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ABSTRACT: The Hong Kong SAR government has always been proud of the fact that Hong Kong retains its top ranking in terms of "market freedom" according to most international rating agencies and think tanks. What the government has been much more reluctant to recognise is that, more than 15 years after the handover, Hong Kong now also tops other developed economies in terms of income inequality. The growing inequality is caused, among other things, by worsening poverty among the aged. This paper attempts to provide an updated analysis of income and wealth polarisation in Hong Kong, with a particular focus on the retirement protection policy and old-age poverty. It will examine the polarising effects of the financialisation of the Hong Kong economy.
KEYWORDS: Financialisation, asset-based welfare, pension fund capitalism, public housing, retirement protection, income polarisation, old-age poverty.
Most of the literature tends to attribute income polarisation in Hong Kong to the economic restructuring since the 1980s, especially the deskilling of middle-aged workers. While important, such analysis overlooks the role of financialisation, especially its impact on social protection. Financialisation is a global phenomenon, and appreciation of this factor in the Hong Kong context is crucial for explaining why several policy initiatives, such as the Mandatory Provident Fund (MPF), have gen- erated a new "paradox of thrift": encouraging more saving and investment economy-wide has paradoxically led to worse prospects for the lower class.(1)This article intends to fill this gap.
This article will proceed as follows. First, we will review the current liter- ature about financialisation, pension fund capitalism, and asset-based wel- fare. Then, drawing from various official data, we will attempt to demonstrate how financialisation transforms and shapes the economy, gov- ernment policies, and social polarisation. In particular, we will look at the impact of financialisation on public housing and retirement protection in Hong Kong. Different as they would seem, we will show that government policies in both policy areas can be understood by the same logic of finan- cialisation. We will conclude with an overall evaluation of the effects of fi- nancialisation on inequality, especially poverty among the elderly. It will be argued that there is a dire need for social welfare reform, especially in the pension system, to deal with the current polarisation.
Financialisation...