Hot Topics: How Covid-19 pandemic and Hong Kong’s labour policies have led to city’s growing income inequality

The gulf between rich and poor in Hong Kong has widened during the coronavirus pandemic. An anti-poverty NGO has said the top bracket of households earns about 47 times more than those at the bottom.

The charity, Oxfam Hong Kong, analysed government statistics. Early this month, it warned the situation had reached “a tipping point”, calling for government action.

The charity found the median monthly income for the city’s bottom 10 per cent of households fell by 22.9 per cent from the pre-Covid level of HK$3,500 (US$446) in 2019, to HK$2,700 between January and March this year. The median monthly household income of the top 10 per cent went up by 6.3 per cent from HK$120,000 to HK$127,600.

“The problem of unemployment and underemployment among the poor remains severe,” Kalina Tsang Ka-wai, the director general of Oxfam Hong Kong, said.

Tsang said the pandemic was tougher for poor people than for the well-off. This led to those in poverty being more likely to lose their jobs and income.

Terry Leung Ming-fung is the group’s assistant research and advocacy manager. He said the pandemic also forced low-income elderly people and women, who were economically active, to lose their jobs.

Hong Kong’s richest make 47 times more than poorest, says Oxfam

The charity added that a severe shortage of childcare facilities made it difficult for poor women to find jobs as they had to care for their children. The report found almost 80 per cent of them could not work.

Dr Xu Duoduo is an assistant professor of sociology at the University of Hong Kong. She said most lower-paid workers were in jobs hit the hardest by the pandemic, such as the catering and service industries. But she said jobs held by the top earners, such as those in finance, remained relatively stable. Xu added the better-off often had stocks and properties to contribute extra income.

Wong Shek-hung is the director of the Hong Kong, Macau and Taiwan programme of Oxfam Hong Kong. She said the city’s minimum wage had stayed at HK$37.50 an hour since 2019. Thus, low-wage workers struggled to pay for what they needed as the consumer price index, especially food prices, continued to rise.

Staff writer

Question prompts:

• Using Context, Glossary and your own knowledge, explain how unemployment and underemployment affected the poor.

• Which low-income groups mentioned in Context were most affected by the pandemic? Justify your answer.

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Question prompts:

• Describe TWO trends shown in the chart.

• Using information from Context, explain TWO factors behind the trends in the chart.

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• Anti-poverty group calls for a rise in Hong Kong’s minimum wage to tackle the rising income gap

• Experts suggest other measures such as setting up an unemployment insurance scheme and providing long-term assistance for the poor

Oxfam Hong Kong has made several suggestions to the government designed to help narrow the gap between rich and poor and ease the plight of the worst-off.

The NGO recommended extending the government’s temporary unemployment relief scheme to the end of the year, which could benefit another 120,000 people. The group called for the minimum wage to be increased to HK$45.40 per hour, which could benefit nearly 340,000 workers. It added that the level should be reviewed on an annual basis instead of every two years.

Oxfam Hong Kong also said the government should regularise and increase the number of beneficiaries of its pilot scheme on living allowance for carers of elderly people from low-income families. It said that authorities should remove the regulation that carers cannot receive Old Age Living Allowance or support from the Comprehensive Social Security Assistance programme.

The charity also suggested the government set up independent childcare facilities to help women from low-income households go out to work instead of having to look after their children.

“Poverty is one of the major issues that the new administration must address,” said Kalina Tsang Ka-wai, the director general of Oxfam Hong Kong. “We hope to see policies that actively assist the poor and build a stronger post-pandemic recovery in the administration’s first policy address.”

Dr Xu Duoduo, an assistant professor of sociology at the University of Hong Kong, urged the government to create a social safety network by establishing an unemployment insurance scheme and a universal retirement protection system to provide long-term assistance for the poor. But Xu predicted the income gap would narrow over time as the city continued to reduce its Covid-19 restrictions.

“The figure has plateaued, and it will drop as the pandemic measures continue to be relaxed and the economy rebounds,” she said.

Staff writer

Question prompts:

• Using News, Glossary and your own knowledge, explain how increasing the city’s minimum wage could affect income inequality.

• Besides increasing the minimum wage, which other suggestion in News would be most beneficial for the city’s poor? Explain using Glossary and your own knowledge.

