A REPORT TO THE UNITED NATIONS COMMITTEE ON ECONOMIC, SOCIAL AND CULTURAL RIGHTS ON HOUSING RIGHTS VIOLATIONS AND POVERTY PROBLEM IN HONG KONG

November 1994

Chapter 3 Poverty

3.1 The Hidden Poverty In A City Of Plenty

Hong Kong is a city of plenty, with its prosperous economic growth in the past decades, the poverty that exists is well hidden. In the past ten years,our annual average growth for real Gross Domestic Product per capita has been 5.86% (See Table 16). And we also enjoyed HK$687,012 Million in real Gross Domestic Product in 1993, representing a rapid growth of 86.6% inthe past ten years! Because of its consistently high economic growth rate,Hong Kong is always regarded as a successful economic development model for other countries.

However, when we look back the socio-economic development in Hong Kong, we are ashamed at what our government has done to our poorest groups. Their socio economic rights have not been safeguarded in the past decades. They are forced to live under the poverty line. In fact, it is not that we lack the social resources to tackle the poverty. Instead, the ruling ideology of the colonial government is oriented towards economic development and capital accumulation.

3.2 Residual Social Welfare System

With the lack of a comprehensive social security system in Hong Kong, the existing social welfare system has been criticised by the public as a piecemeal and residual approach. The dignity and the socioeconomic rights for the poorest elderly, single parent families and children, urban unemployed and the new immigrant families - have not been well respected in the past decades.

Although the Bill of Rights was introduced in June 1991, it fails to incorporatethe International Covenant on the Social, Economic & Cultural Rights into its protections. Failure to translate the ICSECR into the domestic law means that the government does not provide adequate legal protection to the poorest in case of the violations of their socio economic rights.

3.3 Poverty Gap Between the Rich and Poor Becomes Wider

It is always said that people in Hong Kong benefit from the favourable economic growth. Because of the generally accepted belief that open opportunities for upward social mobility exist, poverty issues are not recognised in our society. In fact, the "trickledown" theory does not apply to ourpoorest groups. Instead, we are shocked by the widening gap between the rich and the poor and the rapid growth in the poor population in the past years.

Looking at the Gini-coefficent in the past twenty years the poverty gap has become wider and wider. The Gini-coefficent was 0.43 in 1971 and became0.48 in 1991 (See the Table 17). In 1971, the poorest 20% of the households shared 5 % of the household income whereas the upper 20% of families shared 49.3% of the household income. But after twenty years, the situation became even more serious, the poorest shared only 4.3 % of the household income and the upper shared 52.8 %.

3.4 Even worse than Guatemala

Hong Kong, along with Taiwan, Singapore and South Korea, is one of the Four Dragons (The Newly Industrialising Countries (NIC)). It is our shame that among the Four Dragons, the Ginico efficient in Hong Kong is the worst. The poverty gap is even worse than other developing countries like Guatemala.

3.5 Rapid Growth in the Poor Population

Up to now, the government does not provide any definition of the "povertyline". However, there is a rapid growth in the number of public assistance recipients. The means tested Public Assistance Scheme (CSSA) was first introduced in 1971 which remains the only official source of financial support to the poor. This scheme has been seen as a safety net for those unable to support themselves, and without relatives able and willing to support them. The number of cases sharply increased in the past ten years. 45,752 families (including the elderly) received public assistance in 1981, whereas over100,000 families are public assistance recipients in August 1994 (See Table18), representing an increase of over 120 per cent! The most vulnerable groups are single parent families, elderly, disabled, blind and deaf, mentally ill and the unemployed. Out of these welfare recipients, over 60 per centare elderly.

However, the demand for public assistance has been suppressed because the amount of assistance is inadequate to meet even the basic standard of living.In Hong Kong, government has not defined the poverty line. However, from estimates from the NGOs, about one million people are living below the poverty line this includes public assistance recipients, disabled, old urban slum dwellers, the poor elderly and urban unemployed (See Table 19).

3.6 The Elderly Poor

3.6.1 Aging population

Hong Kong is facing a growing aging population. In 1971, about 7.4 per cent of the total population was aged 60 and older. The number of elderly today is 716,901, which represents about 13 per cent of our total population.It is projected that the elderly population will grow to over one million people in 2011 (See Table 20).

