192,500 families are trapped in poverty;
All-round income protection policies are needed for families of employed poor

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Poverty has worsened in the past five and a half years among families of low-income workers, and the gap between poor and rich families is at its highest ever, warned Oxfam Hong Kong in a new report, Employment and Poverty in Hong Kong Families. The report urges the government to take immediate action, including ensuring that the statutory minimum wage takes into account a worker’s need to support his or her family, and providing comprehensive income protection policies for employed members of poor families. In the long run, tax credits should be explored as a form of direct income support, and as a supplementary provision to the minimum wage.

Trends among the working poor

  • 192,500 poor households with working members: In 2010 Q2, one in every 10 households with at least one working member (10.2%) was living in poverty, with a monthly income less than half the median among families of comparable size. From 2005 to 2010 Q2, the number of households of employed poor increased to a record high of 192,500, despite the economic growth.
  • Large families suffer most: About 65% of poor households with at least one working member include three or four family members. Families of three or more members have a higher than average poverty rate, indicating that the livelihoods of these families are at higher risk. 
  • Employed members of poor families bear heavier burden: In 2010 Q2, over 63% of poor families with one or more workers had dependents aged below 15 or above 65, which is much higher than the 45% among all families with working members.
    The ratio of workers to dependents is 1:2 among poor households, which means EVERY EMPLOYED PERSON in these households must support TWO FAMILY MEMBERS. By comparison, the ratio is 1:0.8 among general households with employed members.    
  • Over 60% of the households of the employed poor are living below CSSA level: In 2010 Q2, 124,300 poor families with at least one worker had a monthly income of less than the average CSSA payment for the corresponding household size; this situation describes 64.6% of the total households of the working poor. However, a majority of these households, though most would qualify, are actually not on CSSA. In July 2010, only 14,887 low-income households were on CSSA, representing just 12% of households with at least one worker that are currently living below the CSSA standard.

General poverty trends

  • The monthly median household income of the richest 10% is 27 times that of the poorest 10%: Comparing the monthly household median income of the richest 10% of Hong Kong households with the poorest 10% in 2010 Q1, it is found that the former is 27 times that of the latter. Moreover, the median monthly income of the poorest 10% and 20% of households has remained the same as in 2005, which are HK$3,000 and HK$6,000 respectively. However, an increase of 16% is noted in the highest 10% of households, from HK$70,000 in 2005 to HK$80,900 in 2010 Q1.  
  • The widest income gap among the world’s wealthiest economies: According to the Human Development Report released by the United Nations Development Programme (UNDP) in 2009, Hong Kong had a relatively high Gini coefficient of 43.4, the highest among developed economies.

Ineffective government policies

The government has adopted a range of policies to facilitate the entry of poor people to the workforce. The minimum wage is one such crucial policy, but reference to “the needs of workers and their families” was excluded from the final bill, which indicates that additional policies will be needed to supplement it. Apart from the minimum wage, other policies such as Comprehensive Social Security Assistance (CSSA), the transport support scheme, various childcare support programmes and short-term food assistance projects are aimed at the households of the employed poor. However, these measures are far from adequate, and a large portion of the households of the employed poor are left behind. Making matters worse is the stigmatization faced by recipients of CSSA, which poses a barrier to low-income households in applying for CSSA, even though they are eligible for it.

Oxfam Hong Kong recommendations

Oxfam Hong Kong maintains that all working people have a right to a decent minimum standard of living for themselves and their families. The establishment of a minimum wage will reduce the prevalence of poverty among the employed to a certain extent, but this measure alone may not be adequate to lift families out of poverty, especially those with three or more family members and with dependents. In fact, it is intolerable to allow a significant portion of the population, which is contributing to the workforce in our society, to remain in desperate straits for extended periods, to become marginalised with regard to mainstream society, and to put their futures and those of their families in jeopardy. In order to correct this situation we recommend that the Hong Kong Government consider the following policy suggestions:

  1. Minimum wage
    • Ensure the minimum wage is set at a level adequate to enable a worker to feed herself/himself and at least one additional family member.
    • Review the minimum wage each year with reference to the consumption price index, the basic needs of families, the performance of the labour market and the latest statistics on poor households with working family members.
  2. Transport support scheme
    • Expand the existing scope of the transport support scheme from four remotes areas (Tuen Mun, Yuen Long, New Territories North and outlying islands) to all administrative districts.
    • The existing scheme limits subsidies to a period of twelve months. This is not attractive enough to encourage people to seek long-term employment far from their homes. The government is advised to provide a whole work life subsidy to eligible low wage earners so as to increase the incentive for them to remain in the labour market.
  3. Childcare support
    1. Neighbourhood Support Child Care Project (NSCCP)
      • Expand the existing scope of the NSCCP from the current six districts (Tung Chung, Sham Shui Po, Kwai Chung, Tuen Mun, Yuen Long and Kwun Tong) to all administrative districts.
      • Pay all childcare workers at least the minimum wage.
      •  Expand the number of places in the programme and provide escort services to participating children.
      • The government must commit to ensuring that childcare projects are adequately subsidised and provide enough fee waivers or reductions for all poor families with working members. Poor families with members working at least 72 hours[1] per month should be granted fee waivers for their children in the programme. Those working less than 72 hours but more than 30 hours[2] should be granted fee reductions.
    2. After School Care Programme (ASCP)
      • Extend the service until 8:00 pm on weekdays and provide service during weekends and public holidays as well.
      • Expand the number of places and provide escort services for participating children. The government must commit to ensuring that childcare projects are adequately subsidised and provide enough fee waivers or reduced rates for all poor families with working members. Poor families with members working at least 72 hours[3]per month should be granted fee waivers. Those working less than 72 hours but more than 30 hours[4] should be granted fee reductions.
  4. Family carer allowance
    • In order to respect gender equality and division of labour in taking up family responsibilities and recognise the socio-economic importance of family care, a family carer allowance should be granted to ensure a basic standard of living for workers who must remain outside the paid workforce or reduce their working hours in order to care for family members.
    • The family carer allowance should be provided to adults on low incomes who need to look after family members on a full-time basis.
  5. Meal allowances for employed persons
    • On top of the Short-term Food Assistance Service Projects, extra meal allowances could be provided to employed persons with low incomes.
  6. Promote a positive public image of CSSA recipients
    • It is necessary to foster public recognition of the significance of low-income CSSA. The government should take the lead to explain the vital importance of low-income CSSA, so as to encourage its use to assist all those whose earnings fall below subsistence level.
  7. Tax credits for families of the working poor
    • Tax programmes, including negative income tax and tax credits, are effective measures against employment poverty in the United Kingdom, United States and Western Europe. A complement to social welfare, such programs also encourages unemployed workers to rejoin, and low-income earners to stay in, the labour market.

About Oxfam

Oxfam Hong Kong is an independent development and humanitarian organization working against poverty and related injustice. We recognize that much poverty is caused by injustice and that poverty alleviation requires economic, social and structural change. We work with people facing poverty and with partner organisations on development, humanitarian, policy advocacy and public education programmes.

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[1] Under the Employment Ordinance (Cap 75), anyone who is employed continuously for four weeks or more and works at least 18 hours each week (72 hours per month) is entitled to basic protection under the Ordinance. (http://www.labour.gov.hk/eng/public/ConciseGuide.htm)

[2] The official definition of “part-time employee” used by the Census and Statistics Department in its report Social Data Collected via the General Household Survey: Special Topics Report No. 52, is an employee working less than 30 hours per week and without a fixed number of working days per week.

[3] Same as footnote (1)

[4] Same as footnote (2)