The Hong Kong Special Administrative Region government is very generous with its social welfare programs, which provide support to the needy in kind or in cash. Unfortunately, the spending is not well targeted at people who need it the most. As a result, those who need help are often denied adequate assistance, while many enjoy benefits not intended for them.
Our public rental housing (PRH) program is an example. Whereas in Singapore low-cost rental housing is available to Singaporean citizens or permanent residents, the lease is no more than three or two years; renewal will be granted only if they continue to meet the eligibility criteria. In Hong Kong, once someone is allotted a PRH flat, that person can stay for 10 years. Thereafter, they have to report incomes and assets every two years and are allowed to keep the PRH flat as long as their income is below five times the Waiting List Income Limit (WLIL). The recent PRH rent reform for well-off tenants is a big step forward. It requires tenants with incomes more than two times the WLIL to pay 2.5 times rent, those with incomes more than three times the WLIL to pay 3.5 times rent, and those with incomes more than four times the WLIL to pay 4.5 times rent. They must all pay rates in addition. If a person’s income exceeds 5 times the WLIL, they must vacate their PRH flat.
This arrangement is a big step forward, compared with the absurdly generous former arrangement of merely requiring tenants slightly short of earning 5 times WLIL to pay double rent. But this reform is clearly not enough and cannot be justified given our huge fiscal deficit. By keeping well-off households in public housing, the government has to build more public housing while it gets less revenue from land sales and profits tax from developers. The generous benefits for well-off tenants come at the expense of people who have never enjoyed the benefits of PRH, and who must keep their incomes down to remain qualified and wait many years before being assigned a PRH flat.
I was shocked by some statistics revealed in a feature article in the September issue of the Hong Kong Monthly Digest of Statistics on the Comprehensive Social Security Assistance (CSSA). While the total number of CSSA cases decreased gradually from 260,774 at the end of 2013 to 200,400 at the end of 2023, an average drop of 2.6 percent per annum in the past decade, the statistics about people collecting CSSA benefits for unemployment is truly concerning. Let me quote from the article: “Of the unemployment cases as at end 2023, 72.7 percent were single person cases. Among the unemployed recipients … 86.6 percent were between the age of 40 and 64. Analyzed by the duration of receiving CSSA, the median length of receiving CSSA of unemployed recipients was 5.6 years. Around 73.7 percent of the recipients had been receiving CSSA for more than 3 years.”
The CSSA program was introduced in July 1993 to replace the former Public Assistance program. The CSSA is meant to be a safety net of last resort for people who cannot support themselves financially because of old age, ill health, disability, single parenthood, unemployment, low earnings or other reasons to help them meet their basic needs. This social safety net is entirely supported by the government. Unlike the unemployment insurance plans in place in many countries, there is no requirement for payment of an unemployment insurance premium. Whereas unemployment insurance benefits are conditional on the recipient having worked so many weeks in the past year, and run out after a specified number of weeks, in Hong Kong we have CSSA recipients who have been unemployed year after year! Moreover, while most Hong Kong residents face higher medical charges in public hospitals and clinics, all CSSA beneficiaries enjoy a waiver of public healthcare service fees.
Singapore is launching a new unemployment support initiative this month — the SkillsFuture Jobseeker Support program — under which involuntarily unemployed people may get benefits of up to S$6,000 ($4,570) over six months if they complete a set of employment-related activities. To qualify, job seekers must have been unemployed for at least one month from their last day of employment before receiving the payout, must also have earned S$5,000 or less a month on average for the duration of their previous employment within the last 12 months and cannot live in a property with an annual value of more than $31,000. This is because the program focuses on lower- and middle-income people. Those who qualify can receive S$1,500 in the first month, which tapers down to S$1,250 in the second month, and S$1,000 in the third. They can receive S$750 a month for three more months before the benefits end.
If we are paying the unemployed CSSA benefits year after year, let us employ them in social service for the number of hours obtained by dividing the monthly stipend by the hourly statutory minimum. I have proposed a “basic job” arrangement in this column before. This is not to penalize the recipients for being unemployed, but to ensure that they can continue to be productive members of the community. I would give them the option of working more hours under the proposed arrangement.
The author is a former director of the Pan Sutong Shanghai-Hong Kong Economic Policy Research Institute, Lingnan University, and an adjunct professor at the Education University of Hong Kong.
The views do not necessarily reflect those of China Daily.