3.6.2 150,000 elderly are still working

Without a comprehensive pension scheme in Hong Kong, elderly people suffer a lot. In Hong Kong, the retirement benefits in the private sector are very limited, providing benefits to less than 25 per cent of the total working population. Many elderly have to work very hard for a living. Statistics show that over 150,000 elderly people (i.e. onefifth of the elderly population)are still working. And their median monthly income is HK $3,600 in 1991,which is comparatively lower than the average worker. (The median incomewas HK $5,170 in 1991). Some 24,015 elderly people are earning
less than HK $2,000 a month (See Table 21).

Worse still, the government has always said that the public assistance schemeis an adequate protection for the elderly poor. In fact, this scheme has been criticised by many academics as inadequate because it cannot maintain a minimum acceptable standard of living.

3.6.3 Rapid increase in public assistance recipients

At present, 76,800 elderly people are public assistance recipients, whichis a sharp increase from ten years ago. (The growth rate for elderly people receiving public assistance in the past ten years is 70 per cent!). The elderly poor are living in an inhumane situation and their socio-economic rights are not safeguarded.

3.6.4 Cut budget for basic necessities

For instance, public assistance recipients spend more than 70 per cent of their income on food (See Table 22). In order to pay for food, the elderly people have to cut back on clothing, transport, household goods and social activity of all kinds. But assistance rates are so low that diets are still inadequate.

The attached tables show that a single elderly person has only HK $41.80to spend everyday on food, which means about HK$13.90 per meal. This amountis even less than the cost of meals in the hospital. Elderly single peoplehave to keep a tight budget on their daily expenses.

For example, for the old people who are living in the cagehomes, no cooking is allowed because of the fire hazard. So these old people must go
out for meals. It costs at least HK$20 to buy a lunch box meal. Hence, inorder to save enough money for food, they cut the budget for other basic necessities.

Perhaps the following tragedy of an old lady in a cagehome can illustrate how they live under public assistance.

In the Chinese New Year of 1992, an old lady, Mok Choi, froze to death inthe toilet in a women's cagehome in Taikoktsui. On that freezing day, the temperature plummeted to under 10 degrees celsius. In order to save money for kerosene, she took a cold water bath. She was found dead after collapsing with her frozen hand stretched out from the toilet. Other old ladies burst into tears when they spoke of this incident.

3.7 Failure to meet minimum standard of living

During the 1970s, basic rates of public assistance were around 24 to 25%of the median income. However, the situation became worse in the 1980s.It fell to 19.8% in 1986 and further decreased to about 14.7% in 1993 (SeeTable 23). This implies the welfare recipients cannot afford a minimum standard of living as the other families. They are forced to live in poverty!

Because of the inadequacy of the public assistance rates, the NGOs and thepublic assistance recipients are fighting for an increase. In 1993, the Social Service Council was invited by the Legco Welfare Services Panel to conduct a research on the Adequacy of Public Assistance Rates.

3.7.1 Inadequacy of the Public Assistance Rates

This independent survey, conducted by Dr. Steward MacPherson of the City
Polytechnic of Hong Kong during 1993 and 1994, finds that the existing ratesare inadequate and cannot enable people to live with human dignity. The survey recommended an increase of the rates up to HK$2,300 for a single person, which is based on the "budget-standard approach".

"Budget standard approach" seeks to maintain a minimum standard of living with recipients. It is a pity the government rejected the recommendation and refused any increase for the basic rates of the elderly people this year.

3.7.2 Elderly in Poor Financial Situation

Those elderly who are not public assistance recipients are also in a poor financial situation. A government survey (Social Welfare Department, 1987) revealed that over 60 per cent of the aged had no pocket money, and 20% received only around $200 from their family members.

In 1994, around 70% of aged 65 to 69 (i.e. some 130,000) declared assets less than HK $130,000, thus qualifying for Old Age Allowance. All these reflect statistics suggest that about 70% of the elderly are in need of financial support for retirement protection.

3.7.3 "Old Age Pension Scheme" Undecided

Despite a continuous campaign from the community during the last twenty years for a contributory social security system to protect retirement, the Government has not yet decided to endorse the "Old Age Pension Scheme".

