How Hong Kong’s war on poverty can be won
Paul Yip says even though policy intervention has had some effect on poverty rates, real change requires a better job market and training to boost income levels among the poorest, along with a combination of community effort and visionary government planning
The latest Commission on Poverty report reveals that the poverty rate in Hong Kong – or the number of households earning less than half the median household income – went up slightly, from 19.75 per cent in 2015 to 19.9 per cent last year. The number of people in poverty rose by 7,000, whereas the city’s population increased from 7.29 million to 7.34 million in 2015-2016. Counting the government’s recurrent cash benefits, the poverty rate dropped from 19.9 per cent to 14.7 per cent in 2016.
The Hong Kong government has spent considerable resources on achieving this reduction. Nevertheless, the continued increase in the number of older-adult and single-parent households has brought extra difficulties, as their poverty rate is worse than that of the general population.
Groups contributing more to the poverty rate rise included singleton households aged 65-74 and 75 or over, and three- and four-people households with young people aged 15-24. But a very notable reduction in poverty among four- or five-people households with children under 14 was observed.
The increase in poverty among households with young people can be related to unemployment, especially among early school leavers, and the improvement among large households should be linked with the government’s targeted subsidy for poorer families with young children, the Low-income Working Family Allowance.
The poverty gap, measured by the amount needed to lift the income level of poor households above the poverty line, has widened from 2015. This is mostly due to no change in earnings among the low-income group and a bigger increase among high-income earners. A group of households in the poverty trap has become the hard core poor, and this situation can only be remedied by a radical and fundamental change in their earning levels.
The government has increased its welfare spending to HK$73.3 billion, up by HK$9.5 billion or 14.9 per cent from 2016/17. Even so, has quality of life improved? What is life like for a two-person family living on HK$9,000, without public rental housing? Private rental costs can take up half of their income.
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What can we learn from this poverty line, especially with relation to formulating social and public policies to address the situation? The rise in the number of poor among older adults should be viewed with caution, as many can be income poor but asset rich. Elderly people who are both income and asset poor should be given more help, especially if they have no support from children.
The poverty rate among the unemployed is eight times higher than among those with jobs, and the jobless rate among those aged 15-19 is about 14 per cent, against 3.4 per cent for the general population. The government has pointed out that continued economic growth with a good job market would be the most effective in improving livelihoods. But we also have 8 per cent working poor in the population.
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Should the government employ those who have been hired by outsourcing companies to provide services to its own departments? Providing a stable and more favourable working environment for these low-skilled workers would also benefit their families and children. They can live on their salary rather than accept the low-income subsidy, which is government money anyway.
The HK$30,000 annual subsidy for students who meet the minimum requirement but fail to enrol in government-funded tertiary places should be made more inclusive, by allowing them to use these resources to sharpen their skill set as well. If they can’t improve their employability with better skills training when young, they are likely to remain on the lower socioeconomic rungs for life.
Districts with high poverty rates, such as North District, Sham Shui Po, Yuen Long, Kwai Tsing and Kwun Tong, need to have a community-based approach to mitigate poverty. Some of these are far from business districts, and the relatively high transport costs have also been shown to be a barrier to securing employment outside home districts.
Sadly, there is neither a short cut nor a silver bullet to improve the quality of life for Hong Kong’s poor. Recurrent cash support is a short-term solution and likely to be ineffective without employment conditions where wages among low-skilled workers can be improved. Genuinely needy older adults should also be clearly identified.
With the workforce expected to peak next year and then steadily decline, it is important to make the current and incoming workers more productive. We also need to diversify our economy to create more space and opportunities for the young. The Hong Kong government can help to boost and diversify our economic portfolio. At present, it is fighting an uphill battle in containing the spread of poverty in a rapidly ageing society. The war against poverty still requires a community response, along with strategic and visionary planning. Hard work, dedication and community efforts will pay off.
Paul Yip is chair professor of social work and social administration at the University of Hong Kong. The project is supported by the Hong Kong Jockey Club Charities Trust