Poverty and Social Security APSS451 Social Policy Week 4 7 Feb 2023 Learning objectives 2 At the end of this lesson, you are expected to be able to understand the meaning of poverty identify vulnerable groups in Hong Kong and their challenges explore policies to alleviate poverty in Hong Kong What is poverty? 3 Absolute poverty (subsistence) o Lack of money to meet basic needs o Not subject to economic growth Relative poverty (Townsend, 1979) o Below 50% of the national median household income • Wages, pension payouts, investments, money transfers from family members living elsewhere, welfare benefits o Subject to national economic performance What is poverty? 4 Income inequality o Differences between the tops and bottoms o Income ↑ ≠ economic inequality ↓ What is poverty? 5 Material deprivation o Income-based indicators unable to capture multidimensional nature of poverty (e.g. asset-rich, cash-poor older persons; data inaccuracy) o Measuring one’s standard of living directly • Accommodation, food, clothing, medical care, social connections, energy (air conditioning, hot shower) (Cheung & Chou, 2019) What is poverty? 6 Social exclusion o Lack of opportunities; being excluded from some social activities and social participation The [World Development] o Key dimensions • Economic capability • Cultural acceptance • Political engagement • Social interaction report [2000/01] accepts the now established view of poverty as encompassing not only low income and consumption but also low achievement in education, health, nutrition, and other areas of human development. And based on what people say poverty means to them, it expands this definition to include powerlessness and voicelessness, and vulnerability and fear. Sen’s capability theory of poverty (1980) 7 Commodities o Resources (income, health care, education, housing) Capabilities o Necessary conditions human beings need to enable to function fully o Freedom; empowerment Functioning o Achievement Poverty and wellbeing 8 Income inequality lower child wellbeing Intergenerational poverty o A strong association between grandparental education/ earnings and grandchildren’s education/earnings “grandparents effect in social mobility” Pickett & Wilkinson (2007) Poverty and wellbeing 9 Poverty as a key determinant of poor health Poor health restricts economic activities (job loss) financial difficulties The worse-off more likely to have poorer mental and physical health, compared to the better-off Lower social status associated with higher chance of suffering from diabetes and with less healthy behaviors Income disparity health disparity Relative poverty in HK 10 Poverty rate 23.6% in 2020 Social group Poverty rate (%) in 2020 CSSA recipients 96.1 Elderly 70.4 Single-parent 49.2 New-arrival 37.9 With-children 24.8 Youth 9.7 (pre-intervention) Housing characteristics Public rental housing Private rental housing Owner-occupiers Poverty rate (%) in 2020 35.7 16.0 18.9 -with mortgage or loans 8.7 -without mortgage loans 24.2 Social patterns of poverty in HK 11 Underemployment: Working poor o Globalization and casualization of workforce among lowincome class; flexible labour o Lack of labour legislation and protection: over-exploitation of manual workers & part-time worker o Under-valuation of manual work o Individual problem or structural problem? Social patterns of poverty in HK 12 Casualization of workforce 1997-2014 Source: Li (2016) Social patterns of poverty in HK 13 Increasing income inequality Gini Coefficient (original monthly household income) HK$ 400,000 % 0.539 350,000 300,000 339,454 0.43 0.6 0.5 0.4 250,000 200,000 0.3 150,000 0.2 100,000 50,000 Per capita GDP Gini Coefficient 0.1 6,596 - 0 1971 1976 1981 1986 1991 1996 2001 2006 2011 2016 Social patterns of poverty in HK 14 Feminization of poverty Number of poor population by sex (Women’s commission, 2019) Social patterns of poverty in HK 15 Child poverty o 21% of HK children aged 3 to 6 living in poverty o Intergenerational poverty o Covid-19 outbreak: Inequality in learning outcomes Social patterns of poverty in HK 16 Poverty among older persons o 41% of household with elderly head aged 65 or above in poverty (28% in 1991) o Median monthly household income of families with older persons: HK$15,500 (average HK$25,000) • Current cash income just enough to cover daily expenses o Social participation restricted by limited financial resources Ideological perspectives on poverty 17 New Right; Neo-liberalism; Third way o Personal responsibility; the undeserving poor; underclass o Cutting welfare; force to work; minimal welfare Fabianism; Marxism; structuralism o Poverty as a result of capitalist exploitation o Universal welfare; changes in political & social structure Post-structuralism; post-modernism o Social discourse; social construction of poverty o Deconstructing the myth of poverty & reconstructing alternatives Policy directions for poverty reduction 18 Economic growth o ‘Horses-and-sparrows’ theory • Incentives for capitalist firms, not the poor • Emphasis on employment • The myth of ‘trickle down’ economy in the 1960s & 70s o Increased income inequality