29 APR 2013
Oxfam calls for Low Income Family Subsidy to relieve burden of working poor households with children
A new report by Oxfam finds that the number of working poor households has not dropped significantly over the last three years after the implementation of the minimum wage. In the fourth quarter of 2012, 170,000 working households were living in poverty, only 800 households less than in 2010. The report on the latest trends among the working poor also finds that the monthly income of more than half of the working poor households is below the CSSA level. Furthermore, about 65% of these households have dependent children, adding to their financial burden. Oxfam urges the government to implement a Low Income Family Subsidy to lessen the burden of working poor households with children, help them maintain basic standards of living, and alleviate inter-generational poverty.
Trends among the Working Poor
- The wealth gap has not been narrowed subsequent to the implementation of the minimum wage. A comparison of the median monthly income of the richest 10% of households with the poorest 10% in the fourth quarter of 2012 revealed that the former was 26.3 times that of the latter. This means the monthly median household income of the richest 10% is 26 times that of the poorest 10%.
- According to the Population Census 2011, 284,099 children aged 18 or under were living below the poverty line, among those 195,854 were living in working poor households. This situation described about 70% of the total number of poor children.
- In the fourth quarter of 2012, there were 170,600 working poor households, among which 91,600 had a monthly household income lower than the CSSA level. However, over 90% of working poor households, especially those with children, did not apply for CSSA.
- Among all eligible working poor households, only 10,339 were receiving CSSA according to the data from the Department of Social Welfare in 2012, representing just about 10% of all working poor households.
- In the fourth quarter of 2012, about 65% of working poor households had to support dependents aged 18 or below, whereas the proportion was about 38% among working households in general.
- On average, each employed member of working poor households had to support two non-working members. However, among working households in general, each employed member only had to support an average of 0.8 non-working member. This reveals that working poor households bear heavier burden in terms of caring for dependents.
Oxfam’s Policy Recommendations
The policies and measures implemented by the Government over the years have proven to be inadequate in solving the problems of working poverty and unable to provide meaningful support to working poor households with children. Therefore, Oxfam recommends that in addition to reviewing the minimum wage level annually, the Government should also implement a Low Income Family Subsidy to ensure that working poor households with dependent children will be able to maintain basic standards of living without having to apply for CSSA. This will help to alleviate inter-generational poverty. Our recommendations are as follows:
Target: Poor households with at least one full-time working member and at least one non-working dependent child aged under 18 (including children aged under six and children aged six or above studying at a primary/secondary school) are the targeted beneficiaries. To minimise administrative cost, the database of the Labour Department could be used to select eligible households.
Eligibility: Households with monthly income at or below the poverty line, that is, 50 per cent of the median household income are eligible to apply. To simplify the application procedure, an asset test is not required.
Subsidy amount: Every eligible child can receive a subsidy of HK$800, which is equivalent to 40% of the remaining expenditure of a poor child after deducting total sum of current subsidies (such as the School Textbook Assistance Scheme, Meal Allowance for Children and Subsidy Scheme for Internet Access Charges), and also equivalent to half of the standard rate for children under the CSSA scheme. We initially recommend that the first two children will receive HK$800 each. The subsidy amount for the third and subsequent children will be adjusted according to the decreasing additional costs they bring to the household.
According to the above recommendations, about 180,000 poor children aged under 18 are estimated to benefit from the subsidy. The annual cost for this scheme is approximately HK$1.73 billion.
Oxfam is dedicated to fighting poverty and inequity worldwide. The international and independent development and humanitarian organisation tackles poverty in four main ways: sustainable development in poor communities, disaster relief, local and global advocacy, and education with Hong Kong youth. Established in Hong Kong in 1976, Oxfam Hong Kong is a founding member of Oxfam, an international confederation that has assisted poor people in 94 countries. Oxfam Hong Kong alone has supported poor people in over 70 countries/regions.
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