Poverty, Social Security & Minimum Wage

Topics: Poverty, Poverty in the United States, Unemployment Pages: 9 (3097 words) Published: December 20, 2012
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.

Poverty has been a hot issue in Hong Kong for several years. Several policies developed form the Social Security system have been adopted by the government for soothing this problem, such as the CSSA scheme and the MPF fund. Nevertheless, it seems that the poverty problem is getting worse. Voices of demanding the government to help the poor have become fiercer. Recently, the minimum wage is also called for guaranteeing the lower income group to be able to afford their living. In this essay, the trend and size of poverty in Hong Kong society would firstly be critically examined and thus the effectiveness of the present Social Security system and the minimum wage in eradicating Hong Kong’s poverty problem would be assessed.

Part I
Definition of poverty
Before examining the trend and size of poverty in Hong Kong, it is necessary to understand the definitions of poverty. According to United Nations, poverty is a denial of choices and opportunities, a violation of human dignity. It is also the lack of basic capacity to participate effectively in society. Poverty can be categorized into two types, absolute poverty and relative poverty. Absolute poverty is the basic and minimal living standard in the society, which commonly includes food, water, sanitation, clothing, shelter, health care, education and information. Relative poverty is the socially defined and dependent on social context, a measure of income inequality. It suggests that the lack of access to many of the goods and services expected by the rest of the contemporary society leads to social exclusion and damaging results for the individuals and families in relative poverty.

Part II Size and trend of Poverty in HK
In Hong Kong, there are three main types of measuring the size and trend of poverty, income approach, the approach of counting the number of CSSA recipients and the Gini Coefficient approach. Figure 1

Source: Report 2011 By The Council of Social Service
For the general phenomenon of poverty in Hong Kong, there is an increase in prevalence of low-income households in Hong Kong in the past decade. According to Figure 1, there were 0.89 million of people living in low-income families in 1995 while there were 1.22 millions in 2005. Poverty rate has risen from 14.8% in 1995 to 17.7% in 2005. In Hong Kong, there is no official poverty line but it is common to take the half of the median of the household income as the poverty line. The medians of the different sizes of household income are, 1 person for HK$3500, 2 persons for HK$7500, 3 persons for $10570, 4 persons for $13250. Another report by The Hong Kong Council of Social Service, referring to the data of the household income and the population of 2011 provided by The Census and Statics Department, demonstrated that the poverty rate has a small improvement, lowering to 17.1%, but still having 1.15 millions of people living under poverty. This poverty rate is the lowest since 2001. The number of CSSA recipients in 1997 is 186932, the number of CSSA recipients has risen to 288145 in 2007. There is an average increase of 4.4% per annum over 10 years.

Using the Gini Coefficient as the measuring approach has been very common in Hong Kong nowadays. It is also a measurement of income disparity. The scale of Gini Coefficient can be categorized as the following: - Below 0.2: income is absolutely equal

- 0.2 – 0.3: income is fairly equal
- 0.3 – 0.4: income is moderately equal
- 0.4 – 0.5: income gap is large
- 0.5 – 0.6: income gap is very large
The higher the number, the larger the income gap, vice versa. The Gini Coefficient in Hong Kong has been high for ten years, more than 0.5. It identifies that the wealth inequality in Hong Kong has been serious.

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