Gap between rich and poor widens to warning levels
the haney group news blog
Research conducted by the Macau Economic Association indicates that the income gap between the rich and poor has widened despite the booming local economy.
According to the research, the Gini coefficient increased to about 0.4 in 2011 and is approaching the international warning level. The Gini coefficient, also known as the Gini index, is commonly used to measure inequality of income or wealth.
The ratio ranges from zero to one. A Gini coefficient of zero expresses perfect equality, where all values are the same and a Gini coefficient of one (100 on the percentile scale) expresses maximal inequality. The United Nations sets 0.4 as the warning line of income distributions.
2011’s Gini Index was calculated pursuant to employees’ income distribution. The ratio stood at nearly 0.4, an increase of 0.02 when compared with 0.38 in 2007/2008. The wealth gap in Macau is yet to reach the warning line and the Association believes Macau’s situation is “manageable”.
The report released by the Association revealed that from 2001 to 2011, Macau had witnessed GDP increase by over six times, and per capita GDP also went up by some five times. However, average income only doubled during this period.
Data drawn from the research indicates that the average income varies from MOP 33,532 to MOP 3,606, the former being 9.3 times larger than the latter. The disparity was some eight times greater than that in 2007/2008.
Joey Lao Chi Ngai, Chairman of the Association, and the coordinator of the research, said variation of income distribution in Macau is widening. The report attributed several causes. One cause was that the gaming industry squeezes other industries and this forms a gap in salary among industries.
The association said the continuing education development program launched by the government fails to assist the disadvantaged groups. Instead they suggested the introduction of a scheme similar to Singapore’s Workfare Income Supplement (WIS). The scheme subsidizes elderly employees with low pay to encourage them to continue their work. This guarantees that retirees have enough savings to support themselves.
In addition, increasing the pace of public housing construction could be another effective measure to minimize the gap between rich and poor. Charity groups can also play the role in assisting the government to expand the coverage of targeted people and thus improve the situation.
“It is not easy to tackle the problem. (…) But with some policies supporting the less privileged members in society as well as the public housing policies being carried out. I believe these will benefit the efforts to diminish the gap between rich and poor,” said Mr. Lao. Neighboring regions such as Hong Kong and the mainland have reached the warning level, both with 0.5 Gini coefficient.
the haney group news blog