Poverty line

Hong Kong plans to set its first official poverty line in 2013. The threshold will be decided by a panel of experts at the Commission on Poverty but is expected to be set at half of the median household income.

CommentInsight & Opinion

In fight against poverty, Hong Kong needs basic respect for workers

Paul Yip says Hong Kong's efforts to reduce poverty must be built on a social contract that supports paying workers a decent wage, even if it chooses not to go the way of a welfare state

PUBLISHED : Wednesday, 09 October, 2013, 12:00am
UPDATED : Wednesday, 09 October, 2013, 2:49am

The Hong Kong government has made it a priority to reduce poverty. This is good news. It is, of course, the duty of any responsible government to alleviate poverty in the community. However, it is also important to realise that a certain proportion of the population will always be below a relative poverty line (in Hong Kong's case, 50 per cent of the median household income).

The suggestion to reduce the figure to a single-digit percentage is nearly impossible, given that it is simply a statistical distribution of income in the community. The proportion of Hong Kong's population below the poverty line has been around 15-20 per cent in the past two decades. The latest figure is 19.6 per cent.

As the chief secretary rightly pointed out, the real test lies in devising effective poverty alleviation measures. Our real challenge is to help the less fortunate to improve themselves.

A recent visit to Oslo, Norway's capital, provided some interesting comparisons. There, a hamburger costs the equivalent of about HK$60, or three times as much as in Hong Kong. On the other hand, Norway's median household income is also about three times higher than it is here. A bus driver earns as much as a teacher or a lecturer in an academic institution. The top 10 per cent of income-earners make three to four times as much as the lowest 10 per cent. In Hong Kong, the top 10 per cent earn more than 10 times as much as those in the bottom 10 per cent.

There is no statutory minimum wage in Norway but most people, if not all, earn enough to pay tax; t ax revenue is over 40 per cent of gross domestic product. Workers in McDonald's earn the equivalent of about HK$160 an hour. The Norwegian community believes that people who sell burgers deserve a decent salary. People accept the high cost of living, and are prepared to pay to reduce social inequality. Of course, average home prices are only about half of those in Hong Kong.

Visitors to Norway are concerned about the high costs, but it doesn't stop them visiting, to experience the beautiful scenery, blue skies, clean air and rich culture.

My Norwegian counterpart, Professor Lars Mehlum, of the University of Oslo, says a consensus has been built on the view that a better society can be created if everyone earns a decent salary and everyone pays tax. There is no free lunch, and people are willing to pay, through taxes, for a society with less poverty and inequality; a place where everyone gets a share of the lunch they pay for - both the affluent and the less well off.

He believes a more harmonious and happier society can be created by narrowing the income gap. The Norwegian government provides generous family-based benefits, including maternity leave and free education up to university level for all. But, again, everyone is contributing to the situation; there is community consensus to support the necessary measures.

There are potential pitfalls, however. High wages can, for example, lead to more work being outsourced to countries with cheaper labour.

Hong Kong's situation is somewhat different; everyone thinks they are owed something, whether they be rich or poor. This is a self-centered society, without much community spirit. The rich complain of an overreliance on welfare that leads to a deterioration of the business environment; the poor remain in poverty, with little chance of climbing the ladder.

The working poor have been deprived of a salary that would allow them to maintain a decent living. The relatively low salaries also provide little incentive to work instead of relying on government assistance. At the same time, over 50 per cent of those who work do not earn enough to pay tax. Many actually work hard, for long hours, but their efforts are not rewarded with a reasonable salary.

Many people laud Hong Kong's free market. Yet, it's worth reviewing workers' salaries, especially the wages of manual and semi-skilled labourers. This will require massive social engineering and a change of mindset in the community. Are we content to live in a society with a million low-income earners, where the middle class is shrinking, and a few tycoons have amassed huge wealth? Would our community be happier and healthier if the income level of those at the lower end was improved?

Certainly, we can understand business concerns that high labour costs would make Hong Kong less competitive. However, that shouldn't stop successful firms contributing 1 or 2 percentage points of their annual profits to employees. This would have a limited impact on shareholders and their own riches. And I'm sure there would be lots of happier faces.

Furthermore, the government and non-governmental organisations should provide additional security for the community, especially young people, by creating more long-term, permanent positions. The government's use of subcontractors is one factor creating the working poor in our community. On the surface, officials may save some money, but what about the social costs?

Reducing poverty requires a collective community effort. Yes, we need good government policies. But socially responsible companies and a hard-working, intelligent labour force are crucial components as well.

We don't have to follow the example of the welfare states of Western Europe. However, the basics of respecting workers, paying them a decent salary and being committed to building a harmonious society should not be any different. We might take a different route, but we should be aiming to achieve the same thing.

There's a good reason why the Nobel Prize award ceremonies are held in Oslo; Norwegians have made a commitment to world peace and reducing inequality in the community - they work and pay for it.

Paul Yip is professor of social work and social administration at the University of Hong Kong

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