Redistribution of social benefits o Income redistribution o Social safety net vs. equal distribution Inclusive social and economic development Workfare as welfare 19 Direct employment or help to get into workforce Nurturing human capital through job training & education Objectives o Poverty reduction among able-bodied adults o Social mobility & social advancement o Self-efficacy & empowerment Self-reliance Origin of workfare 20 Poor Relief Act (1576) in UK o “If a person is able and willing, they need to work in order to receive support.” Old Poor Law (1601) o Idle poor in the “house of correction (i.e. workhouse)” Poor Law Amendment Act (New Poor Law) (1834) o Tightened eligibility for relief → reduced costs o No outdoor relief: A punitive approach o “Workhouse is worse than working outside.” (stigmatization) Origin of workfare 21 Workhouse From welfare state to workfare 22 1930s-1970s Policy direction for poverty reduction in HK 23 Residual welfare regime o Means-tested social assistance Priority on workfare o Support for Self-reliance Scheme (SFS) o Working Family Allowance Scheme o Employment Support Supplement Time-limited job creation under the Job Creation Scheme Reinforcing job (re)training programs Categorization of poor households in HK 24 HKSAR (2021) Policy measures for poverty reduction in HK 25 First poverty line set in 2012 o 50% of the median monthly household income • Single $4,400; 4-person $20,800 in 2021 o To assess policy effectiveness for poverty alleviation • Pre-intervention vs post-intervention o Intervention: recurrent cash, non-recurrent cash, means-tested in-kind benefits (non-means-tested in-kind benefits excluded) Social assistance programs in HK 26 Recurrent cash measures oCSSA, OALA, Working Family Allowance, Disability Allowance, Student Grant, non-means-tested Public Transport Fare Subsidy Scheme, Work Incentive Transport subsidy Non-recurrent cash measures oSalaries tax rebates, Caring and Sharing Scheme, one-off cash measures Means-tested in-kind benefit oPRH, Kindergarten & Child Care Centre Fee Remission Scheme Comprehensive Social Security Assistance 27 Public Assistance Scheme (1971) renamed as CSSA (1993) review (1998) Budget standards method o Minimum subsistence + basic minimums for social lives CSSA cases and average monthly payments CSSA Number of cases Average monthly payment (two persons) (HK$) 2001 2006 2013 2020 247,192 294,204 259,422 222,086 6,319 5,786 7,645 9,957 Support for Self-reliance Scheme 28 Introduced in 1999; intensified in 2003 To assist able-bodied CSSA recipients’ employability o The unemployed aged 15 to 64; single parents and child carers with their youngest child aged 12 to 14 o To reduce work disincentives and CSSA fraud/abuse o Integrated Employment Assistance Program for Self-reliance (IEAPS) operated by NGOs since 2013 o Disregarded Earnings A typical example of ‘workfare’ policy in HK CSSA unemployment cases 29 Most of laid-off persons do not apply for CSSA. Sources: GovHK (2021b) and Census and Statistics Department. Policy measures for poverty reduction in HK 30 Time-limited relaxation of CSSA asset limits for able-bodied persons Temporary Unemployment Support Programme (2022) o One-off lump sum of HK$10,000 for those temporarily lost their jobs amid the pandemic Employment Protection Scheme (2022) o Three-month wage subsidies for eligible employers Casualization of social welfare (Ad hoc flexible welfare strategy) Policy measures for poverty reduction in HK 31 Neither contributory unemployment insurance, nor meanstested unemployment assistance available “From last year, we saw many people losing their employment… the government should set up a short-term unemployment or low-income assistance scheme to help people when they lose their jobs or income… We’ve talking about it for two years and nothing has happened.” Sze Lai-shan (Commission for Poverty) HKFP 11 November 2021 “…CSSA Scheme has all along served its function as a safety net effectively. …the CSSA Scheme as well as the aforesaid short-term measures with wide coverage have assisted unemployed persons … during the epidemic and economic downturn. Therefore, the temporary unemployment assistance, if provided, will overlap with these existing measures. Secretary for Labour and Welfare, 2021 Statutory minimum wage 32 Lowest remuneration legally entitled for labor Advantages o Strengthened purchasing power; reduced working hours improved quality of life; effective redistribution tool Disadvantages o Price mechanism of labor market likely distorted; financial burden on employers decreased employment opportunities; minimal effect on poverty alleviation $28/hr (2011) → $37.5/hr (2019) → $40/hr (2023) Recurrent expenditure on welfare 33 HK Poverty Situation (2021) Policy effectiveness in poverty alleviation 34 HK Poverty Situation (2021) Universal basic income 35 Non-means-tested recurrent cash benefits for ALL, regardless of other income sources, financed by government expenditure Increasing job insecurity in the highly automated society; growing inequality & rising unemployment Discussions and experiments in advanced economies (e.g., US, Canada)