The Hong Kong government will offer low-income families various supports in education and employment in a bid to narrow the city's increasing wealth gap, Hong Kong chief Donald Tsang said Wednesday in his policy address.

The over-all strategy, said Tsang, aside from relief measures for exceptional times, will focus on investment in education, which facilitates poverty alleviation through social mobility, and employment support, which includes enhancing the quality of the workforce and ensuring reasonable wage levels for workers.

The government will continue to assist poor families through its social welfare network, helping those in need to cope with difficulties and maintain a reasonable standard of living.

Tsang noted that income disparity has widened in the year as the city continues to steer its economy towards high value-added service industries.

"In the transition to a knowledge-based economy, however, the wages of some low-educated, low-skilled workers have continued to lag behind economic growth owing to differences in education and skill levels among the working population." he said.

In addition, new arrivals from the Chinese mainland have further enlarged the pool of low-skilled workers in Hong Kong, which is another cause of their stagnant wage growth, he added.

He pledged the government will continue to devote substantial resources to education, which is fundamental to alleviating inter-generational poverty.

Specific measures include a hike in the grant under the School Textbook Assistance Scheme.

Tsang proposed to increase the flat-rate grant from the existing 408 HK dollars to 1,000 HK dollars per year for full- grant students, and from 204 HK dollars to 500 HK dollars per year for half-grant students, with effect from the next school year.

As for support to low-income workers, the government has decided to launch a Work Incentive Transport Subsidy Scheme to help all eligible employees in Hong Kong meet part of their traveling expenses. The monthly allowance will be 600 HK dollars a person.

To encourage the business sector's participation in helping the poor, the Hong Kong chief said he has decided to set up a Community Care Fund, to which the government and the business sector will each contribute 5 billion HK dollars to support people in need in areas not covered by the Comprehensive Social Security Assistance Scheme.

Tsang said he will raise funds from the business sector and the initial response has been positive.