Critically Examine the Trend and Size of Poverty in Hong Kong Society. Please Assess the Effectiveness of the Present Social Security System and the Minimum Wage in Eradicating Poverty in Hong Kong.

Topics: Minimum wage, Poverty, Employment Pages: 10 (3339 words) Published: March 29, 2013
No city in the world is as ironic and contradictory as Hong Kong. This city has not only the 6th highest per capita GDP, but also the highest Gini coefficient in the world (World Bank, 2011). Fortunately, the Hong Kong government isn’t turning a blind eye towards this dilemma but are instead actively looking for a trade-off between economic performance and social welfare. One notable example is the re-establishment of the Commission on Poverty, it is hoped that a clearly-defined poverty line will shed a new light into the poverty situation in Hong Kong. Another important policy in recent years is the implementation of minimum wage law, which has been in effect for two years aiming to guarantee a basic wage for low-income workers, however its effect on overall employment level in Hong Kong is still to be determined. In this essay, I will first examine the overall trend and size of poverty in Hong Kong, then move on to assess the effectiveness of the present social security system, as well as the minimum wage in eradicating poverty in Hong Kong.

Poverty, is an ambiguous term especially in Hong Kong. The United Nations places the benchmark for poverty as living under a monthly income less than or equal to half of the median household income of equal size households. This is the definition that the Commission on Poverty is likely to adopt. But before the launch of official poverty line people are considered poor only if they apply for Comprehensive Social Security Assistance (CSSA), which eligibility is largely determined by nominal income. As a result, the number of people applying for CSSA decreased after minimum 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 rate up to the year 2011 was the lowest since that of 2001. Before 2011, there had been an overall increasing trend in both the number of households living in poverty as well 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 meant a reduction of 55000 people suffering from poverty. Additionally, the total number of poor households had been rising from 2001 to 2007, but this trend started to decline 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 disparity in Hong Kong has been worsening. In the year 2001, the median monthly income of high-income group was $31,000 while 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 grow and in the year 2011, the median monthly income of the high-income group increased 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 more 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 due to the thriving economy instead of governmental efforts, at the same time, the income gap has been widening despite the implementation of minimum wage law. These statistics all indicate that the current social policies are inadequate in eliminating the imminent threat of poverty.

The social security system in Hong Kong is a three-tier system consisting of social assistance and social allowance in the form of Comprehensive Social Security Assistance and Old Age Allowance, mandated occupational pension in the form of Mandatory Provident Fund as well as private saving. In the remaining part of the essay, the effectiveness of the above social security policies in lifting poverty will be assessed one by one.

The Comprehensive Social Security Assistance was renamed after the Public...
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