Poverty Defined

George Orwell said that poverty annihilates the future. I believe that to be truer today than ever. Without the means to serve basic needs, however defined, either yours or those of your family, the future is bleak.

Therefore, how you define poverty is important so that plans to reduce it are most effective.

In Hong Kong, poverty is based on the concept of “relative poverty”. Whereas “absolute” poverty identifies individuals who can’t meet a minimum level of subsistence or basic needs, however defined, relative poverty focuses on living standards below the general public. The government sets the poverty line at 50% of the median household income before policy interventions (for example, before tax, welfare payments such as transportation concessions, health care vouchers, etc.).

It is important to note that the poverty calculation is based solely on income without considering assets or liabilities. Therefore, the actual quality of living and disposable financial resources of households is not reflected. The poverty line for 2020 are show below (note, the Hong Kong government has not issued a poverty report since 2020).

Poverty line by household size in Hong Kong, 2020
	1-person	2-person	3-person	4-person	5-person	6-person and above
HKD	$            4,400	$            9,500	$          16,000	$          20,800	$         20,000	$         21,900
USD	$                572	$            1,235	$             2,080	$             2,704	$            2,600	$           2,847
Source: General Household Survey, Census and Statistics Department.

What the Hong Kong Government does is to define the poverty line (at 50% of median household income), then analyze and compare how policy interventions applied to households which fall at or below the poverty line affect the overall poverty rate. In 2020, for example, during Covid, the pre-intervention poverty rate in Hong Kong stood at 23.6%, or about 1.65 million people, the highest level since 2009 when the government started keeping records. Post-intervention, the rate fell to 7.9%.

The Secretary of Labor and Welfare, Chris Sun, noted recently that the use of median income only to gauge poverty is not appropriate. A more realistic approach would be to analyze the income and living conditions of the poorest subcategories of people. These subcategories would include those living in “subdivided” homes (where more than one family lives in an apartment that has been divided to accommodate additional people), single-parent householders, and the elderly.

The government believes that the current measure of poverty based on median income is not sufficient because it does not take into account assets owned. There is concern that poverty alleviation measures might be going to those who are not truly in need of them (for example, to people who own an apartment or more than one apartment or other assets). While I agree that a more comprehensive measure should be considered, I also agree with the deputy director of NGO Society for Community Organizations (or SOCO), Sze Lai-shan, that household income should remain a key component used to measure poverty since most people who own a lot of assets would not have such low-income levels.

Also to note that according to Oxfam, the poverty level in Hong Kong in 2023 was approximately 20%, or 1.36 million people. Comparing the median monthly incomes of the richest and poorest households before and after the pandemic, Oxfam found that the poorest decile earned 57.7 times less than the richest decile in the first quarter of 2023. That’s up from 34.3 times in 2019. That shows that after the pandemic ended, the highest-income families have benefitted more from the economic recovery than the lowest-income families who have new challenges such as greater unemployment to face.

The poverty line is a useful tool to identify and monitor the poor population. It is important that it adequately reflects those in need as it is used to set policies to effectively alleviate poverty.