Working Poor in Hong Kong

Abstract

In-work poverty is becoming an important category of poverty in many developed economies, where labour polarization and income disparity have trapped in poverty a growing number of people, particularly low-skilled workers, despite their active participation in the labour force. In Hong Kong, the government has acknowledged the seriousness of the problem and has made the working poor one of the main target groups of its poverty reduction strategy. Existing studies have identified various individual, employment and household factors that contribute to the poverty risk of households with working members. These factors operate through three mechanisms: low earnings, the lack of other earners in the household and high living costs related to the care of dependent members in the household. The relative importance of these mechanisms varies according to the socio-economic contexts of different societies. In order to formulate an effective poverty reduction policy, it is necessary to understand which mechanisms lead to in-work poverty in a local context. In this paper, we sought to identify the characteristics of households affected by in-work poverty, and the mechanisms that lead to such poverty, by analysing a data sample from the 2011 Hong Kong Population Census. The results show that low-paid work and the absence of a second earner in the household are the two main mechanisms that lead to in-work poverty in Hong Kong. The results also show that the risk of in-work poverty differs for high- and low-skilled labour. We propose that the government should strengthen the poverty reduction strategy by countering the income disparity in the labour market and adopting an integrated approach in the formulation of policy to improve the labour participation of working-poor households.