Written by Sarah Shetty
The COVID-19 pandemic has ravaged countries around the globe, penetrating nearly every aspect of our day-to-day lives. Arguably one of the most important consequences resulting from this pandemic, is that it has forced us to recognize the economic inequality that persists between social class.
Unlike the U.S., which is currently leading the world in COVID-19 deaths and cases, Asian countries/cities have done a better job at mitigating the spread of the virus. Hong Kong, for instance, is ranked 108th in the world for COVID-19 cases – having only 4,692 cases and 77 deaths. Despite its low death toll, the virus has not left Hong Kong unscathed economically. In fact, the pandemic has worsened a city already in economic peril.
By the end of 2019, following months of social and political unrest surrounding relations with China, Hong Kong plunged into an economic recession. At the end of the fourth fiscal quarter in 2019, Hong Kong’s economy contracted by 2.8%. The outbreak of COVID-19 further worsened their economic situation. By the end of the first quarter in 2020, the economy shrank by 8.9% (Siu, 2020). Extensive coverage from Bloomberg found that by the end of the second quarter, Hong Kong’s unemployment rate rose to 6.2%, exceeding the unemployment levels Hong Kong experienced during the global financial crisis in 2008 (Lam, 2020). A comparison of pre-pandemic unemployment levels to pandemic unemployment levels would reveal nearly a 110% increase in unemployment. A third wave of COVID infections exacerbated joblessness within Hong Kong, as the government enforced additional lockdown requirements. An article published by the South China Morning Post found that the following industries were particularly hit hard by new lockdown restrictions: the food and beverage sector (14.7% joblessness), the construction sector (11.2% joblessness), the entertainment industry (10.8% joblessness), the hotel and the hospitality sector (9.5% joblessness) and retail (7.7% joblessness) (Yau, Leung, Magramo, & Tsang, 2020). Aside from rising unemployment rates, a report from Reuters found that the underemployment rate rose to 3.7%, the highest level in nearly 17 years (Kwok & Siu, 2020). While the unemployment rate has decreased slightly to 6.1% at the end of July, the city is far from claiming economic victory.
In response to the economic toll COVID has had on workers, the Hong Kong government launched two programs: the (1) Employment Support Scheme and (2) a one-time HK$10,000 handout with the intent of helping workers get by. Through the first program, the government authorized employers to pay 50% of employees’ salaries for six months, with the monthly subsidy for each worker capped at HK$9,000 (Low & Yau, 2020). The latter program was a one-time payment of HK$10,000 given to permanent residents (Low & Yau, 2020). While these programs were created with the intention of helping those most in need, those who are most in need of benefits seem to be left in the lurch.
Why? There are two potential explanations for this: (1) workers are unaware that their employers have accepted aid from these programs and they have been forced into unpaid leave/workers do not qualify to participate in these programs or (2) due to the negative stigma surrounding welfare programs workers choose to dip into their own savings rather than take governmental aid.
According to a report by the South China Morning Post, low-income residents in Hong Kong are one of the hardest-hit socioeconomic groups. As stated in the report more than one-third of low-income residents do not benefit from the recent welfare programs despite the incredibly high levels of unemployment/underemployment rates within this socioeconomic group. The report also included a survey of 330 low-income residents conducted by the Society for Community Organization (SoCO). The results from the SoCO survey were jarring and painted a very different picture than what government officials were likely hoping for. The survey found that 75% of respondents had been unemployed for a continuous period of three months, 60% reported that they were unaware as to whether their employers had applied for the subsidy and were asked to take unpaid leave even if the company had applied (Low & Yau, 2020). This is an alarming statistic given that the Employment Support Scheme was designed in a manner where in which employers who benefited from a subsidy could not consider staff who were on unpaid leave as being their employee for that month (Low & Yau, 2020). The flawed construction of the Employment Support Scheme ended up benefiting employers rather than their workers, defeating the very purpose of the program.
