The Growing Issue of Income Disparity and Government Financial Capacity
In recent times, the issue of widening income disparity has become a pressing concern. This problem is further exacerbated by the diminishing financial capacity of the government in the post-pandemic era. The government has been facing a rising budget deficit due to a shortfall in revenue from land sales and stamp duties, as well as higher welfare spending.
Government Response to Poverty Rate
The government made a significant decision to stop using the poverty line as a reference for policymaking from 2022. This move came after the 2021 report recorded a 12-year-high poverty rate of 26.3 per cent. After factoring in cash handouts, public housing, and other subsidies, the poverty rate was adjusted down to 7.9 per cent. The government has committed to launching a new, more accurate framework in 2024.
A government spokesman highlighted the limitations of using the median monthly household income as the sole indicator for measuring poverty. This method does not consider household assets and liabilities or in-kind benefits like public medical services, subsidized housing, and free education. The government has shifted towards targeted poverty alleviation by directing resources to those most in need.
Impact Beyond Traditional “Poor” Districts
Professor Paul Yip of the University of Hong Kong (HKU) emphasized that poverty is no longer confined to the traditionally “poor” districts. Economic restructuring has led to a proliferation of poverty across all districts in Hong Kong. Despite economic recovery driven by strong export demand, challenges persist in private consumption and real estate.
Ms. Sze Lai Shan, deputy director of the NGO Society for Community Organisation, highlighted the various reasons why more Hong Kongers are falling into poverty. Factors such as illness, single parenthood, job loss, low income coupled with high rents and inflation are contributing to the financial struggles faced by many in Hong Kong.
Individual Stories Highlighting Struggles
Individuals like Mandy have been forced to find creative ways to make ends meet. Mandy has resorted to selling items she finds at home on online marketplaces like Carousell to generate additional income. She acknowledges the importance of every dollar and has had to adapt her lifestyle to cope with the financial challenges she faces.
Analysis and Implications
The widening income disparity and rising poverty rates in Hong Kong have far-reaching implications for both individuals and society as a whole. As more people face financial hardships, the need for targeted poverty alleviation measures and a more accurate framework for measuring poverty becomes increasingly vital.
For individuals like Mandy, the struggle to make ends meet in a high-cost city like Hong Kong underscores the importance of financial planning, support systems, and access to resources. The government’s response to these challenges will shape the future economic landscape of Hong Kong and determine the well-being of its residents.