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Friday, November 08, 2019, 16:57
Outside the box
By Peter Liang
Friday, November 08, 2019, 16:57 By Peter Liang

The Hong Kong free market economy was shaped by the government economic policy of low taxes and minimum intervention. As such, it is skewed overwhelmingly toward businesses while allowing market forces to determine the workers’ share of the economic harvest.

That system worked almost flawlessly in the go-go years of the 70s and 80s when the manufacturing-based economy was growing at a brisk pace despite occasional faltering. The strong demand for factory workers to fill swelling overseas orders helped ensure rising wages and improving benefits.

To be sure, social and economic inequality was stark. But the trickle down effect of wealth was widely seen to be working. More important was that the door to upward mobility was seen to be opened to budding entrepreneurs by the low threshold of starting up factories in the labour intensive industries producing garments and plastic toys that were in keen demand in overseas markets.

Things have changed after the wholesale exodus of industries to the Pearl River Delta region in the late 1980s. Initially, the transition to a service-based economy was large smooth and painless as the layoff factory workers were quickly absorbed by the burgeoning services sector establishments.

But most services sector jobs are of the low-skilled and low-pay types that provide little opportunities for advancement. The situation for workers have been made worse by the wider use of outsourcing by businesses with the view to cutting cost. Workers forced to work for outsourcing contractors on temporary basis are denied most benefits that corporate employees take for grant.

Meanwhile, big businesses, especially the family-owned property companies, are amassing larger and larger fortunes resulting in a widening wealth gap that ranks the highest among developed economies. The issue has been put into sharp focus in the civil unrest that has rocked Hong Kong in the past five months.

The call for businesses to take the initiative in addressing the problems arising from increased social and economic injustice is on the rise. It has become clear that the situation is approaching boiling point and changes must be made to avoid an implosion. The choices are obvious. Either businesses do more to raise the benefits to workers or the government will be forced to take over the distribution of wealth by raising taxes or widen the tax net.


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