005, as chief executive – were a 55 per cent expansion in the size of Hong Kong’s economy, and a 31 per cent real increase in the average income of employees.

This is a strange boast. You don’t need to be a mathematical genius to work out that if the economy has grown 55 per cent, and the incomes of employees – the majority of Hong Kong’s population – have only grown 31 per cent, then most people have failed to share in what Tsang called “the fruits of economic prosperity (SEHK: 0803announcementsnews) “.

Yet even his claim of a 31 per cent increase in average employee income will have sounded far-fetched to many Hong Kong workers.

A quick look at the detailed indices of real – that is adjusted for inflation – wages and salaries compiled by the government’s own Census and Statistics Department shows the only employees lucky enough to have enjoyed a 31 per cent salary increase since 1997 are managers working in the city’s banking sector.

As the chart shows, in other sectors, real salaries have risen far less. Overall, Hong Kong’s real wage index has risen by just 11.5 per cent since the handover.

For many workers the picture is far worse. According to government data, in March 1999 the average restaurant waiter earned HK$8,994. In March this year he or she took home just HK$8,834.

That’s a pay cut of 1.8 per cent over a period in which the cost of living has risen 7.5 per cent. While Hong Kong’s economy has boomed, the incomes of many ordinary people have actually fallen in real terms.

To his credit, Tsang is aware of the problem. He peppered his policy address with references to the minimum wage law passed earlier this year, and promised a range of government measures aimed at redressing the city’s widening inequalities.

Topping the list was a pledge to resume building small flats for sale at subsidised prices to middle-income families. In a city where the average home price now exceeds 11 years of average household income, any initiative to build low-cost housing is welcome. But the number of flats planned – just 17,000 over four years from 2016 – is too small to affect affordability except for the few families lucky enough to secure one of the new 500 square foot apartments.

Alongside this programme, Tsang announced a grab bag of measures intended to increase the supply of private sector housing and soften the impact of rising living costs. These included a pledge to increase the supply of building land for new homes, a two-month rent holiday next year for public housing tenants, and a one-month bonus for those receiving government welfare payments.

These initiatives are well-intentioned, but they will do little to share with the city’s ordinary workers the extraordinary wealth generated by Hong Kong’s rapid economic growth.

In Hong Kong, the combination of the city’s famously flexible labour market and the infamous inflexibility of its other economic sectors, notably the property market, mean that the rewards of economic growth flow not to ordinary employees but to those who control scarcer resources – especially the city’s property developers and rent-collectors.

The introduction this year of a statutory minimum wage makes the labour market fractionally less flexible, and the steps announced yesterday should make the property market a tiny bit less inflexible.

But the changes are largely cosmetic. Hong Kong’s economy remains deeply skewed in favour of a small, asset-rich minority who are able to use their privileged position to extract lucrative rents from the bulk of the population.

Yesterday’s policy address does nothing to alter the picture. Certainly it will be insufficient to secure Tsang the economic legacy he wants.

As a result, if anything history is likely to remember him as the chief executive who presided over an economic boom in which the fruits of prosperity were denied to the majority of Hong Kong’s people.

Air Toxicology and Epidemiology

The 2011-12 Policy Address

Download PDF : Policy11-12