3.7.4 Families and Children

Again, the socioe-conomic rights of poor families with children have been neglected in our society. At present, 6582 families are dependent on public assistance, including 20,000 children. Most of them are singleparent families,or widows whose husbands have died in industrial accidents.

3.7.5 Welfare Children are Always Hungry!

The basic public assistance rates for a child is HK$1,180 and HK$965 permonth for a mother. This amount is hardly be sufficient to provide children
with growing food and clothing needs. Like the elderly public assistance recipients, in order to pay for food, they sacrifice other basic necessities such as clothing, fuel, household goods and social activities. Perhaps the following case of Madam Ku Shui Ling can illustrate how a family lives at the public assistance level.

Madam Ku, 38, got a divorce a few years ago because she was battered by her husband. She has to raise four children, ages five to thirteen. She receives about HK$5,600 in grants from the Social Welfare Department which averages about HK$186 for this five member family every day. This means every child has only HK$37.2 to spend each day, on food, clothing and other basic necessities.

Buying a lunch box for a child costs her HK$20.00 every meal. Then she is left with little for other expenses. As growing children, they are always hungry and Madam Ku is frustrated by not being able to provide her children with sufficient food.

3.7.6 Minimal ExtraCurricular Activities for Welfare Children

Children dependent on public assistance, like other children, are also in need of extra-curricular activities for their growth. But the governmentis depriving them of their rights and their normal development needs. Because of the inadequate rates, diets are minimal and social activity is almost eliminated. Children cannot participate in boy Scout activities because the families cannot afford to pay HK$200 for the uniform. Again, they cannot participate in outings and the social activities organized by the socialcentres.

This could have a very damaging effect to the normal growth of these 20,000 children. They have the very low self esteem as a result of being welfare dependent. The government itself is harming these children! Despite the fact there is continuous outcry from the community demanding an increaseto public assistance for single parent families, the Hong Kong government only pays each single parent family a supplement of HK$200 a month and increases the standard rates for children by $205. (i.e. HK$1,380 for a child). This is far below the standard range of $1695.46 to 2022.36 which was recommended by the Dr.Stewart MacPherson (See Table 24a and 24b). (Annex 3 and 4)

3.8 Situation of the new immigrant families

Apart from the families dependent on welfare, the socioe-conomic rights of new immigrant families who come from Mainland China are not safeguarded.

There are no services for new immigrant families. At present, 40,000 persons from China come to Hong Kong every year. Many of them come to Hong Kong for family reunification. No official statistics show the socioe-conomic status of the new immigrant families. New immigrants have to reside in Hong Kong for at least seven years before they can get permanent residency. However,in our working experience, we find that the socioe-conomic rights of these new immigrant families are being deprived in terms of the housing policy and other social services. (see "Housing")

According to the official statistics, there are 199,717 persons from Chinand Macau who have been residing in Hong Kong for less than seven years.(18% of this number have resided less than one year, 40.6% between oneto three years, 41.2% between four and six years). These recent immigrants constitute 3.6% of the total population.

3.8.1 Discriminatory Social and Housing Policies

The government does not provide any services to the new immigrant families to help them to integrate into the local community. Language can be a problem to them because some cannot speak Cantonese, a local dialect in Hong Kong. The Cantonese classes offered by some voluntary agencies are very limited.

At present, new immigrant families cannot be allowed to get into public housing unless they have the permanent residency after seven years. Their housing problems will be increasingly serious when their children in China are entitled to have Hong Kong residency after 1997.

3.9 The Urban Unemployed in Economic Restructuring

Again, the unemployment problem in Hong Kong is hidden. Looking at the official statistics, the unemployment rate remains very low, ranging from 4.5% inthe early 1980s to 2.2% in 1994. However, in the process of economic restructuring in the 1980s, workers, especially unskilled labourers and women workers in the manufacturing industries, suffered the most.

Over the past 30 years of industrialization, Hong Kong industry grew onthe
basis of labour intensive and export led manufacturing by exploiting cheap labour. The manufacturing sector was the main provider of jobs during 1960s and early 1970s (47% in 1971).

3.9.1 Increasing Relocation of Industries to South China

Because of the open economic policy of China in the early 1980s, manufacturing industries began relocating to south China and the Pearl River Delta. Wen Wei Pao, a pro-China newspaper, reported that over three million Mainland workers are employed by the Hong Kong industrialists in the south Chinaregion. The major 'outgoing' industries are toy, low tech electronics, shoe, textiles and garment manufacturing. Hong Kong remains a base for commercial and financial services.

