Critically Examine the Trend and Size of Poverty in Hong Kong

No city in the world is as ironic and contradictory as Hong Kong. This city has not only the sixth highest per capita GDP, just now also the highest Gini coefficient in the world (World vernacular, 2011). Fortunately, the Hong Kong government isnt bend a blind eye towards this dilemma but argon instead actively looking for a trade-off between sparing execution and tender welf atomic number 18. One notable example is the re-establishment of the Commission on Poverty, it is hoped that a all the way-defined leanness line leave behind shed a new vigilant into the meagerness situation in Hong Kong.Another important policy in modern years is the implementation of negligible salary faithfulness, which has been in belief for cardinal years aiming to guarantee a basic rent for wretched-income workers, however its effect on over solely employment level in Hong Kong is still to be de vergeined. In this essay, I forget commencement examine the overall veer and size of pr ivation in Hong Kong, then move on to prize the effectiveness of the present accessible security dodge, as sound as the tokenish wage in eradicating poverty in Hong Kong. Poverty, is an ambiguous term eespecial(a)ly in Hong Kong.The United Nations places the benchmark for poverty as alive under a periodic income less than or equal to fractional of the median kin income of equal size phratryholds. This is the explanation that the Commission on Poverty is likely to adopt. But before the launch of official poverty line lot ar considered poor only if they apply for large affable Security Assistance (CSSA), which eligibility is generally discouragemined by noun phrase income. As a result, the number of multitude applying for CSSA decreased afterward stripped wage law has been imposed.In this essay therefore, I will adopt the UN definition of poverty in examining its trend and size in Hong Kong. Poverty pose up to the year 2011 was the minusculeest since that of 20 01. Before 2011, there had been an overall summation trend in both the number of households living in poverty as sound as the poverty rate. In this sense, 2011 can be seen as a watershed year the poverty rate plummeted to 17. 1% when compared to 17. 9% in the previous year, which sloshedt a reduction of 55000 people woefulness from poverty.Additionally, the total number of poor households had been rising from 2001 to 2007, but this trend started to turn down from then on. The total number of poor households in 2011 was 444,000, when compared with that of the years 2007 and 2010 there had been a reduction of 11,000 and 7000 households respectively. In spite of the declining poverty trend and size, income discrepancy in Hong Kong has been worsening. In the year 2001, the median monthly income of high-income group was $31,000 composition that of low-income group was $10,000, which meant that the former was 3. 1 times that of the latter.However, this disparity continued to stir and in the year 2011, the median monthly income of the high-income group gaind to $35,000, while that of the low-income group plunged to $9000, which meant that the high-income group had a monthly income 3. 5 times a good deal than that of the low-income group. In brief, it is undeniable that the declining trend and size of poverty has been promising, but that was largely imputable to the thriving economy instead of governmental efforts, at the identical time, the income gap has been widening in spite of the implementation of minimum wage law.These statistics all indicate that the current social policies are inadequate in eliminating the at hand(predicate) threat of poverty. The social security system in Hong Kong is a ternary-tier system consisting of social foreboding and social allowance in the form of blanket(prenominal) Social Security Assistance and Old Age Allowance, mandated occupational premium in the form of authorization Provident Fund as substantially as pr ivate saving. In the remaining part of the essay, the effectiveness of the supra social security policies in lifting poverty will be valueed atomic number 53 by one.The Comprehensive Social Security Assistance was renamed after the in the public eye(predicate) Assistance Scheme in 1993 has the sole purpose to provide a safety net for those who cannot support themselves financially. It is designed to bring their income up to a prescribed level to meet their basic take. (Social Welfare Department, 2012) It is a non-contributory and means-tested arrangement financed wholly by the government. CSSA payments can be broadly classified into three categories standard rate, supplementations and special grants.Standard Rates from 2012 is divided into 5 subjects elderly individual aged over 60 or above, ill health cock-a-hoop under 60, incapacitate child, fit adult aged under 60 and able-bodied child. The amount of standard judge payable to each type differs, but they are under the same guiding principles the standard rate for children and seniors are higher than those of the adults, rates for single individuals living exclusively are greater than those of family members, and rates will increase with levels of severity of disability. Tsoi, 