March, 2007

ECONOMY AND POVERTY
Poverty Grows with the Economy

Franklen Choi Kin-shing

(The author is the former senior researcher of the Social and Economic Policy Institute in Hong Kong and is currently working as the research coordinator of the Hong Kong Confederation of Trade Unions [HKCTU].)

Introduction
Hong Kong is one of the most affluent cities in Asia. Since the 1970s, the city has enjoyed strong economic growth. Within just two decades, Hong Kong's per capita gross domestic product (GDP) was comparable to most Western developed countries. Against this background, policymakers have seen aggregate growth as both the necessary and sufficient condition for poverty reduction in the city. Poverty has been regarded as a temporary and low-priority problem and never a serious issue of political discourse here, although previous academic research had pointed out that as high as about 10 percent to 15 percent of Hong Kong's population was living in poverty in the 1990s.

Poverty in Hong Kong
"Poverty" is a contested concept and can be defined in either an absolute or a relative sense, and any definition carries with it corresponding political implications. The Hong Kong government refuses to establish a poverty line, and lawmakers have not yet come to a consensus about what constitutes "poverty."

To grasp the severity of the problem in Hong Kong, however, a convenient measure is to take the number of Comprehensive Social Security Assistance (CSSA) cases and recipients. The official CSSA scheme run by the Social Welfare Dept. (SWD) claims to provide a "safety net" for individuals or families who are unable to support themselves financially, to bring the income of such individuals or families up to a level to meet their basic and special needs by providing cash assistance. It is means-tested, and the SWD considers the whole family as the "assessment unit" (i.e., case) in assessing the eligibility and its resources and needs to derive the amount of assistance payable based on subsistence. Hence, the caseload of the CSSA scheme reflects the extent of "absolute poverty" in Hong Kong.

It should be noted that CSSA statistics probably only provide the lowest estimate of people living in poverty in the city, however. Many eligible low-income families may not apply for the scheme, either not knowing their rights or to avoid the social stigma imposed on its recipients.

According to the report of the Census and Statistics Dept. at the end of 2004, the total number of CSSA recipients was 542,017, representing an increase of 211.2 percent over a period of 10 years. The average growth in the number of cases or families over the years is 9.6 percent per annum. The percentage of "elderly" recipients to the whole population aged 60 and over increased to 17.4 percent. Unemployment, single parent and low-earnings cases rose to 15.3 percent, 13.4 percent and 5.5 percent of the total caseload respectively in 2004. The percentage of recipients aged under 60 to the total population of the same age group increased to 6.1 percent.

While the mass media tends to portray "new immigrants" from mainland China as comprising most CSSA recipients, figures show that at the end of 2004 only 13 percent of all recipients were new arrivals (i.e., have resided in Hong Kong for less than seven years). Poverty is a social and local problem affecting all age groups in or out of paid work.

Explanations of Poverty
While the above figures indicate that there are still many people unable to support themselves without direct cash payments from the government, they do not explain the causes. There are several dominant discourses on poverty that are summarised in three common explanations described below.

Myth 1: Poverty Is a Temporary Phenomenon due to Economic Recession
On a number of recent occasions, Hong Kong's chief executive, Donald Tsang Yam-kuen, mentioned that Hong Kong's present economy is now exhibiting its best performance since the handover. It seems that Hong Kong has finally come out of the shadow of economic recession when unemployment rates and the number of low-income households continued to break records during the Asian financial crisis in 1998, the global economic downturn in 2002 and the outbreak of severe acute respiratory syndrome, or SARS, in 2003.

While economic expansion is always applauded in this city, growth alone does not necessarily mean that the fruits of growth are fairly shared by the majority of people. The critics of globalisation often note that the growth of the global economy may have an adverse effect on the most vulnerable members of society, and hence, its distributional consequences should be taken into account. The Hong Kong experience has repeatedly shown that affluence often co-occurs with poverty. In many cases, corporate profits do not automatically trickle down to those in need.

A recent report released by the Commission on Poverty indicates that the effect of economic recovery alone is rather limited when it comes to poverty alleviation. The report instead suggests that the increase in single households and population ageing are the key factors leading to a rise in the number of low-income households over the long term.

Myth 2: Poverty Is due to Welfare Dependency
In our society, one popular belief about poverty focuses exclusively on individual pathology. In many cases, poverty is caused by one's misfortune-injuries, diseases, disasters, etc. These people are the "deserving poor" who merit public care and support. In other circumstances, however, poverty is often attributed to the malfunctioning of individuals, such as poor financial management or, worse still, lacking an industrious work ethic. This last group of poor people is considered to be "undeserving" and should be deterred from relying on public welfare or becoming a burden on society.