3.9.2 Reduction of manufacturing industries

Workers in the manufacturing sector suffered the most in the economic restructuring process. With massive factory closures and production relocation, middle aged,elderly and women workers suffer from real wage loss (See Table 25a &25b), underemployment and various difficulties in finding other permanent employment. Most of them are semi-skilled or unskilled labour. The number of workers in the manufacturing sector sharply declined from 904,646 in 1981 to 455,853 in 1994, representing a decrease of 49.6% (See Graph 6).But the employment in the trading, financial and service sector is not sufficient enough to absorb these 448,793 workers from manufacturing.

3.9.3 Difficulties in finding jobs in service sector

It is a pity that government officials said that workers displaced in the manufacturing sector can be structurally transformed to the service sector.In reality, workers face a lot of difficulties in this process. Especially the middleaged and elderly workers who are semi-skilled or unskilled. Even for those who are skilled have skills that are only essential for labour intensive manufacturing production, not the service sector.

3.9.4 Middle aged and elderly workers experience discrimination

Many employers discriminate against the elderly and middle aged workers andso they have very serious problems in finding regular jobs that provide a stable income. They are forced to work as if they are coolies in casual or part time jobs in restaurants, etc. The unemployment rate is superficially low as a result of their employment in jobs with unstable income. Living standards among this lower class are deteriorating.

3.9.5 Low growth rate in real wages

Perhaps the overall real wage growth in the past years can be used to describe the situation of labour in Hong Kong. The real wage growth rate is highest for the workers is 3.4 % in 1985 but suffers negative real growth of 1.2%in 1990. The average annual growth rate in real wages from 1982 to 1993is 1.64% only. The average annual growth rate in real Gross Domestic Product per capita in the same period is 4.97%. Obviously, workers in Hong Kong have not shared the fruit of economic development in Hong Kong (See Table26 and Graph 7).

3.9.6 Injustice in wage policy

Apart from the economic restructuring, the injustice in the wage policy in Hong Kong also contributes to the negative growth rate for real wage.At present, labour unions are deprived of the right of collective bargaining for wage determination. The Hong Kong government encourages market mechanisms to determine the wages but employees generally do not have access to information and enough power to protect themselves.

Employers, on the other hand, enjoy full rights to decide on wage levels.Management associations admit that they share information on wage levels in meetings for their members and normally reach a consensus on new wage levels for employees. Without a minimum wage policy, workers suffer the most. On one hand, workers suffer from negative wage growth, while the inflation rate remained a 12%. Low income families thus suffer from a double attack(See Table 27).

3.9.7 Situation of the Women Workers in Manufacturing sector

Again, women workers in the manufacturing sector also suffer from the economic restructuring. In 1991, 321,445 women workers were employed in the manufacturing sector, which sharply declined by 29% as compared with 1981. Among these women workers, most of them have only primary education or are even without schooling. The age ranges from 35 to 45. Because of their low education level and their ages, they face a lot of difficulties in seeking a permanent job in the service sector. The government has not conducted any survey on the problems of the women workers being displaced from manufacturing sector.

3.9.8 Age Discrimination by the employers

But surveys done by local labour unions find that these women workers, over 30 and usually with a primary education, experience discrimination by employers when they seek jobs. Bosses in the service sector look for workers with good command of English, who are young and will work for cheap wages. Ofcourse, those unemployed women who have previously worked for 10 or 20 yearsin the factories cannot meet this requirement. A typical example is that the boss from a chain cake shop looks for sales girls under 25 years old.Of course, this is very unreasonable! But it is not rare in the service sector in Hong Kong. The government has done nothing to resolve the age discrimination of the employers. Hence, women workers are forced to become"housewives" when they cannot find a job in the service sector.But this is not reflected in the official unemployment rate.

3.9.9 Lack of income protection for unemployed

Unemployed workers do not have any income protection. At present, 63,200 persons are reported to be unemployed and 50,100 persons are underemployed. Unemployed persons will not be automatically entitled to public assistance. All of them have to register with the Labour Department for a month and must accept all job offers if they are capable of working. But as mentioned above, because of the age discrimination from the employers, middle aged workers have great difficulties in finding another permanent job. Worse still, the labour importation policy further affects the employment opportunities of these workers.

