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Poverty
OpinionComment

Redirect Hong Kong’s welfare spending to reach its most needy

Paul Yip says an analysis of the city’s poverty statistics shows it’s time for subsidies that are now widely shared to be redistributed to vulnerable groups

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Paul Yip says an analysis of the city’s poverty statistics shows it’s time for subsidies that are now widely shared to be redistributed to vulnerable groups
Paul Yip
The poverty line is a relative measure and there will always be households who fall below the preset threshold and are deemed poor. Illustration: Craig Stephens
The poverty line is a relative measure and there will always be households who fall below the preset threshold and are deemed poor. Illustration: Craig Stephens
The Commission on Poverty provides detailed figures on the situation in Hong Kong and has just released the fourth update to the poverty line since it was set in 2013. The poverty line is set at half the median household income, according to household size. Those living below it are considered poor. As it is in relative term, there will always be a certain proportion of the population below the threshold.

It’s official: Hong Kong government figures in last poverty report show more people becoming impoverished

Based on this criterion, Hong Kong’s poverty rate has hovered between 14 per cent and 18 per cent over the past two decades and has been pretty stable throughout the years, irrespective of the economic conditions. Slight changes in the rate should not be a big concern. Analysis of the poverty line plays a major part in identifying which groups need priority support. This helps the community gain a better understanding of the situation and enables citizens to assist the government in evidence-based policy formulation and the effective evaluation of policies.

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In 2015, the poverty rate stood at 14.3 per cent after accounting for recurrent cash injections from the government totalling more than HK$66 billion. Welfare expenditure already accounts for about 19 per cent of total government spending and that figure is expected to rise further, given our rapidly ageing population profile. Sustaining these levels of assistance could be a real concern.

Signs for different currencies are seen above a currency exchange shop in Mong Kok. Hong Kong must maintain its economic growth to tackle poverty. Photo: Reuters
Signs for different currencies are seen above a currency exchange shop in Mong Kok. Hong Kong must maintain its economic growth to tackle poverty. Photo: Reuters

To really help the poor, Hong Kong needs to target the advantages enjoyed by the rich

Thus, it is important for Hong Kong to maintain economic growth to mitigate the poverty situation, especially as the poverty rate among people in work is only 8 per cent, compared with 58.2 per cent of those who are unemployed. Certainly, income levels of the working poor should be continuously improved. The proposed new minimum wage of HK$34.50 an hour would have only a limited impact in the improvement of low-income earners’ quality of life.
The actual poverty situation among older adults may well be better than the data suggests
Meanwhile, the government’s outsourcing of low-skilled work is also a concern. As the bargaining power of this group is not strong, outsourcing companies have little incentive to increase wages.

Another major concern is the supposed increase in the number of poor older people, which might have been grossly overestimated due to the fact that only income, not assets, is taken into consideration in compiling the statistics. There are a significant number of “income poor, asset rich” older people, for example, retirees who have made sufficient financial arrangements for their old age.

It is interesting to note that 54.7 per cent of these “poor older adults” are owner-occupiers and 35.6 per cent are living in public rental housing. As accommodation costs are the major expenditure item in Hong Kong, it is not unreasonable to assume that this group is not so poor and they are, in fact, much better off than many others. Hence, the actual poverty situation among older adults may well be better than the data suggests.

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The increase in the number of impoverished smaller households is a concern. Photo: Edward Wong
The increase in the number of impoverished smaller households is a concern. Photo: Edward Wong

Officials scrap plan to redraw Hong Kong poverty line

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