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• Widening income disparity and soaring cost of living make it harder for the poor to achieve a better life

• The socio-economic status of parents affects their children’s educational attainment and job prospects

Experts have pointed out that Hongkongers who are born poor face difficulties on all fronts, with many potentially caught in an unending loop of intergenerational poverty.

According to the Hong Kong Poverty Situation Report 2020 released last November, 1.65 million people – almost one in four of the population – lived below the poverty line, set at half the median monthly household income.

There were 274,900 poor children in 2020, which meant a poverty rate of 27 per cent, the highest since records began in 2009.

A survey of 201 poor children and teenagers by local NGO Society for Community Organisation (SoCO) found that more than four in five respondents had to do housework or look after family members, which they said affected their health and studying.

Peace Wong Wo-ping, chief officer of policy research and advocacy of the Hong Kong Council of Social Service, a federation of non-governmental social service agencies, said the socio-economic status of parents affected their children’s educational attainment and, subsequently, their job prospects.

He pointed to his organisation’s data for 2016, which showed that 85.5 per cent of young adults whose parents earned HK$80,000 or more a month entered university, whereas only 36.6 per cent of those whose parents earned less than HK$15,000 a month made it to university.

Nelson Chow Wing-sun, an emeritus professor of the department of social work and social administration at the University of Hong Kong said poor children often struggled more with language skills, especially English, because of their parents’ low education levels. This affected their chances of entering top schools and universities.

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They also had limited social exposure and social networks, poor self-image and lacked self-confidence.

“Unlike their well-off peers who were more confident about their chances of going to university and becoming professionals like doctors and lawyers, children of low-income families did not have strong aspirations,” he said.

Terry Leung Ming-fung, assistant research and advocacy manager of Oxfam Hong Kong, said soaring living expenses, especially home prices and rents, made it harder for poor young people to break out of poverty.

Staff writer

Question prompts:

• What do the reports mentioned in Context and Issue point at? What are the consequences if these trends are allowed to continue?

• “Children of poor households lose at the starting point on all fronts.” What evidence in Issue supports this statement? Explain.

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Context:

• Using Context, Glossary and your own knowledge, explain how unemployment and underemployment affected the poor. Those who were unemployed or underemployed likely could not afford to keep up with the rising cost of food.

• Which low-income groups mentioned in Context were most affected by the pandemic? Justify your answer. Women who did not have family or friends to help take care of their children were most affected because not only were they forced out of jobs because of Covid-19, but they also have more household members depending on them. (accept other reasonable answers)

Graph:

• Describe TWO trends shown in the chart. The median monthly household income for the top 10 per cent has increased from HK$120,000 to HK$127,600, but for the lowest 10 per cent, it has decreased from HK$3,500 to HK$2,700.

• Using information from Context, explain TWO factors behind the trends in the chart. The pandemic forced low-income elderly people and women out of jobs, but those who were well-off held jobs in industries that were relatively stable, such as finance.

News:

• Using News, Glossary and your own knowledge, explain how increasing the city’s minimum wage could affect income inequality. Increasing the minimum wage could help Hong Kong’s low-income workers earn more money to help them keep up with the increasing cost of living.

• Besides increasing the minimum wage, which other suggestion in News would be most beneficial for the city’s poor? Explain using Glossary and your own knowledge. The unemployment insurance scheme proposed by Xu could be most beneficial as this is a form of long-term financial support. The unemployment insurance scheme would ensure that those who have unwillingly lost their jobs will be paid regularly, with minimal impact on their ability to purchase necessities. (accept other reasonable answers)

Issue:

• What do the reports mentioned in Context and Issue point at? What are the consequences if these trends are allowed to continue? All the reports highlight the dire financial conditions of the city’s low-wage workers which are worsening. This impacts their children and creates a vicious cycle of intergenerational poverty. This will continue unless the government steps in.

• “Children of poor households lose at the starting point on all fronts.” What evidence in Issue supports this statement? Explain. The article mentions how this group of children have to juggle studying, doing chores and looking after family members. It also states that parents’ education, income and job affect their children’s education levels and careers because these parents likely cannot send their children to extracurricular or tuition classes, unlike their more well-off peers. The possible limited social exposure and social networks also affect the development and mental well-being of children from low-income families.