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Cost of Living
Present Situation
Wealth Gap
82. Despite sustained economic growth in recent years, the widening of the wealth gap is still a source of social discontent. Poverty in Hong Kong is related to economic restructuring. After restructuring, there has been a drop in labour market demand for low-educated, low-skilled workers, which has slowed their wage growth. The Government has been helping low-income families to improve their living standards through housing, education, healthcare and welfare policies and an array of subsidies. The statutory minimum wage and transport subsidy scheme implemented this year are both designed to raise their income. In a free, open and mature capitalist economy, the wealth gap can hardly be eradicated. Investing in education and fostering social mobility are the best long-term solutions to reduce cross-generational poverty.
High Inflation
83. Our economy has recorded impressive growth since the beginning of this year, with the unemployment rate remaining low. While the income of the grassroots has increased, we are also facing enormous inflationary pressure. The average inflation rate for this year is expected to reach 5.4%, which is the highest annual rate since 1997. The Government will strive to ease domestic inflationary pressure by such measures as cooling the property market and preventing excessive credit growth.
Existing Policies
84. I am very concerned about the impact of high inflation on the livelihood of our people, especially the grassroots. To relieve the burden of inflation, a number of recurrent and one-off measures were introduced in last year's Policy Address and this year's Budget. Many of these measures have been implemented and proved effective. Examples include a rates waiver for one year since April; an electricity charges subsidy and extra payments of CSSA, OAA and Disability Allowance (DA) since July; and government payment of public housing rent for August and September. Other measures will take effect in due course.
Specific Measures
One-Off Relief Measures
85. We are not optimistic about global economic prospects next year. We may see inflation and recession come one after the other. In response to this, we will implement short-term measures to ease the burden on the grassroots. After consulting the Financial Secretary, I propose to implement the following measures next year:
(i) Paying two months' rent for around 700 000 public housing tenants, with an expenditure of about $1.9 billion; and
(ii) Providing an extra allowance to CSSA recipients, equal to one month of the standard rate, and an extra one-month allowance to OAA and DA recipients, with an expenditure of more than $1.9 billion.
When preparing the Budget for the next financial year, the Financial Secretary will assess the prevailing economic situation and our financial position to work out the implementation details. The purpose is to help the grassroots cope with the possible economic downturn in 2012. If necessary, we will consider further measures such as tax concessions.
Food Prices
86. One of the major causes of the recent rise in inflation is surging global food prices, which have pushed up local food prices. In the first eight months of 2011, global food prices registered a year-on-year increase of 34%, while retail food prices in Hong Kong also rose significantly by 9.1% year-on-year. In fact, food prices and expenditure on meals bought away from home have contributed to nearly 40% of the increase in Hong Kong's underlying consumer prices.
Food Supply
87. The Government endeavours to ensure an ample supply of food at stable prices by expanding the sources and types of food supply and reducing the risks brought about by unstable conditions in individual places. Also, we have the support of the Central Government in the form of safeguarded supplies to Hong Kong and strengthened food quality control. The Mainland will continue to ensure a stable supply of quality agricultural products such as grain, meat, fruits and vegetables to the Hong Kong market.
Food Banks
88. The Government's Short-term Food Assistance Service provides immediate and direct support for people in need. We will soon submit to this Council for approval to use the $100 million already earmarked to continue and improve this service, including providing a larger variety of foods and fresh foods. The Social Welfare Department (SWD) will closely monitor the operation of this service. If necessary, the Government will allocate an additional $100 million to the service.
Tackling Working Poverty
89. In the labour policy area, the most important breakthroughs of this Government have been the statutory minimum wage that came into force this year and the recently launched Work Incentive Transport Subsidy Scheme. Both measures play a pivotal role in protecting low-income workers, alleviating working poverty and promoting employment. The implementation of the statutory minimum wage marks a change in the traditional mindset of the Government. It shows that the Government is ready to intervene in the market as appropriate to improve the livelihood of hundreds of thousands of low-income people provided that the free economy of Hong Kong will not be prejudiced.
90. The Labour Department (LD) will proactively inspect the workplaces of low-income trades, offer all necessary assistance to employers and employees, and closely monitor the impact of the statutory minimum wage.
Enhancing Training and Employment Support
91. This year, the Employees Retraining Board (ERB) will increase the number of training places to 130 000 and provide nearly 900 courses covering about 30 industries. Some of these courses also provide job placement services. The LD will continue to offer comprehensive employment support to enhance the employability of young people, the middle-aged, people with disabilities and other disadvantaged groups. It will also continue to provide financial incentives for employers to employ the disadvantaged.
92. Some people with disabilities have considerable difficulties securing employment. The Government will strengthen support for them. The SWD has launched the "Enhancing Employment of People with Disabilities through Small Enterprises" Project by granting funding for non-government organisations (NGOs) to set up small enterprises employing people with disabilities. The Government will inject $100 million into the project to create more jobs for these people. Also, we plan to provide a subsidy from next year onwards for employers of people with disabilities to purchase technical aids and modify work areas to boost the efficiency of such employees.
93. Targeting non-engaged youths, the ERB launched the Youth Training Programme in 2008 to help them build confidence, stimulate their desire to learn, and facilitate their return to school or employment. The Vocational Training Council (VTC) will launch a pilot scheme to extend the structured apprenticeship arrangements to service industries, providing young people aged 15 or above with in-service training and relevant professional education. It is expected that 1 000 additional training places will be offered each year.
Labour Policy Review
Standard Working Hours
94. The Government is studying the issue of standard working hours. We are looking into the relevant systems and experiences in other places. The Census and Statistics Department will collect and analyse data on our local workforce and the current working hour arrangements in various sectors. We expect the study to be completed in mid-2012. The findings will lay a good foundation for public discussion.
Paternity Leave for Employees
95. Many developed countries provide paid paternity leave for employees to promote child-bearing and family-friendly practices. The Government will take the lead in promoting this good practice, beginning with a study into the provision of paid paternity leave for civil servants. In considering whether to make it a statutory requirement for all employers, we will have to carefully consider the actual circumstances in Hong Kong.
(To be continued)
Ends/Wednesday, October 12, 2011
Issued at HKT 12:03
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