The Democratic Progressive Party (DPP) recently broadcast a TV commercial voicing doubts about the benefits of the Economic Cooperation Framework Agreement (ECFA). Its contention was that the agreement would strip Taiwan of its sovereignty and consign it to being another Hong Kong. It would also, according to the ad, contribute to an increase in the disparity between the rich and poor.
In response, Council for Economic Planning and Development (CEPD) Minister Christina Liu (劉憶如) retorted that Hong Kong’s poverty gap had been considerable long before the territory signed the Closer Economic Partnership Arrangement (CEPA) with China. Consequently, Liu asserted, the CEPA had nothing to do with the disparity in wealth. In fact, she added, signing the ECFA would actually reduce the poverty gap in Taiwan.
Such a statement from an official responsible for guiding the country’s economic development leaves one dumbfounded.
Hong Kong signed the CEPA with China in 2003. According to Hong Kong’s Census and Statistics Department, its Gini coefficient (a value between 0 and 1, where 0 corresponds with perfect equality and 1 corresponds with total inequality), determined by the distribution of incomes in Hong Kong, increased from 0.525 in 2001 to 0.533 in 2006, the highest since 1971.
Meanwhile, the differential in revenues between the top and bottom 10 percent of families in Hong Kong increased from 26.9 times in 2001 to 32.5 times in 2006. The concern is that the rich get richer and the poor get poorer, and there is no getting away from the fact that this phenomenon does really exist in Hong Kong and that it has worsened since the CEPA was signed.
The CEPA has also had a considerable impact on Hong Kong’s industries and labor market, gradually turning the majority of Hong Kong’s middle to lower-class workforce into marginal workers, those forced to “work more for less.” This is one of the main reasons for the increase in Hong Kong’s poverty gap.
A few examples might well shed a little light on these figures. The number of workers who earn less than HK$5,000 (US$640) a month has increased by more than 70 percent, from 307,000 in 1997 to 528,000 in 2006, and the number of workers who work 55 hours or more per week has increased by more than 80 percent, from 501,000 in 1997 to 934,000 in 2006.
Both the CEPA that China made Hong Kong sign and the ECFA in Taiwan’s case are part of the free-trade system. And in both cases the likely winners in this process of globalization and liberalization are the capitalists and multinationals. The losers, as usual, will be the workers who can’t afford to move away.
In the past, Taiwan had maintained a healthy export trade with China, but since large numbers of Taiwanese businesses have subsequently moved to China, taking jobs with them in the process, many people in Taiwan have found themselves unemployed. Those who have managed to cling onto their jobs over the past 10 years have watched their salaries stagnate.
When President Ma Ying-jeou (馬英九) debated about the ECFA with DPP Chairperson Tsai Ing-wen (蔡英文) a few months ago, he mentioned that the government would introduce tax breaks and social benefits to the poor to mitigate problems such as the distribution of wealth and a widening wealth disparity resulting from the ECFA. It would take this action, as, he said, this would only be right and fair. The ECFA has been signed but not yet implemented and already the government seems to have forgotten the promises it made back then. It has done nothing to limit the potential repercussions of the increasing wealth disparity and now the CEPD is saying that the ECFA will even reduce that gap. Truly, any person on the street would be well advised to look out for him or herself and not expect too much help from the government.
Chang Wei-kuang is an associate researcher for the Policy Research and Coordinating Committee of the Democratic Progressive Party.
TRANSLATED BY TAIJING WU AND PAUL COOPER
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