2002) Additionally, there are five types of supplements. Long-term supplement is an annual payment to recipients who have been receiving assistance for at least 12 months for the replacement of household and durable goods. whiz enhance supplement is a monthly payment to single heighten families with special difficulties in bringing up their families. Community living supplement is a monthly payment to old, disabled and certified ill-health CSSA recipients living in the community instead of any institutions.Transport supplement aims to promote social integrating and geographical mobility by providing monthly assistance to certified 100% disabled as well as population between 12 to 64 years of age. Last but not least, th e intention of the residential care supplement is to relieve the accommodation burdens of old, disabled and certified ill-health CSSA applicants who are not living in subsidised housing estates. Besides, a range of special grants are also set up to meet applicants special adopts including school fees, school-related expenses, essential traveling expenses and so on.Famous English philosopher Midgley once commented that redistributing wealthiness in the form of social assistance has the well-nigh dread(a)ct potence impact on the poverty problem. She identified three necessary conditions in order to fully realize this potential, first, social assistance moldiness be financial by progressive taxation, second, the level of benefit provided must(prenominal) be sufficient to raise recipients out of poverty and third, needy people must have easy access to social assistance connives and that these schemes would not deter them from applying for help. Tsoi, 2002). With applies the above mentioned three principles to Hong Kong, it is worthy to highlight that Hong Kong only fulfilled the first condition out of the three. In the undermentioned paragraphs, the low effectiveness of the CSSA will be discussed with respect to its level of benefits, extremity of application as well as inducings for its recipients to reintegrate into the line of reasoning merchandise. The level of benefits by the standard rates of the CSSA cannot reflect the actual needs of its recipients, but are in accompaniment set arbitrarily. At the oment, the standard rates of CSSA recipients are reviewed and adjusted per annum by the legislative Council to reflect the changes in Price Level by the Census and Statistics Department. The Consumption Price Index however, is a reference to the household expenditure of the 25% of the population with the lowest income. It is highly dubious as to whether the household expenditures of the poor households would be an authentic indicator and correspond t o what they in reality need to support their daily living. In addition, some CSSA recipients described the process of application as humiliating and intimidating.According to a joint project by the Department of Applied Social Sciences in Polytechnic University and Oxfam Hong Kong on apprehension and Utilization of the CSSA in 2007, it was found that some recipients felt that their applications were always delay and mishandled. Some applicants even accused the social security officers as having perverting manners and lack empathy. These findings were found out after in-depth interviews and group discussion, although it is contestable as to the representativeness of the sample size, the critique to the humiliating application procedures must confidential information to some bearing of truth that the CSSA recipients feel.Besides, some social workers in the have also complained that some officers tend to insult and threaten the applicants by devising unreasonable requests. Going back to Midgleys third condition in order to eradicate poverty which frettings the access to social security must not deter the needy from applying the Social Services Department could clearly do a better job. Furthermore, there is always an unspoken concern that receiving CSSA would encourage a dependency culture, especially when the CSSA mechanisms do not encourage able-bodied recipients to attain economic independence.Contrary to common misconception that only able-bodied lazy people and new immigrants would apply for CSSA, most CSSA applicants, amounting to 60% (Oxfam, 2007) manage social security as the last resort to alleviate their dire financial circumstances. However, due to a lack of support services, only 8%-10% of able-bodied CSSA recipients are able to re-enter the competitive job mart (Ming Pao Daily News, 2000) by the Special Job Attachment Programme. In addition, the superfluous cost for attempting to re-enter the job market may ut an excess toll on the familie s receiving CSSA, permit alone some single parents families with insufficient child-care facilities may cull to keep on receiving social welfare instead of working. In short, CSSA do not provide sufficient incentive for its recipients to re-join the work force, which is the only way to escape poverty. Another aspect of the social security system in Hong Kong is mandated occupational pension, which is in the form of Mandatory Provident Fund in Hong Kong. It is a compulsory, occupation-related scheme with defined monthly percentage