The survey also found that 30% of respondents were ineligible for the one-time handouts and of those who were found eligible 60% claimed that the funds “barely covered their expenses” (Low & Yau, 2020). This highlights another problem with the Hong Kong’s relief programs which is that many hard-hit individuals simply do not qualify for these programs and must dip into their own savings, borrow money from family/friends, or they must apply for social welfare to meet ends meet. For some Hong Kongers the latter option is not something they would even consider regardless of their economic security. In fact, a study published in the Journal of Asian Public Policy found that seven in ten unemployed are unwilling to apply for the Comprehensive Social Security Assistance (CSSA) due to the negative stereotypes associated with individuals who accept CSSA such as being labeled “lazy” or “incapable of finding working” (Chung, 2010).
Little effort has also been made by the Hong Kong government to address concerns of discrimination if individuals accept social welfare (Chung, 2010). Hong Kong officials’ refusal to tackle the issue of discrimination is unacceptable especially given the current circumstances where people are in dire need of monetary assistance. Furthermore, the requirements to even qualify for CSSA are so high, that it is nearly impossible for those who wish to apply for aid to even be considered (Zheng, 2020). Consequently, many individuals have been forced to dip into and potentially deplete their savings or borrow from family/friends to make ends meet.
Given the severity of COVID-19 pandemic and the detrimental effects that this virus has had on Hong Kong’s economy, it is pertinent that government officials do more to ensure that their residents are not in more of a financial bind than they need to be. Policy makers should not turn a blind eye to the shortcomings of their relief programs and should work to create more substantial policy. One such policy matter includes reforming CSSA to decrease the negative stigma surrounding the program. This can be done by setting a time limit for how long individuals can receive CSSA benefits. In doing so, society will come to recognize those who accept welfare as those seeking temporary aid from the government to make ends meet rather than those who are ‘lazy’. Additionally, to ensure that employees are not getting shortchanged by their employer’s wage subsidies should be given directly to employees, in a similar vein as the U.S.’s coronavirus stimulus checks. Hong Kong will emerge from COVID-19. However, it is up to government officials and policy makers to decide whether their residents will be knee deep in debt or will be economically sound.
References
Chung, K. W. (2010). Negative public perception on welfare recipients and its implications for social security in Hong Kong. Journal of Asian Public Policy, 3(2), 200-206. doi:10.1080/17516234.2010.504328
Kwok, D., & Siu, T. (2020, July 20). Hong Kong’s April-June unemployment rises to 6.2%, highest in over 15 years. Retrieved August 24, 2020, from https://www.reuters.com/article/us-hongkong-economy-unemployment/hong-kongs-april-june-unemployment-rises-to-6-2-highest-in-over-15-years-idUSKCN24L0ZL
Lam, E. (2020, July 20). Hong Kong Jobless Rate Jumps to 6.2% in June as Recession Drags. Retrieved August 24, 2020, from https://www.bloomberg.com/news/articles/2020-07-20/hong-kong-jobless-rate-jumps-to-6-2-in-june-as-recession-drags
Low, Z., & Yau, C. (2020, August 23). Hong Kong’s low-income residents suffering more under pandemic: Survey. Retrieved August 24, 2020, from https://www.scmp.com/news/hong-kong/society/article/3098497/coronavirus-hong-kongs-low-income-residents-suffering
Siu, T. (2020, May 15). Hong Kong Q1 GDP shrinks 8.9% y/y in worst recession on record. Retrieved August 24, 2020, from https://www.reuters.com/article/hongkong-economy-gdp/hong-kong-q1-gdp-shrinks-89-y-y-in-worst-recession-on-record-idUSP8N2CW00E
Yau, C., Leung, K., Magramo, K., & Tsang, D. (2020, August 06). Hard times go on for Hongkongers tightening belts and depleting savings. Retrieved August 24, 2020, from https://www.scmp.com/news/hong-kong/hong-kong-economy/article/3095691/grim-times-without-jobs-some-hong-kong-tighten
Zheng, M. (2020, June 1). Most jobless fear welfare stigma. Retrieved August 24, 2020, from https://www.thestandard.com.hk/section-news/section/4/219518/Most-jobless-fear-welfare-stigma
China, Hong Kong SAR. (n.d.). Retrieved August 24, 2020, from https://www.worldometers.info/coronavirus/country/china-hong-kong-sar/