Nowadays, many problems induce some affect to the social welfare system in Hong Kong. In this article, we defined that aging population; widening income inequality and economic downturn are the problems induce affect. In this article, we are going to use the current and future situation of social welfare system to have a compare to show how the problems associated with the social welfare system in Hong Kong. In the following, we highlight the issues that what the problems cause, then to suggest some reforms that can carry out to tackle these issues.
Social welfare is about how people, communities and institutions in a society take action to provide certain minimum standards and certain opportunities. It is generally about helping people facing contingencies. Nowadays, there are some problems affected to Hong Kong social welfare system. The key object of this project is to find the main problems associated with the social welfare system and how government carries out to tackle these issues. Current situation
Hong Kong has more and more concern about the social welfare nowadays. Mainly is the aging problem. Comparing with other countries, the characteristics of Hong Kong’s social welfare system seems to be more simplex. In Hong Kong, there is no legislation on specific welfare, although the Hong Kong Government already officially launched the long-fermenting government health insurance plan, but still need time to process.
Hong Kong is the freest and stable economic market, the whole economic market seems to be controlled by the corporation, so that Hong Kong Government no need to spend so much money for it but have more money to care about the social welfare to fix the social problem. But as more and more serious social problems, Hong Kong Government mostly aim on the poor people and neglect the middle bourgeoisie. Hong Kong’s tax system is more simplex then other countries mainly are profit tax and salaries tax.
The people whose income is lower than the minimum tax charge are no need to pay tax and the tax rate is also limited. Because of this reason, it caused a problem that the middle bourgeoisie have more pressure in it. For the social welfare, there are Social Security, Family and Child Welfare Services, Medical Social Services, Services for People with Disabilities, Services for Elders, Services for Young People and Services for Offenders.
This article has two objectives. The first objective is to discuss about the social welfare system in nowadays and finding the problems which associated with the social welfare system in Hong Kong. The second objective is to analyze the problems we have found and give some reform of those problems to suggest Hong Kong government carry out to tackle these issues.
The age structure of the Hong Kong population is shown that the aging population will get increase in the future next twenty years. It seems that the burden of aging population will get increasing. Since the aging population, there are some issues will bring out. The needs of social welfare will increase. For the medical social service, elder is easy to fall in ill.
The needs of sickbed will get increase when they are fall in ill. As a research, the number of sickbed that the elder need in each day is nearly 10,000, it is a serious and huge need by the elder and it is totally make the medical service carry a burden. For the social security, the elder needs help on CSSA and Normal/Higher Old Age Allowance; because of they do not have any working ability. Also, around 360,000 elderly is living alone now. This huge number of elderly is living alone increase the large of number of the needs of CSSA and Normal/Higher Old Age Allowance. The percentage of the elderly applied in CSSA is 50.7% in 2003 to 55.6% in 2011.
There is 1.1% average growth per annum. It can be show that the increase on the elder needs the social security well. For the Services for Elders, the government recurrent expenditure of an additional nine million, an increase of one hundred day care places and extend the service time of the establishment of the new day care centers and units. Also, additional seventy-three million to build residential care homes, through the construction of three contracts.
Those appropriations are broadening the government expenditure to increase the burden of government. Also, the aging population causes fiscal limitations. It is because of the elder is getting increase; the working population will be decrease by the aging population and lower birth rate. The decrease of working population will cause the lack of tax payer. The government revenue will be decrease when the tax payer being decrease. It will cause the expenditure on social welfare may decrease or affected the quality. Base on the two articles. Article 107
The Hong Kong Special Administrative Region shall follow the principle of keeping the expenditure within the limits of revenues in drawing up its budget, and strive to achieve a fiscal balance, avoid deficits and keep the budget commensurate with the growth rate of its gross domestic product. Article 108
The Hong Kong Special Administrative Region shall practice an independent taxation system.
The Hong Kong Special Administrative Region shall, taking the low tax policy previously pursued in Hong Kong as reference, enact laws on its own concerning types of taxes, tax rates, tax reductions, allowances and exemptions, and other matters of taxation. Base on this two articles, the expenditure and revenue should be balance will affect the expenditure of social welfare in the future, because of the government revenue is affected by the decrease of working population.
If government needs to be balance on the revenue and the expenditure, the expenditure on social welfare will get decrease. Also, government cannot do any things to increase the revenue by the article 108. Since the main revenue of government is the tax, article 108 said that Hong Kong government should taking low tax policy; it means that cannot increase the tax to broaden the government revenue. It will affect the quality of social welfare and social welfare may perform badly by the expenditure on it get decrease.
Widening income inequality
The problem of widening income inequality is more and more serious these days. In 2009-2010, the data showed that the poor population is under 17.3%, but in 2010-2011, the poor population has risen to 18%, and the gain coefficient showed that the data 2011 is almost 0.5, it is a very serious
problem in Hong Kong of widening income inequality. Hong Kong is the industrial society in the past, most of the workers who worked in the factory is a group of less education and less skilled. But nowadays, Hong Kong already transformed to a society based on financial and services sectors.
The workers who are less education and less skilled is hard to adapt these transformation, it caused Hong Kong had increased a large amount of unemployment rate suddenly. Because of the workers had a lack of basic knowledge, it caused most of the corporations of financial or services are not willing to hire them. So that the jobs that those people can fulfill are only some low salary and mass energy works. But those who are well education or fresh graduated students are become very sought-after.
It caused the wage dispersion between the workers who are well-skilled or well-educated and the workers who are less skilled or less well educated have been increased. On the other hand, the low education standard group will form a cycle which their children are not well education as well. Children are the future of Hong Kong, their education standard seem to become the problem that Hong Kong Government concern with.
Also, the labour market institutions such as trade unions in Hong Kong are so weak and also is divided in the politically, There are still have no statutory collective bargaining rights for the trade unions in Hong Kong. So some large consortium can lower down their salary and benefits. Even if Hong Kong has the statutory collective bargaining power, those workers who have less skilled and less education are not able to know how to bargain or even find the unions to bargain with the large corporations.
This is one of the main problem that to cause the expenditure of social welfare increase. Besides, Hong Kong’s tax system is process in a limited maximum tax rate and simple tax system. The result of the Hong Kong’s tax system has not succeeded in producing the effect of the transformation of wealth, but it turned out to be the one successfully make those wealthy people become richer. In the past, Hong Kong adopted a “Positive non-intervention” policy; it caused a lot of large corporations to monopolize the market in Hong Kong, such as supermarket, a chain of restaurants and property etc. in a few years.
Because of these large corporations are wealthy and powerful, they caused many business with a small capital are hardly to contend with the large corporations. Thus, the business with small capital have to wind up one by one and the public became have no rights to choose, and because of the market have no competitors, the large corporations are easily to corner the whole market and then fixed the prices. Finally, the public can only spent their money gather on to those large corporation to make them become richer.
Not just the large corporations are causing the problem of widening income inequality, but also the problem of inflation. The inflation mainly causes by the Renminbi (RMB) appreciation, Hong Kong dollar in contrast devaluation. The Hong Kong Government issued Hong Kong dollar retail inflation-indexed bonds; this offered issue amount is HK$10,000,000,000 which is announced in 2011-2012 government budget of Hong Kong by Mr. John Tsang Chun-wah.
But iBond is only suitable for the middle to high class, the grass roots are unable to afford to buy this, they can only get help from the government such as waive one month rent of public housing, expand Textbook Assistance etc. Although the Hong Kong Government had launched these policies to assuage the inflation, but it is still not quite effective and is limited. The salary rate still not rose by the large corporation, the public still need to face the problem of the inflation, it caused those poor people become poorer.