Jake's View | Welfare for working poor depresses wages, benefits greedy employers

[Oxfam director general Stephen] Fisher, who is on the government-appointed Commission on Poverty, said he would urge the authorities to introduce a low-income family allowance for the working poor who earned less than CSSA payments but were loath to apply for assistance.

Let's assume the government listens and does as Mr Fisher suggests. The sorts of employers who underpay their workers will then rub their hands and say, "Wonderful. Now I won't have to bother myself about paying these people more. The government will do it for me."

It would not happen this way if just a handful of people received a special handout but we are talking here of a blanket allowance for every household that earns less from work than it would from social welfare if its members were unemployed.

Their employers will of course know how much this subsidy comes to and of course they will take advantage of it. They wouldn't otherwise be the sorts of employers who underpay their workers. We're not talking of nice people here.

In fact we already offer subsidies of this kind at the moment with exactly these effects. Public housing with average rents of HK$1,200 a month amounts in practice to a wage subsidy, as does the more recent scheme to pay a HK$600 monthly travel allowance to every worker who makes less HK$10,000 a month.

The bosses just rub their hands and keep the wages down. It's one big reason that we still have 550,000 households that make less than HK$10,000 a month. This is almost a quarter of the households in Hong Kong, and in an economy where gross domestic product per household runs at HK$70,000 a month. It has also been getting worse. Only 340,000 households made less than HK$10,000 a month fifteen years ago.