Hong Kong's yawning wealth gap grows wider amid coronavirus pandemic

HONG KONG • Hong Kong is emerging as a case study of how the coronavirus pandemic is affecting vulnerable members of society, as tens of thousands have been thrown out of work with little social safety net to support them in one of the world's most unequal and expensive cities.

The economy is mired in its deepest recession on record after a disastrous year of social unrest and then the virus outbreak, with a net 250,000 people losing work in the city since May, according to data compiled by Bloomberg from the Census and Statistics Department Hong Kong.

The lower-paid services and hospitality sectors have been hit the hardest, as protests and virus-control measures shuttered retailers and left hotels and restaurants empty.

As Hong Kong has no general unemployment benefit provision, that leaves most low-income job seekers reliant on savings, family assistance and charities at a time of stretched budgets and renewed concerns over a third wave of the virus outbreak.

Hong Kong's income inequality has long been higher than that of any Group of Seven economy and the 19 wealthiest billionaires in the city control assets of about US$230 billion (S$320 billion), according to the Bloomberg Billionaires' Index.

"The wealth gap has obviously widened because of Covid-19," said Ms Iris Pang, greater China chief economist at ING Bank.

"Hong Kong could become increasingly more unequal in terms of income. Poverty is becoming an imminent issue. In short, the poor are getting poorer."

Last month's employment statistics are expected tomorrow.

Job vacancies in the retail as well as the accommodation and food services sectors, among the most important sources of employment for the working class, have been particularly hard hit by the virus. These job vacancies plummeted 64 per cent and 80 per cent, respectively, from a year ago as of March.

The total number of employed people has dropped by almost 250,000 for a record 6.5 per cent decline from a year ago as of May. The number employed in the city now stands at just more than 3.6 million, less than half of Hong Kong's 7.5 million population, as the number of unemployed has almost doubled since the end of last year to more than 230,000.

As of 2018, about one million people in Hong Kong were considered poor by the government's definition, for a poverty rate of almost 15 per cent, after adding recurring benefits such as the Higher Old Age Living Allowance in June 2018, according to a December government report.

It is likely that a year of political unrest and recession as well as the coronavirus has seen those numbers worsen.

One of the most vulnerable groups is the city's growing population of people 65 and older, who are often unprepared for retirement and at a disadvantage when competing for jobs, while now also facing greater health risks from the virus.

Hong Kong has a weak social safety net for its older population.

In 2018, those 65 and older who were considered poor stood at about 360,000 for a poverty rate of 31 per cent, more than double the overall level, the report said.

"When I was 50 years old, people would still want me to work for them, but at the Chinese restaurant that I worked for, even though I could handle the job, the boss still looked down on me," said Ms Y.T. Chan, a 65-year-old woman who lost her full-time job as a dishwasher last November following an illness.

After struggling to find work for months, she now earns about HK$2,000 (S$358) a month as a cleaner and dishwasher.

Her income can barely cover her expenses, which includes HK$4,200 in rent a month, so she relies on loans from friends or occasional money sent from her sons in mainland China.

Joblessness among workers aged 50 to 59 has climbed to 6.5 per cent, well above the overall level of 5.9 per cent, according to government data.

Young people aged between 15 and 19 are still the worst off, with a 16.1 per cent unemployment rate.

"I met a recently unemployed man in his early 60s with just a combined HK$48 savings in two of his bank accounts," said Mr Jason Lam, a community organiser.

"He was so overwhelmed when we offered him some food packages - you could tell how hard his life was."

BLOOMBERG