An employee looks out from a half-shuttered shop during a protest in Tsim Sha Tsui on December 24. The protests are having an impact on Hong Kong’s economy and employment rate. Photo: Bloomberg
by Paul Yip
by Paul Yip

Continuing unrest makes Hong Kong’s poor poorer and helps no one

  • The absolute number of people in poverty grew in 2018, even though the economy made gains then. The impact of the protests will surely be felt in new poverty figures, as more people lose their jobs

The latest Hong Kong Poverty Situation report reveals that the city’s poverty rate went up slightly, from 20.1 per cent in 2017 to 20.4 per cent in 2018. The number of people in poverty increased by 29,800 from 1.377 million to 1.406 million, before government intervention.

However, after the government intervened by providing recurrent cash benefits, the poverty rate fell from 20.4 per cent to 14.9 per cent in 2018, which is the largest improvement so far.

In our analysis of the situation between 2017 and 2018, we found a slight improvement in the poverty rate after government intervention. But the overall picture has become more worrying, because the number of poor in society is attributable to overall population growth, the size of the aged population, and the number of single-parent households.

These three factors will continue to shape the trajectory of poverty in Hong Kong, and they are somewhat beyond the control of the government (although it could tweak the population growth rate by adjusting the daily quota on one-way permit holders entering Hong Kong).

Turning away mainland migrants won’t benefit Hong Kong

Meanwhile, it seems there is a group of people who are structurally poor and benefit little from government intervention. Older adults have a higher poverty rate than the general population (30.9 per cent); so do single-parent households (35 per cent).

The rising number of single-parent households in poverty, even after government intervention, deserves special attention, as it will have a spillover effect on the children, who might be more vulnerable to the risk of intergenerational poverty. For older adults, however, the situation may not be as bad as it seems, as many are retirees on a low-income, but who own assets of a certain value.

With appropriate financial arrangements, like the HKMC annuity plan, it might be possible to improve older adults’ quality of life.
For working families with children, their lives could be considerably improved by enhancing the working family allowance. More needs to be done to improve the accessibility and availability of jobs, especially in deprived districts including Kwun Tong, Sham Shui Po and Tuen Mun.

Hong Kong has become too expensive for Hongkongers

The best arrangement would be to create jobs in these districts, that is, bring the jobs to the people rather than bring the people to the jobs, so they can save on transport costs. As it is, women in these households already face barriers to participating in the workforce and improving their household income, such as insufficient childcare support and sociocultural factors that affect ethnic minority women.

Also, there is room for improvement in pay. Hong Kong’s minimum wage, at HK$37.50 per hour, is still rather low. In 2018, Hong Kong’s economy grew 3 per cent, but the wealth gap persisted. Economic gains have not spread to most of the economically active.

The government has spent considerable amounts to mitigate the pressure on the poor. However, it needs to do so strategically and sustainably. For many low-income residents, public housing remains a lifeline; without it, they would have to spend up to half their salaries on accommodation.

The impact of the social unrest over almost seven months will be reflected in the new poverty figures. The unemployment rate is climbing, especially among those in the service and catering industries – and they are the ones who might easily fall below the poverty line.

Although the rising youth poverty rate is a concern, young people have a better chance of escaping poverty than older people. Providing education (especially tertiary education) and training opportunities for the young is still the best way to improve their quality of life and income.

It is a challenging time for Hong Kong and the worst is yet to come. People leaving the city and capital outflows are becoming more serious. But those within the low-income group face the biggest difficulties; they have less choice and cannot just leave Hong Kong.

The unrest continues, with no gain whatsoever. Necessary measures must be implemented to make Hong Kong competitive again.

Paul Yip is a chair professor (population health) in the Social Work and Social Administration Department at the University of Hong Kong