The End of the Golden Age:
The Need to Renegotiate the Social Contract

Tai-lokLui

The Changes brought about by Economic Restructuring

Once again, top government officials have asked the public to be patient. Most recently it was the turn of the Financial Secretary to do so. Officials maintain that the Hong Kong economy is recovering and that, sooner or later, everyone will benefit from this. The Hong Kong economy is back on track. The derailing effect, brought about by the Asian financial crisis, is coming to an end. Things will be changing for the better for everyone, including those lower down the social ladder. Officials argue that everyone must be patient, however, and in time they will see the benefits brought by the changing economy. 

Hong Kong people, however, remain unconvinced. They do not believe that it is merely a matter of time before economic restructuring will bring the beneficial outcomes projected by the SAR Government. More and more people are finding that the erstwhile promise of ever-better benefits in their career has not come about. The middle class is still feeling the pain of the sudden collapse of the property market in 1998. Indeed, quite a significant proportion of middle class professionals, managers and administrators are still suffering from negative equity in their property assets. They are holding on to them wondering when the ordeal will be over. And to add insult to injury they are having to come to terms with cost-cutting and downsizing. The middle class was once portrayed as 'organisational man (sic)' or 'salary-man (sic) with a stable and long-term career'. However, as a result of the changing economic and employment environment, the middle class, particularly those in mid-career, are facing disruption in their career path. Mid-career professionals, managers and administrators have lost any sense of job security.

Newcomers to the rank of the middle class are also unhappy. They do not welcome the new short-term, contractual employment practices which are now prevalent in both the private and public sectors. Young middle class professionals, managers and administrators find the employment 'paradise' that they once dreamed of in ruins. Their career ladder is now truncated, if not actually broken altogether. The lucrative fringe benefits and allowances previously available to middle class employees have been taken away. While the social ladder in Hong Kong remains open and accessible, the rewards associated with a middle class career have become less enviable.

For clerical workers, production workers, and those employed in low-paid jobs in the service sector, their working lives have been changing for quite some time as a result of the restructuring process that started in the 80s. They have seen their jobs turned into "casual labour". The relocation of production plants to South China has not brought about technological upgrading in local production. The golden days of manufacturing are over, and displaced workers are having to find new, low-paid jobs in the service sector. As regards the clerical workforce, they too are finding that they are now replaceable. More and more of them are finding that their jobs are vulnerable. Given such a socio-economic context, the calls for patience that emanate from top officials of the SAR Government are not popular. 

The Need for a new Social Contract

The Asian financial crisis has alerted us to the inadequacy of the implicit social contract embedded in Hong Kong's former institutional arrangements. Previously, it was expected that continuous economic growth and development would of itself create social solidarity in support of the regime that was facilitating this. The colonial government was able to maintain its political authority, largely because it delivered the desired outcomes - prosperity and stability. People were happy with a non-interventionist government that left them free to find their own best way to advance socially. Given the pace of economic growth in the early post-War decades, Hong Kong people of all walks of life became used to continually being able to improve their standard of living. The rapid development of the manufacturing sector created employment opportunities for skilled and semi-skilled workers. The subsequent transformation of Hong Kong into an international financial centre brought new openings for the post-War baby-boomers to move up to top professional, managerial and administrative positions. Rapid economic development facilitated structural mobility and gave most people an opportunity to find a place for themselves in the ever-improving economy. While one must be careful not to overstate the extent of openness and fluidity in Hong Kong society1, it is undeniable that the structural changes triggered by economic growth gave most people the chance of improving their situation, whether through joining the fierce competition for academic credentials, or through competing in the ruthless small business environment. The 'Hong Kong dream' - the belief that hard work plus luck will bring about success - became firmly entrenched2.

Despite their awareness of the existence of socio-economic inequalities and barriers in the process of social mobility, most Hong Kong people remain optimistic about the opportunities for general social advancement and continue to believe that personal effort will bring about success3. While most people do not move from 'rags to riches', they trust that Hong Kong society will still create new opportunities for open competition. They see justice not as equality of income but as equality of opportunity. However, continued faith in this ideology of success depends on the continuation of economic growth. As economic growth slows down and the local economy becomes less competitive globally, problems that were formerly hidden, such as growing inequalities in incomes and urban poverty, become issues of real popular concern. Disparities in income and opportunity have become alarming. The earlier social contract, built upon continuous economic growth, is beginning to break down. 

Currently the SAR Government is feeling pressure on two fronts. On the one front, there are more and more calls on the Government to find a way to protect ordinary people from falling into the poverty trap. People are becoming more aware that their own position in the labour market is vulnerable. There are two possible ways forward. Either the government revitalises the economy and thus creates new opportunities, or it has to find new ways to assist people to maintain a decent standard of living. The problem is that the public is not convinced that the government has the right mind-set to work effectively on either possibility. On the other front, there is growing discontent among middle class professionals, managers and administrators, who are losing their faith in the government. They remain sceptical of every move made by the government since the handover in 1997, whether it be to build a new economy, to reform housing or to upgrade education. The economic downturn has not only had a direct impact on the middle class by eroding their personal wealth, but it has also heralded the arrival of a new work environment in which middle class careers are increasingly undermined by the demand for organisational flexibility and cost-cutting. Once the champions of the Hong Kong dream of success built on personal effort, the middle class are now reduced to worrying about their own future.

For a long time, Hong Kong people have assumed that the local economy would continue to be vibrant and competitive, and, based upon this assumption, they have tended to see low incomes and unemployment as consequences of lack of personal effort. Now as they themselves begin to suffer the consequences of the restructuring process, they are coming to recognise that perhaps the issue of poverty and business failure is more complex. They may not yet have changed their views on social welfare for the needy, but they are beginning to sense that the golden age of guaranteed economic growth has come to an end.

The SAR Government, however, is failing to grapple with the implications of the socio-economic changes precipitated by the recent economic downturn. It continues to look at emerging social problems from the old perspective. It fails to understand why the public is losing patience and becoming more and more discontented, demanding and assertive. Its assumption that the current popular unrest is the result of greater democratisation - of politicians mobilising popular discontent to gain votes in elections - misses the point. The crux of the matter is that the basis of the former social contract between the government and the governed has been eroded. The SAR Government can no longer provide effective governance by repeating the same old formulas used by the colonial government. Top government officials can no longer comfort the public by telling them to be patient. Times have moved on. Hong Kong people know very well that the days of rapid economic growth are over. They are looking for a new social contract between the government and the governed. 

Notes
1. On social stratification and social mobility in post-War Hong Kong, see Thomas W.P. Wong and Tai-lok Lui, "Reinstating Class: A Structural and Developmental Study of Hong Kong." Occasional Paper No.10, Social Sciences Research Centre and Department of Sociology, University of Hong Kong, 1992.
2. Tai-lok Lui and Thomas W.P. Wong, 'The "Hong Kong experience": class, inequality and morality in political transition.' Asiatische Studien Etudes Asiatiques, Vol.XLIX.
3. Thomas W.P. Wong, 'Discourses and dilemmas: 25 years of subjective indicators studies,' in S.K. Lau et al. (eds) Indicators of Social Development: Hong Kong 1990. Hong Kong: Hong Kong Institute of Asia-Pacific Studies.

Dr. Tai-lok Lui is an Associate Professor of the Sociology Department, Chinese University of Hong Kong