Hong Kong - Poverty and wealth

Hong Kong is a prosperous territory with a high GDP per capita (US$18,813 in 1998). However, the distribution of income is uneven and there is a wide gap between social groups in terms of wealth and income. Large parts of the economy are dominated by a small group of tycoons who are among the richest people in the world and whose wealth is increasing. At the same time, there is a growing number of unemployed with practically no chance for rejoining the workforce. They are the victims of the migration of manufacturing establishments to mainland China who are middle-aged and unskilled or whose skills are not in demand. The service sector has absorbed a large portion of manufacturing unemployed since the 1980s, but the continuation of this trend is unlikely, since the skills of the unemployed often do not match those of the available positions.

The role of the Hong Kong government in the economy is minimal, but it has an extensive role in providing essential services, including health care, education, and housing. The health-care system, which provides high-quality standard services, is accessible by the entire population. Government-run hospitals dominate the medical institutions and provided 85 percent of hospital beds in 1996, but there are also private medical clinics and hospitals.

Government-provided health-care services are not free, but their fees are low, as these services are subsidized. Costs of medical services can be waived if patients cannot afford them. Government spending on the health-care system receives a large percentage of its total annual spending, increasing from 11.1 percent in 1989-90 to 14.3 percent in 1996-97. The government has considered reforming the health-care system since the cost has been increasing. If the current situation continues, this cost will absorb 21 to 23 percent of total government spending in 2016. Government spending on health-care services amounted to US$3.4 billion in 1998-99. Hong Kong's high life expectancy (78.6 years in 1998) ranks the territory fifth among the top developed economies after Japan (80 years), Canada (79.1), and Sweden and Switzerland (78.7 years). This rank puts it far ahead of China with its life expectancy of 70.1 years in 1998. In addition to the absence of widespread malnutrition and the availability of safe water and adequate sanitation, Hong Kong's impressive high life expectancy indicates the efficiency of its health-care system.

Hong Kong has a very good system for basic education, thanks to significant government spending. Total public funds spent on education were equal to 4.2 percent of GDP (US$4.6 billion) in 1998-99, an increase of about US$500 million from the previous year. About 92.9 percent of its population was literate in 1998. The government provides free and compulsory education for children between the ages of 6 and 15. Children over the age

of 14 who wish to continue their studies at the high-school level must pay for their education, but there are government subsidies for those who cannot afford it. In 1998, for example, the government subsidized the education of 84 percent of children of school age. Hong Kong's post-secondary educational system includes 7 universities, which offer degree programs to 18 percent of the 17-to-20 age group who wish to enter university programs. There were 65,800 university students in 1998, an increase of 11,800 from 1994.

Despite its merits, the education system has certain problems. Its inability to train people with the skills required for the economy is the main problem. This has resulted in a vacancy of thousands of jobs in the high-tech industry, for instance, while there is a large number of unemployed with skills irrelevant to the changing economy. Another significant problem is discrimination against the physically and mentally disabled in education, despite the existence of anti-discrimination laws. Finally, some primary schools operate 2 sessions a day at the expense of lowering educational standards.