Replies to LegCo questions

LCQ19: Measures to help low income households

        Following is a question by the Hon Emily Lau and a written reply by the Secretary for Health, Welfare and Food, Dr Yeoh Eng-kiong, in the Legislative Council today (March 10):

 

Question:

 

        According to the Quarterly Report on General Household Survey published by the Census and Statistics Department, the number of households with monthly income less than $4,000 (the low income households) increased from 165,500 in the second quarter of 1999 to 209,400 in the third quarter of 2003.  Regarding the number of low income households and measures to relieve their financial hardship, will the Executive Authorities inform this Council whether:

 

(a)    they have studied the cause of the drastic increase in the number of low income households in the past few years; if so, of the results of the study; if not, the reasons for that;

 

(b)    apart from the Comprehensive Social Security Assistance Scheme, there are other measures to relieve the financial hardship of low income households, such as introducing a statutory minimum wage; if so, of the details of such measures; if not, the reasons for that; and

 

(c)    they plan to establish a poverty line for reference in implementing policies, with a view to reducing the number of low income households; if so, of the details of the plan; if not, the reasons for that?

 

Reply:

 

Madam President

 

(a)    As indicated by the findings of the General Household Survey, the number of domestic households with monthly income below $4,000 went up from 161,700 in the second quarter of 1999 to 203,600 in the third quarter of 2003, showing an increase of 41,900 households or 25.9 per cent.  The following may be the major factors contributing to such an increase in the above period:

 

(i) There was an increase of 33,900 1-person and 2-person households in the group of households with monthly income below $4,000 (80.9 per cent of the 41,900 households).  Since households with fewer members tend to have lower household income, the continuing trend of decreasing household sizes in recent years is one of the reasons for the increase in the number of households with lower income.

 

(ii) There was an increase of 23,400 households with at least one member aged 65 or above or one retired member aged 64 or below in the group of households with monthly income below $4,000.  We have no information on the assets of this group of economically inactive members, which could be a supplemental or main resource to support their living.

 

(iii) The seasonally-adjusted unemployment rate increased substantially from 6.1 per cent to 8.3 per cent in the above period.  The number of households with unemployed member(s) surged, and the households concerned thus faced a reduction in monthly income.  There was an increase of 12,300 households with at least one unemployed person in the group of households with monthly income below $4,000.

 

(iv) The employment earnings of employed persons showed a decrease in the above period.  The median monthly employment earnings of employed persons in all households decreased from $10,000 to $9,700, while those in households with monthly income below $4,000 also decreased. Amidst further restructuring of the economy towards higher value-added and knowledge-based activities, and increased downsizing and lay-offs in the corporate sector, these workers were generally harder hit by the problems of unemployment and wage cut.

 

        We should note the fact that the above statistics are in absolute terms and have not yet taken into account the effects of deflation.  Discounting the effects of deflation(*), the number of households with monthly income below $4,000 increased from 188,300 to 203,600 in the above period.  The percentage of these households to the total number of households in Hong Kong stays at 9.3 per cent both in 1999 and 2003.

 

(b)    The Government actively and effectively supports and assists low-income earners in many policy areas, including housing, education, health and welfare etc.  It is Government policy that no one is deprived of basic and essential needs because of a lack of means. 

 

        Our public rental housing programme provides subsidised homes to low-income families who cannot afford private-sector accommodation.  The heavily subsidized levels of rents go a long way in helping improve the quality of life of low-income tenants in public housing.  For tenants who encounter temporary economic hardship, the Housing Authority operates a Rent Assistance Scheme, under which tenants not receiving CSSA may apply for rent reduction. In recent years, we have also made tremendous efforts in reducing the waiting time to enable low-income families to get access to public housing expeditiously. At present, the average waiting time is slightly above two years. For households which are not selective in the location or types of flats, they can be allocated public rental flats within a year or so.

 

        To ensure that no one will be denied access to adequate medical services due to a lack of means, there is in place a medical fee waiver mechanism to assist those who are in need.  Non-CSSA recipients in financial need can apply for a full or partial fee waiver subject to a simple assessment of their family income and assets.

 

        As regards education, on top of the free education to all from primary one to secondary form three and the heavily subsidised higher secondary and tertiary education, there are various forms of financial assistance to ensure access for students with the ability to the level of education they aspire to attain.  These include tuition fee remission, student travel subsidies, school textbook assistance, student loans, etc.

 

        Our social security schemes provide a safety net for people in need due to low income or other reasons.  The Social Welfare Department (SWD) has put in place a wide range of welfare services to help individuals and their families in need, such as counselling and guidance services, community care services, residential care placement, schooling and temporary shelter assistance, etc. All those in need including low-income earners and CSSA recipients have access to these services by direct approach, on referral basis or outreaching network of SWD.

 

        In the long term, the Government adopts a multi-pronged approach of fostering economic growth, facilitating human investment and increasing social investment together, to lift the standard of living for all.

 

        Regarding the suggestion to set a minimum wage, the wages of Hong Kong workers, like other terms of employment, are determined by demand and supply in the labour market and freely negotiated between employers and employees.  This mechanism for determining wage levels ensures the most effective allocation of manpower resources in the society.  As an open economy, Hong Kong needs to maintain a market-driven mechanism for determining wage levels, to ensure the labour market's flexibility and adaptability to changes in the economy.  Introducing a statutory minimum wage will impact on the ability of our labour market to adjust in changing economic circumstances, and may have adverse effects on economic development and job creation.  Therefore, we do not agree that a statutory minimum wage should be set.

 

(c)    There are no universally agreed definitions or measurements of poverty, and any attempt to define poverty inevitably involves subjective value judgment.  Some groups have defined poverty in relative terms and attempted to draw a poverty line by relative levels of wages or family income between different groups in the same economy.  However, this approach ensures that even the most affluent societies will always have a group of people regarded as "poor", and we consider it unsound.  Others have defined poverty in terms of income distribution.  However, such analyses take no account of intangible income derived from Government spending on housing, education, health and welfare etc., thus understating the economic effectiveness of social services in improving household income and its distribution.

 

        We do not consider that setting a poverty line would improve the position of the disadvantaged.  The common goal is to provide the best environment for people to enhance their capabilities and elevate themselves.  This is pursued by adopting a multi-pronged approach of fostering economic growth, facilitating human investment and increasing social investment.  We would also strive to maintain a highly flexible and efficient labour market, with equality of access to job opportunities where the qualifications and abilities fit.  A social safety net is provided for those who are economically inactive because of age, illness or disability and for individuals who are in need of financial assistance because of unemployment or other reasons.

 

Note :

 

(*) One of the methods is to adjust the absolute values of household income according to the changes in the Composite Consumer Price Index, i.e. the purchasing power in real terms is kept constant at the third quarter of 2003.

 

Ends/Wednesday, March 10, 2004

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