Hong Kong’s plight for a better welfare system

The distinct nature of Hong Kong’s political environment sees the discord between the government’s welfare policies and its people’s needs getting worse, Alex Jingwei He writes.

In Hong Kong’s highly politically divided legislature, pro-establishment lawmakers hardly seem to agree on any major policy issues with their pro-democracy peers. But in late January 2019, they united, firing their outrage at the government and its plans to raise the threshold for the city’s elderly social protection payment from 60 to 65.

The Comprehensive Social Security Assistance (CSSA) Scheme is the city’s last-resort social safety net that provides cash benefits to those without sufficient income to meet their basic needs.

Handing out AU $650 (HK $3,585) every month to each ‘able-bodied’ recipient aged 65 or above, CSSA is the bread and butter for some 150,000 senior citizens who can hardly help themselves.

For many low-income Hongkongers, reaching 65 is not merely a sign of ageing, but is also a mark of eligibility for CSSA payments. Approximately 1.4 million of the city’s 7.35 million population live below the official poverty line, of which 35 per cent are elderly. Almost one in every three of the recipients relies on CSSA for their livelihood in the world’s second most expensive city.

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The rationale behind this policy adjustment, as explained by the government, was to match Hong Kong’s increasing life expectancy – the world’s highest, even higher than that of Japan.

Yet, the message received by the grassroots was that citizens in poverty aged between 60 and 64 would essentially lose at least 40 per cent of their welfare benefits, and would have to work strenuously despite deteriorating health.

Accused of being heartless by lawmakers across the entire political spectrum and by mass media, the government made remedial concessions. None of them, however, could save Mrs Carrie Lam, Hong Kong’s Chief Executive, from receiving her lowest approval rating since taking office.

In fact, this recent episode is merely one of many social policy controversies in Hong Kong from the past decade. Despite its liberal but semi-democratic polity that is prone to populist social contention, the plight of Hong Kong’s welfare system is indeed extraordinary.

Standing as one of the top 10 richest economies in the world – measured by GDP per capita – the global city in itself constitutes a sharp contrast between economic prosperity and limited welfare provision. The economic success of Hong Kong has long been attributed to its “small government, big market” principle that considers the role of government as to create wealth rather than to redistribute it.

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Hong Kong’s long-held residualist welfare ideology had a tendency to regard relative poverty and the income gap as necessary evils, a part of social reality, and motivation for the poor to work hard.

The past two decades have observed the growing welfare demands of those in Hong Kong. Social outcry predominantly points to high poverty rates and the lack of universal retirement protection that forces numerous senior citizens to work until bedridden. Slow public housing supply and an increasingly overburdened public hospital system represent other major sources of social discontent.

The government responded with new social policy initiatives, such as the Old-age Living Allowance and the Elderly Healthcare Voucher Scheme, but most suffered piecemeal implementation. Other than drawing from its deep pocket of public finances and nearly $360 billion (HK $2 trillion) in fiscal reserves, virtually no systematic social policy reform has been undertaken by the government.

Hong Kong’s peculiar political environment is not conducive to structural policy reforms, and this is compounded with the existence of many powerful pressure groups in its society. Yet, these constraints should actually impel, instead of thwart, its policymakers to develop a long-term strategic policy vision.

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Unfortunately, the vision offered by the government seemed unpopular with most citizens, as is reflected in the failed reform on universal retirement protection in 2016. This policy impasse may stem from the weak electoral link between the citizenry and the government. With the latter not being elected by universal suffrage, low support is only to be expected.

But the more compelling reason probably lies in the government’s inability to create and implement strong policies.

Policy reforms create winners and losers, even more so in the context of social welfare. Overcoming the social policy impasse requires not only professional expertise, but also excellent social acuity and courage on the part of policymakers.

In Hong Kong’s pluralist society, contentious politics have been narrowing the political window of opportunity for major reforms. The success of social policy reforms thus hinges not only on the provision of a vision that appeals to most of society, but also on astute political management of public opinions.