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.
Tackling poverty in Hong Kong
With a poverty threshold now established in the city, the challenge is on to meet the needs of the 1.3 million Hong Kongers who are living below it
Ernest Kao and Jennifer Ngo
More than a century after the concept was first developed, Hong Kong finally has a poverty line.
The city's first official poverty threshold was formalised yesterday, set at half of the median household income. More than 1.3 million Hongkongers live in households that fall below it.
The decision to set a formal definition of poverty is expected to place more pressure than ever on the government to tackle the issue head on - the standard is in line with global norms and will allow international comparisons to be made.
It will also oblige the government to set targets and draft policies for poverty alleviation. But the question of how it will do so remains moot.
The actual poverty line is not a single figure, but varies according to household size. A one-person household with less than HK$3,600 per month will be considered poor, under 2012 statistics. For two-person households, the amount is HK$7,700 and for four-person households HK$14,300.
Around 763,000 people - more than half of those living under the city's poverty line - belong to economically active households.
Counting regular welfare payments such as Comprehensive Social Security Assistance would lower that number to 1.01 million and the number of working poor to 584,000 people.
A sizeable increase in the hourly minimum wage, which rose from HK$28 to HK$30 earlier this year, may also help - although such a move would be politically tricky given stern opposition from employers. Chief Secretary Carrie Lam Cheng Yuet-ngor said last week that the wage floor would not be pegged to the poverty line.
Many scholars and organisations agree that the government will target the "low-hanging fruit" and introduce a much talked-about supplement for low-income families. The aim would be to help the working poor - those employed on incomes that leave them either below or just slightly above the poverty line. Lam also acknowledged that this would be the government's preferred response. A supplement for hard-working low-income households would face little opposition, yield quick and clear results and buy political goodwill, said Professor Wong Hung of Chinese University's department of social work and welfare.
The argument is that even with the minimum wage and existing poverty-alleviation measures such as CSSA - Hong Kong's catch-all welfare safety net - a nascent work incentive transport subsidy scheme and subsidies on textbooks for poor children, families still struggle to make ends meet.
"A low-income supplement would help ease the suffering of low-income families," Wong said. "But if we are to lift them out of poverty, it still depends mostly on the minimum wage."
According to the Hong Kong Council of Social Service, the number of working poor households - using a definition identical to the new poverty line - rose by 6,000 last year, bringing the total to 191,000. That means 644,000 people are living in working poor households.
More than three-quarters of these households have at least one member in full-time work.
Oxfam Hong Kong was one of the first organisations to propose a low-income working family subsidy.
"A low-income supplement for families is a quick and small push which would lift many out of desperation," said Stephen Fisher, a former government welfare chief who serves as Oxfam's director general.
CSSA has not been popular with working families due to the stigma attached to welfare, Fisher said, with most being unwilling to apply for it.
Oxfam proposed a subsidy for households with at least one full-time worker and at least one non-working dependent child that have a monthly household income on or below the poverty line. However, unlike CSSA, there would be no means testing of claimants' assets.
Under Oxfam's proposal, a family would receive HK$800 a month for the first two children aged 18 or under, adjusted downwards from the third child onwards to reflect the decreasing costs they impose on the family. Fisher says approximately 180,000 children would benefit.
The Hong Kong Council of Social Service has proposed a low-income family supplement of 10 per cent of the median income of households of the same size. Those below the poverty line would receive the full supplement, which would range from HK$1,600 to HK$3,230 a month. Those above the line would see that subsidy reduced by 50 cents for every dollar of earnings.
Dr Law Chi-kwong, a professor of social work and social administration at the University of Hong Kong, says a higher wage floor is the key to alleviating poverty, but that the current level of HK$30 an hour is barely enough to help poor households.
"I'm always telling welfare groups: 'Don't argue where the poverty line is set and don't mix it up with the level of impoverished people in Hong Kong'. Households above the 50 per cent threshold need help too," said Law, a member of the Commission on Poverty, which was reinstated by the government last year after it was abolished in 2007. He said any new, overarching subsidy scheme would be too much for the system to handle. Instead, he proposed a supplement that would mirror the existing welfare system.
"The government should tweak current policies to provide more and make them clearer," he said. "For instance, nobody thinks a textbook subsidy is a low-income family subsidy, but it is. My suggestion is to group the transport subsidy to become the actual low-income family supplement, then increase the flat grant of the textbook subsidy and group it with that too."
But Wong believes a subsidy for low-income families should not be the top priority.
"Hong Kong's poor are made up of three big groups - the working poor, the elderly and CSSA recipients," he said. "The subsidy would aid the working poor, but Hong Kong has bigger issues."
He believes a universal retirement scheme, an idea that has long been discussed, should be the first step as the city deals with a rapidly ageing population.
He also said CSSA had lost its relevance as a tool for alleviating poverty, as the allowance was no longer calculated based on a scientific assessment of what a person needed to survive in the city.
"It would be best to conduct a basic-needs study and adjust CSSA accordingly," he said. Ultimately, a poverty line is based only on income, but poverty itself is much more complicated, he added. It could mean having a low income, but could also be measured by deprivation - being unable to have what others in Hong Kong can expect, such as an internet connection or one's own bed - Wong said. It could also measure social exclusion and isolation - such as that experienced by ethnic minority families who for generations have struggled to learn Chinese and have found themselves cut off from mainstream society and job opportunities, he explained.
Cash subsidies can only help to a certain degree, he said, as true poverty alleviation would be much more of a long-term process, involving more planning, especially of minimum wage adjustments, job diversity and opportunities and providing a secure retirement.
"I agree with what the government has been saying it would do for a long time but never really delivered as promised - developing more jobs, and making those jobs pay," he said. "We need to creatively rethink our planning … We can't just stick to finance and real estate any more."