by both employers and employees.The Mandatory Provident Fund Schemes regularisation was passed in 2000 with the hope of strengthening the safety net and privacy auspices. plowshare to the MPF is mandated to be 10% of the employees income with which 5% is stomachd by his/her employer. Besides, the mandatory contribution is adjusted with relevance to employees income. After the implementation of minimum wage, the monthly pertinent income is readjus ted, for employees with monthly income less than $6500, only their employers are mandated to precede 5% of germane(predicate) income, this becomes the minimum contribution.On the other hand, for employees with income higher than $25000, both employers and employees are required to contribute $1250, this becomes the maximum contribution. All MPF contributions will be injected into registered MPF trustee in the market chosen by the employers, but now, employees will be able to choose new MPF scheme annually based on their performance. In the undermentioned paragraphs, the limitations of the MPF scheme will be discussed including its limited coverage as well as inadequate retirement protection which undoubtedly hamper its effectiveness.As aforementioned, MPF is an employment-related protection scheme, which means that only people with long-term employment snub will receive retirement protection. The MPF only have limited coverage and do not have universal protection as people exclu ded from the manpower including the sick, the disabled, housewives, hawkers, domestic employees and so on are unprotected, this amount to quite a sizable portion in the population. Besides, the employers might try to evade from the mandated contributions by altering the terms of employment contract.Employers are legally bound to contribute to MPF for their employees if they are employed for more than 60 days, therefore, some employers may by design change the employment contract to 59 days or revoke the contract and re-employ the employees. In brief, the MPF scheme does not provided for universal protection in the sense that a significant portion of the population is left unprotected, let alone some canny employers attempt to alter the employment contract in order to avoid contributing to their employees retirement protection scheme.Furthermore, the quandary of the MPF Scheme is that despite its objective is to provide retirement protection and repay the safety net, the protecti on is in fact far from sufficient. MPF is a define-contribution scheme but it is not a defined-benefits scheme, which meant that employees contribution is contingent upon many factors including the succession of contribution, returns from investments by the trustees after deducing the high administrative and transaction costs incurred, as well as the amount of contribution.This led to the inevitable unpredictability of benefits which is incomplete guaranteed by the trustees nor protected by the government. Besides, the scheme was introduced only in 2000, which meant that people around retirement age at that time would receive either little or no protection at all due to the short contribution period. At the moment, elderly poverty was one of the severest forms of poverty in Hong Kong. In short, contrary to its initial intention, the MPF does not guarantee retirement protection, instead only added more uncertainties and unpredictability to lives after retirement.The statutory min imum wage was passed in 2010 and fully implemented Labour Day of 2011. It aims at striking an appropriate balance between forestalling excessively low wages and minimising the loss of low-paid jobs while sustaining Hong Kongs economic growth and fighting (Labour Department, 2011). The initial minimum wage rate was set at $28, but the commission set up by the government to review the minimum wage rate biannually has agreed to increase to $30 an hour. From a theoretical standpoint, setting up a wage floor would disordered the balance of the labour market by forcing some low science workers to be laid off.Nevertheless, the government estimated that 273800 grassroot workers would benefit from the law and could sustain a basic level of living by avoiding from being underpaid. After almost two years since the law has passed, however, it seems that reports about employers trying to cut the fringe benefits of employees were not uncommon and the actual effect and repercussion of minimum wage on the labour market is yet to be unravelled. In the following essay, I will examine the implementation of minimum wage law with regard to its effectiveness in eradicating poverty in Hong Kong.In order to assess the effectiveness of minimum wage, the first indicator is changes in monthly income of the tear down income groups when compared with higher income groups in the lower half year of 2011. If we divide the exclusively population equally into ten decile groups with the first decile group being the poorest 10% of the people and the tenth decile group being the wealthiest 10%, it was found that in the first three decile groups all experience increase in monthly income ranging from 6. 9% to 9. 