This conception of poverty is institutionalised in the very design of the CSSA scheme. For example, in 1999, when the unemployment rate rose to a historical peak, a "support for self-reliance" scheme was introduced to assist unemployed CSSA recipients move away from "dependency." The scheme comprised a number of measures, notably the withdrawal of most supplementary benefits, regular "active employment assistance" interviews and compulsory participation in community work. Failure to comply with a stipulated requirement, including the condition that recipients must accept any job offer regardless of working conditions, would result in the termination of their CSSA payments.

After the introduction of the scheme, there was a noticeable decline in CSSA cases involving the unemployed. However, people out of work may simply have chosen not to participate in the programme to evade surveillance pressure on themselves. On the other hand, since unemployed recipients mostly come from the periphery of the labour market, leaving the register may mean that they re-entered dead-end jobs without getting a job with a future.

Myth 3: Poverty Is due to a Skills Mismatch
As the Hong Kong government positions the city as a major financial centre in Asia, the above individualistic conception of poverty is renewed. With the Hong Kong economy undergoing a structural transformation and becoming more service- and business-oriented, observers note that unemployment and poverty are the inevitable result of a skills mismatch between the demands of a "knowledge-based economy" and the supply of manpower that is only suited for the sunset labour-intensive manufacturing industries.

Under the imperative of globalisation, it is often said everyone has to develop an active attitude towards upgrading their skills to protect themselves against poverty and to enjoy better career prospects. A flexible, "employable" work force is considered essential to the survival of individuals and groups of people. Accordingly, the government in recent years has actively promoted the concept of lifelong learning and has launched and supported a wide range of education and training programmes that aim to enhance the skills, "employability" and "competitiveness" of the work force. On closer scrutiny, such an approach assumes that a strong relationship exists between education and earnings, which does not necessarily apply to a secondary labour market where two-thirds of the work force are found in Hong Kong. In this niche of the labour market, earnings are often determined by factors other than skills and training, such as the degree of legal protection, unionisation rates, gender, "race" and the offshore movement of production processes.

A common example is the construction industry, a sector consistently having high a unemployment rate in recent years. Any construction worker will point out, however, that they are unemployed, not because they lack the required skills, but because nowadays buildings are assembled from prefabricated pieces manufactured in remote factories in mainland China.

Nevertheless, this discourse functions to constantly remind its citizens to look into themselves as both the source and solution of their financial problems in a society in which the meaning of life is defined as effective participation in the global capitalist economy.

Poverty 'Alleviation' and the Individuation of the Individual
Ironically, when our society is transforming itself into one characterised by uncertainties and insecurities, an "active citizenship" is constructed by removing entitlements and protection from the very concept of citizenship and intensifying the regulation of "the poor" and the individuation of the individual.

For example, old systems of social service financing and provision are under immense political pressure to reform, to replace more universal benefits and services where benefits are available to everyone (or whole categories of people) as a right supported by public resources by more selectivist systems where eligibility is determined by a test of one's means (as in hospital services, post-secondary places and public housing) financed by fees or private insurance schemes (as in hospital and long-term care support services).

Conclusion: Poverty Is Structured
In a society where income distribution is highly unequal and a gross imbalance of political and economic power continues to prevail, the dominant conception of poverty is not only inaccurate but also irrelevant. It is irrelevant because, no matter how hardworking or skilled people are, a significant proportion of families will inevitably be denied access to opportunities and resources essential for enjoying a minimally acceptable standard of living.

The working conditions, for instance, of security guards, cleaners, dishwashers, workers at fast-food chain stores, care-and-attention homes, express centres, etc., are determined less by their respective skill levels than by the difference in labour market power between people and their employers, thanks to the absence of such protection as a minimum wage, equal opportunity provisions and collective bargaining legislation. Likewise, single-parent families are trapped in poverty because of the absence of affordable child-care facilities and laws stipulating fair treatment to part-time workers and the restrictive monthly disregarded earnings provision of the CSSA scheme that discourages a person from formally taking jobs. Moreover, as mentioned above, poverty in one's early ages can be translated into post-retirement poverty as well. Furthermore, rapid deindustrialisation and urban redevelopment not only take jobs away from individuals and families, but they also remove them from their neighbourhood and networks of community relations, their last shield against social exclusion and the impact of poverty.

Thus, beyond the economic upturn, there is another, darker side of the picture. An overoptimistic view of economic growth masks the continued existence of widespread structured poverty throughout Hong Kong. In this sense, we may say, contrary to the mainstream perception, economic growth perpetuates poverty. But if poverty is socially created, then, at least in theory, it can be eradicated.