With public attention mostly focusing on the farce staged by opposition lawmakers in the Legislative Council last week, a significant event — the Commission on Poverty Summit 2019 — was regrettably overlooked by many. As a developed economy, Hong Kong’s poverty situation — partly blamed on income inequality — is a crucial issue. It has strong implications for our social well-being. The Commission on Poverty was set up in 2012; its creation showed that poverty alleviation was regarded as one of the most important policy areas for the previous administration. The current administration continues to pursue this policy goal. The summit is an important venue to evaluate and discuss the poverty situation and also ways to deal with it in Hong Kong.
When we discuss the poverty issue in Hong Kong, we usually use the poverty line as the main measurement. According to latest statistics, the poverty rate in 2017 was 20.1 percent. The figure seems to be rather disappointing as the rate dropped to less than 20 percent during the period from 2011-16, but unfortunately it rose again to the 2010 level (also at 20.1 percent). It seems that the poverty situation is getting worse — despite government expenditure on social welfare increasing over the past few years. The government’s recurrent expenditure in 2019-20 is estimated to reach HK$84.3 billion ($10.7 billion), almost doubling (rising 97 percent) from 2012-13. This paradoxical phenomenon naturally raises an important question: Has something gone wrong?
There is no easy answer. Let’s start by examining technical aspects of the poverty line. The design of the poverty line is based on the concept of “relative poverty”, which is more applicable to a developed city and comparable to international standards. The line is set at 50 percent of the median monthly household income before taxation and social welfare payments. The poverty rate mentioned above only reveals the “original” financial situation of households. To reflect the effectiveness of the government’s poverty alleviation efforts, we need to look at the poverty rate after factoring in policy interventions.
An understanding of economic hardship in Hong Kong should go beyond technical discussions of the poverty line. We should note that there has been a paradigm shift in poverty alleviation over the past few decades
Let’s look at figures in 2017 and 2010 again. The poverty rate before the cash transfers was 20.1 percent. However, after the policy intervention (i.e., recurrent cash transfers), the rate in 2010 dropped to 15.7 percent and the rate in 2017 fell to 14.7 percent. The decline in the poverty rate suggests policy interventions are becoming more effective. The poverty line is an instrument to monitor changes in the poverty situation over time. Every policy tool has its limitations. The current poverty line is affected by structural factors, like the growing aging population and a smaller average household size, which affects the validity of poverty measurements. It is necessary to examine more supplementary analyses to help the public better understand the poverty situation.
An understanding of economic hardship in Hong Kong should go beyond technical discussions of the poverty line. We should note that there has been a paradigm shift in poverty alleviation over the past few decades. In the past, Hong Kong people believed dealing with poverty was the responsibility of an individual or family; government welfare programs only play a supplementary role. With a growing concern about social issues, people increasingly believe the government is obliged to deal with structural poverty by releasing proactive policies. And the government has responded to public expectations — most significantly with the introduction of a minimum wage in 2011. What are the latest trends in poverty alleviation? The consensus is that it is not only the responsibility of the individual, family and government, but also of the business community and society.
This trend could be witnessed in the latest summit, which was held under the theme of “Building Coalition to Tackle Poverty Through Innovative Means”. The term “coalition” refers to the three sectors: The government, the business sector and wider community, who have participated in poverty alleviation projects involving cross-sector collaboration. The rationale behind such an alliance is that each sector has its own strengths — such as resources and networks. When they collaborate, the effectiveness of poverty alleviation projects will be enhanced.
Another significant aspect to forming a poverty alleviation coalition is it can help achieve innovation. The creation of a coalition means that solutions can go beyond the bureaucratic framework. This means more new ideas and service models can be cultivated. A good example is the Social Innovation and Entrepreneurship Development Fund Task Force under the Commission on Poverty. This has put a lot of effort into supporting innovative programs and conducting research. It has allocated over HK$150 million of funding for various poverty alleviation initiatives since its creation in 2013, benefitting 160,000 people.
Muhammad Yunus, the famous social entrepreneur, once said: “Poverty does not belong in civilized human society. Its proper place is in a museum.” His founding of Grameen Bank also shows us that innovation is vital to poverty alleviation. As we are entering the AI era, which will most likely have a huge impact on the labor market, all sectors involved in poverty alleviation need to explore and discuss measures to cope with these future challenges.
The author is research officer of the One Country Two Systems Research Institute.
HONG KONG NEWS