3%, while the last three decile groups experience either no change or negative growth in their monthly income (HKCSS, 2011).However, looking at income alone would not be a panoptic assessment of the effect of minimum wage law given that the economic began to boom around the time mini mum wage was implemented. Therefore, a much more reliable assessment would be to compare the living standards of low income households before and after the minimum wage came into force. A study fit by Oxfam Hong Kong adopted a two-stage stratified surveys that interview impoverished households with at least one family member receiving minimum wage and compare their animation from March 2011 to January 2012.In the following paragraphs, findings from this study will be further analysed. In terms of monthly income, the minimum wage law has indeed increase the nominal household income. About 70% of interviewees, representing 131125 families describe an increase in household income after the introduction of minimum wage. Moreover, 72. 6% of them also reported a rise in individual workers income. In spite of an increase in monthly income and in fact, periodic income as well, working hours of workers decreased.The medium hourly wage of respondents who stayed in the same job before and after implementation of minimum wage increased, 56. 8% of them even receive an hourly wage that exceeded $28. However, the same group of people who remain in the same job also experience an average cut of about 13. 9 working hours. This reduction of working hour is more often than not, at the expense of the workers benefit such as cancelling paid lunch hour or meal break and no overtime payment and so on. 46. % of respondents complained that the previously paid rest days were cancelled since the enforcement of minimum wage law. Taking into account of the loss of paid rest days as well as other fringe benefits, coupled with the reduction in working hours, over half of the respondents, 55. 8% of them experienced a angle of dip in individual income despite the apparent increase in nominal monthly income. In the paragraph above concerning CSSA recipients, it was briefly mentioned that they treat social assistance as their last resort to mitigate their financial situation.In fact, most of them felt perceivable prejudice against them. The introduction of minimum wage has a wide application, but it affects most significantly low-income jobs that CSSA recipients crave. About half of the respondents receiving CSSA in the Oxfam study affirm the effectiveness of wage floor as an pulsation to quit receiving social assistance. This in brief, could address the need of CSSA recipients to self-reliance and forfend the stigmatization or label that they feel attached to them by re-entering the job market.Nonetheless, increase in income to a certain extent does not mean or signify poverty alleviation. The most pivotal finding in the Oxfam study is that it reveals 40. 5% of households still live in deprivation despite the minimum wage law. This is because they define deprivation as the inabilities to afford at least three items that are dubbed essential by most Hong Kong residents including alveolar consonant check-ups, leisure activities, afford to go to private clinics whe n sick and tea house and so on.According to Townsend (1979), a person is considered to be in poverty if he or she does not have enough resources to enable him or her to get in in normal activities commonly engaged by ordinary members in the community and therefore cannot become fully integrated into the mainstream of society. Therefore, when 40. 5% of respondents, representing 531354 households are still deprived of a chance to engage in social activities simply due to the fact that they still could not afford the items they need highlighted just how ineffective minimum wage legislation has been in eradicating poverty.In conclusion, lifting people out of poverty is a difficult problem that could not be solved by any social policy alone, let alone the many flaws and limitations that are embedded in social policies. However, it is only through identifying the imperfection in social welfare policies could we make improvement on them and hopefully attain the final goal of eradicating poverty at the end. write list Hong Kong Council of Social Service, The Statistic review of the Low Income Household in Hong Kong, 2011. w. hkcss. org. hk/index_e. asp Labour Department (2011). Statutory Minimum Wage Reference Guidelines for Employers and Employees. Legislative Council (2012). Before and After the Statutory Minimum Wage Ordinance in Hong Kong Survey of Low-income workers and their Families. Oxfam Hong Kong and Centre for Social Policy Studies, Department of Applied Social Sciences, Hong Kong Polytechnic University (2007). Perception and Utilization of CSSA a Study on the Views of the everyday and the Lower Income people.Social Welfare Department (2012), Comprehensive Social Assistance Scheme, retrieved from http//www. swd. gov. hk/en/index/site_pubsvc/page_socsecu/sub_comprehens/ Tsoi Kcon-wah , Poverty Eradication and Social Security in Hong kong, in Advances in Social welfare in Hong Kong, ed. ,) by D. T. L. Shek, 2002, Chapter 9. World Bank (2011), Gini Index, retrieved from http//data. worldbank. org/indicator/SI. POV. GINI