SHW's Speech (English only)

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Following is a speech by the Secretary for Health and Welfare, Dr E K Yeoh, at the opening of the Second Asia Regional Conference on Social Security today (Monday):

Mr Hui, Professor Midgley, distinguished guests, ladies and gentlemen,

It is my honour to be invited to officiate at the opening ceremony of the Second Asia Regional Conference on Social Security. It is indeed timely for Hong Kong to host a conference on social security at this juncture, as we have just recently implemented a package of measures in relation to our Comprehensive Social Security Assistance (CSSA) Scheme.

The formal social security system in Hong Kong began some forty years ago. At that time, the assistance was mainly in the form of material assistance - food. A cash component was subsequently introduced because it would enable the recipients to cover their special needs and was easier to administer.

In the early 1970s, the Public Assistance Scheme was formally introduced to provide cash assistance to the financially vulnerable who were unable to support themselves. Special supplements were payable to elderly people, people with disabilities or suffering from ill-health. The safety net was cast wider in 1977 to cover able-bodied people suffering financial difficulties.

In 1993, the Public Assistance Scheme was modified to provide comprehensive financial assistance to different categories of recipients. And people with different needs are paid different rates of assistance in accordance with their needs. The aim is to allow the recipients to meet their basic and essential needs. This forms the Comprehensive Social Security Allowance Scheme, or what we normally call CSSA, we have today. The Scheme was a non-contributory one and the assistance was paid out of general revenue of the Government of the Hong Kong Special Administrative Region.

The strive for a comprehensive protection for the recipients has created its own problems. When the economy is booming, there is a tendency to improve the level of benefits so that people on CSSA can have a share of the prosperity. For instance, the cumulative improvements in the standard payment rates had been 67% between 1992 and 1999, compared with cumulative inflation of 44% during the same period. In other words, we have improved the payment level by 23% in real terms.

The improvement in the level of benefits coupled with structural changes in the economy since the mid-1980's have resulted in rapid increases in the caseload and expenditure of CSSA. There were about 90 000 CSSA cases in 1993, but the number of cases increased to about 230 000 in end 1998. Similarly, the CSSA expenditure increased from HK$2.4 billion (US$308 million) in 1993/94 to over HK$13 billion (US$1.7 billion) in 1998/99. A five-fold increase in five years.

What is particularly worrying is that the proportion of recipients who are able and expected to work has been increasing. As at end 1998, almost 30% of the CSSA cases involved able-bodied adults as the principal applicants for reasons including unemployment, single parenthood or low income. And the unemployment caseload kept on growing at times of both economic boom and recession.

We recognise that this rapid growth trend cannot be sustained if we wish to continue to provide for the needy while maintaining our low tax rates system. So after extensive discussions in the community, we introduced a package of measures in mid-1999 to -

(a) encourage and help those able-bodied unemployed recipients to find work so as to become self-reliant and independent;

(b) ensure that the level of benefits payable to larger household is comparable to the income level of households in the lower income category. This is to discourage reliance on CSSA; and

My colleague will speak in greater detail our measures to help the unemployed recipients to find work. But the initial results have been quite encouraging. The CSSA expenditure has since stabilised and there has actually been a slight decrease in the total caseload since implementation of the package of measures.

The lesson we learn from this exercise is that an enhanced gate-keeping mechanism coupled with active measures to help those who are able to work to find work are effective in containing the growth in CSSA caseload and expenditure.

We also recognise that most recipients who are able to work in fact do want to find work and become self-reliant. They are unable to do so, mainly because they are faced with barriers to work. For example, they may have low education attainment, little work skills or the skills they possess are outdated, or they need to take care of their family members and hence are unable to go out to work.

We recognise that it is not good enough simply to provide financial assistance to meet the needs of the social security recipients, especially for those who are able to work. The longer period of time one is out of work, the more difficult it will be for the person to get back to the job market. And long term dependence on social security will have not only adverse psychological impact on the recipients, but also negative effects on their next generation.

I think our next step will be to study the needs of all categories of CSSA recipients who are able and expected to work. We will identify the barriers to work that they are facing and work with them together to overcome the barriers. Where appropriate, we will provide the necessary employment assistance, training and re-training, and support services to enable the recipients to take up full-time or part-time paid work. We believe this is a worthwhile course because we would then be addressing the root of the problem.

I am really glad that we have experts from different countries and areas in the region attending this conference. By sharing of experience and exchange of ideas, we would prepare ourselves better in facing the challenges ahead. May I wish the conference every success.

Thank you.

END/Monday, January 24, 2000

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