Inequality and Poverty in Hong Kong

• This unit examines inequality and poverty problems in Hong Kong.

Definition of Poverty

• Poverty is when people lack sufficient income to meet basic needs and live below a certain standard.
• There are two types of poverty: absolute and relative.
• Absolute poverty is the lack of income to satisfy basic food needs.
• Relative poverty is a low income relative to the rest of society.

Measurement of Poverty

• The poverty line marks the minimum income to maintain basic living.
• The international poverty line set by the World Bank is USD $2.15 (~HKD $17) a day as of September 2022.
• Hong Kong's official poverty line is set at half of the median monthly income.
• Individuals earning less than half the median monthly income are classified as poor.
• The poverty line is based on the concept of absolute/relative poverty.
• Median household income is the income in the middle when all household incomes are arranged in ascending order.
• In Hong Kong 1.65 million people were considered poor in 2020, with a poverty rate of 23.6%.

Hong Kong's Poverty Line in 2020:

• One-person household: $4,400
• Two-person household: $9,500
• Three-person household: $16,000
• Six-person household: $21,900

Why Set a Poverty Line in Hong Kong?

• To monitor poverty with a simple, quantifiable standard.
• To improve policies on tackling poverty.

Limitations of the Poverty Line

• Poverty cannot be entirely eliminated due to the relativity concept; it serves as a yardstick for understanding the situation.
• Defining poverty in relative terms indicates the government is more concerned with inequality than poverty itself.

Measurement of Disparity

• Wealth gap refers to the difference in wealth among people.
• A large wealth gap indicates an extremely unequal distribution of wealth in society.
• The Gini coefficient measures the degree of income disparity on a scale from "0" to "1".
• "0" represents an absolutely even distribution of income.
• "1" represents extreme disparity.
• 0.4 is considered a warning line.
• In other words, zero means perfect equality, and 1.0 means one person takes all.

Gini Coefficient of Hong Kong (Post-Tax & Post-Social Transfer):

• 1996: 0.427
• 2001: 0.421
• 2006: 0.427
• 2011: 0.414
• 2016: 0.420
• 2021: 0.397
• The Gini coefficient measures wealth distribution but cannot show poverty or income levels in a specific place.

Major Types of Poverty in Hong Kong & Reasons

• Poverty rate: 7.5% (2020)
• Definition: domestic households in poverty with at least one member aged below 18.
• Larger household size.
• Higher proportion of single parent and new arrival households.
• Lower proportion of working members in the household.

Intergenerational Poverty

• Intergenerational poverty is poverty passed down from generation to generation.
• Children from poor families have limited access to services and opportunities, hindering skill development.
• They are likely to be trapped in low-paid jobs.
• The poverty cycle continues when they become parents, intensifying intergenerational poverty.

Youth Poor Households

• Definition: People in poverty with all members aged 18-29
• Poverty rate: 6.6% (2020)
• Ah Him is a master Degree holder
• Works as a Councillor Assistant
• Lived in a subdivided unit for 5 years, crowded and shabby
• Had High living costs
• Couldn't afford to buy his own property
• Worried about his future
• Had poor self-esteem

Social Mobility

• Social mobility is the ability of individuals to move upwards or downwards in a social hierarchy based on changes in wealth, occupation, and education.
• Hong Kong is a knowledge-based economy where knowledge and technology are vital for growth, education is vital for upward social mobility.
• Young people with low education and lack of work experience face limited workplace opportunities and are trapped in poverty.

Working Poor Households

• Definition: domestic households in poverty with at least one employed member.
• Poverty rate: 3.0% (2020)
• According to the International Labour Organisation, the working poor work but do not earn enough to lift themselves and their families above the poverty threshold.
• They have lower skill and education levels.
• They have low wages and work long hours.
• Many are new arrivals from mainland China.
• They work as clerks, cleaners, security guards, food deliverers, etc.
• Economic restructuring from manufacturing-based to knowledge-based economy is a reason for poverty.
• Since the end of the 1970s, Hong Kong's industries moved to the mainland.
• In the 1980s, Hong Kong turned to the service sector, such as tourism.
• In the 1990s, labour-intensive industries declined, focusing on finance, trade, and commerce, reducing demand for less educated and low-skilled workers, marginalising them.

Elderly Poor Households

• Definition: domestic households in poverty with all members aged 65 years or above.
• Poverty rate: 21.3% (2020)

Reasons for Poverty

• Elderly people in Hong Kong lack a stable income and rarely engage in full-time jobs. Hong Kong’s workforce participation rate among older adults is 17.7%, compared to Japan (22.7%), Singapore (26.8%), and Seoul (31.5%).
• The Old Age Living Allowance (OALA) is the most popular cash assistance, providing HK$4,250 monthly (from 1st February 2025).
• The Old Age Allowance (non-means tested) for Hong Kong residents aged 70 or above offers HK$1,640 monthly (from 1st February 2025).
• Frail and chronically ill elderly individuals face heavy financial burdens from medical and healthcare expenses.

The Impact of Wealth Gap

• The wealth gap is the difference in wealth among people
• A large wealth gap means unequal wealth distribution
• Two groups
• One side "WE WANT CHANGE"
• An other side giving out a few banknotes

Who owns the wealth?

• Mostly owned by a small number of rich people unwilling to share their wealth with ordinary citizens
• Most of daily necessities and services owned by small number of property developers
• Hutchinson Whampoa Limited owns ParkNshop, Watsons
• Wealthy people like to accumulate their wealth as they monopolised the market

Impacts of large wealth gap:

• On citizens: Lower living standards and intergenerational poverty.
• On society: Increased living costs, public discontent, and reduced social harmony.
• On the government: Decreased government popularity.

On Citizens:

• Financial hardship.
• Increased feelings of injustice and dissatisfaction with government policies.

On Society:

• High property prices and living costs, as well as rising inflation, make life difficult.
• A small group of rich people own the majority of wealth, leading to hostility between the poor and the rich.
• This undermines social harmony and social cohesion.

On The Government

• The government's slow monitoring of the property developers
• Government policies lean towards the property developers
• The result of hardships among citizens leads to discontent against the government.