3.9.10 Government role in the economic restructuring

The government is slow to react to the structural changes in the economy. Some academics have criticised Hong Kong or lack of a long term industrial policy and human resource training. Now with the structural unemployment in the manufacturing sector, the government provides some kind of job retraining schemes for displaced workers. In the Policy address this year, Governor Chris Patten boasted about the success of the retraining scheme. But the effectiveness of this retraining scheme has been challenged by local labourunions. Because workers are still marginalised in the labour
market employers continue to adopt a discriminatory attitude towards workers.

3.9.11 Labour Importation Scheme hits the unemployed workers

Besides, employers in the service sector have other choices of recruitment,mainly the imported labour scheme. The labour importation scheme was adopted in 1989 when the employers claimed a severe labour shortage. Since 1991,a total of 25,000 foreign labourers, mainly from China, are allowed to workin Hong Kong. Under this scheme, quotas are also allocated in the service sector. Obviously, there is a great contradiction between this scheme andthe Employees Retraining Scheme(ERS). On one hand, the objective of theERS is to retrain the displaced manufacturing workers, to enhance their opportunities and transition to the service sector. But on the other hand, because quotas of foreign labour importation schemes are also allocated to the service sector, this further adversely affects the employment opportunities of the unemployed manufacturing workers.

3.10 Lack of effective mechanism to redistribute wealth

Faced with a growing poor population and a wider poverty gap in Hong Kong,the government has done nothing to resolve these problems. In theory, the taxation system is one of the means for income redistribution. But in thecase of Hong Kong, the taxation system is more beneficial to high income earners than low income earners because the government intentionally keeps profit tax low. In the past twenty years, the standard profit tax has beenonly 15 to 17%. At present, it is 15%. There is neither a "socialjustice" or "equity" principle in the objectives of the taxation system. Hence, it does not play an important role in wealth redistribution.

3.11 Article 2 of the ICSECR

In Article 2 of the International Covenant on Social, Economic & Cultural Rights, it clearly states

(1) Each State Party to the present Covenant undertakes to take steps,individually and through international assistance and co-operation, especially economic and technical, to the maximum of its available resources, witha view to achieving progressively the full realization of the rights recognized in the present Covenant by all appropriate means, including particularly the adoption of legislative measures.

(2) State Parties to the present Covenant undertake to guarantee that the rights enunciated in the present Covenant will be exercised without discriminationof any kind as to race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status.

3.12 Fails to Use Maximum of its Resources

Obviously, the Hong Kong government is not lacking any economic and social resources to resolve the problems of the growing poor population. We have a pretty handsome fiscal reserve of HK $121,032 million in 1992 US $155,16million). We also enjoy continuous growth in cash surplus in every financial year (See Table 28).

3.13 Minimum spending on social welfare

But on the other hand, public spending on social welfare is about 46% ofthe social services expenditure. (See Table 29). The public expenditure out of the Gross Domestic Product remains 1516% per year (See Graph 8).Major sectors in the social services like housing, medical and health careare being privatised. To the poor, this is alarming because their living standard would continue to deteriorate with these measures.

3.14 Recommendations

To protect the socio economic rights of the poor disadvantaged groups inHong Kong, the following measures should be undertaken immediately:

1. The International Covenant on Social, Economic & Cultural Rights should be translated into domestic law. For instance, the Bill of Rights should include the ICSECR.

2. A definition and indicators of the Poverty Line should be developed by the government, with the involvement of non-government organizations, so that the situation of the poor population in Hong Kong can be monitored.

3. An overall review of the existing taxation system should be commenced.Principles of "Social Justice" and "Equity" should berealized in the taxation system.

4. A comprehensive social security system should be set up, to protect thebasic standard of living of the poor during retirement and unemployment.

5. Increase the rates of public assistance to a level which ensures a minimum standard of living, in order to protect the socio economic rights of the elderly, single parent families, children, disabled and other public assistance recipients.

6. Regarding the urban unemployed, the government should protect the jobopportunities for workers through the labour retraining schemes, and legislation to prevent age and sexual discrimination against workers should be implemented. The right of collective bargaining should be realized to protect the bargaining power of the workers.

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