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Managing Welfare Expectations in the Post-Handover Era: Social Development Challenges and Social Policy Responses in Ho

Ka-Ho Mok Associate Vice President (External Relations) Dean, Faculty of Arts and Sciences The Hong Kong Institute of Education Chang Jiang Chair Professor Zhejiang University, China. Managing Welfare Expectations in the Post-Handover Era:

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Managing Welfare Expectations in the Post-Handover Era: Social Development Challenges and Social Policy Responses in Ho

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  1. Ka-Ho Mok Associate Vice President (External Relations) Dean, Faculty of Arts and Sciences The Hong Kong Institute of Education Chang Jiang Chair Professor Zhejiang University, China Managing Welfare Expectations in the Post-Handover Era: Social Development Challenges and Social Policy Responses in Hong Kong and Macau

  2. Introduction • Hong Kong and Macau have been under pressure to tackle social and economic problems in the last decade in response to: • Economic hardships after the 1997/98 Asian Financial Crisis and the 2008 Global Financial Crisis • Political changes after the handover • More social conflicts • Global city development pathway

  3. Global City Index 2010 * www.foreignpolicy.com

  4. Global Ranking: Various Aspects

  5. Major Challenges for Managing Global Cities • Globalization, deindustralization and the rise of producer services • Rapid economic transformation and changing social structure • Dualisation in the organization of service industries • Employment and occupational changes • Class polarisation and income inequality

  6. Major Challenges for Managing Global Cities (S. Sassen & Brookings Institution) • Environmental degradation and climate change • Intensified inequality • Unequal competition between transnational corporations and small and medium enterprises • Limited space in central city and land redeployment issues • International governance issues like environment and aviation • Transnational mobility of people and crime • Traffic congestion • Demand for social welfare / service support • Digitalization and the growing impact of internet

  7. Productivist Welfare Model’s Premises • East Asia’s productivist welfare capitalism has long depended on FIVE main pillars: (1) Significant economic growth (2) A young population (3) Strong families (4) Limited social protest and pressure (5) Successful government criticism of the Western welfare state (Holliday and Wilding, 2003: 174) • Although some scholars reject the notion of “productivism” as the distinctiveness of East Asian welfare model, since seeking productivity (e.g. economic growth and development) is always a priority of most countries, yet the above five pillars are commonly-agreed factors that set the East Asian welfare model apart from the western ones in the past few decades

  8. East Asia’s Common Structural Challenges • Fierce economic competition brought by globalization • Heavy welfare burden brought by demographic changes • Rising social unrest brought by rising living costs • More political grievances surface as societies become more democratized

  9. In the 1997/98 Asian Financial Crisis, the governments of many Southeast Asian countries (Indonesia, Malaysia, Philippines, Singapore, and Thailand) had to intervene the market with the help of international organizations to halt the economic and social problems (Ramesh, 2009) • Before the Crisis, there was a strong belief in market mechanism among many Asian countries, which explained the underdevelopment of social security systems (Lee, 1998) • Economic growth first or more social protection becomes heated debates in post-crisis era

  10. Basic Geographical, Population and Economic Data for Hong Kong and Macau, 2011 CIA World Factbook

  11. Examination of the East Asian Welfare Model – Significant economic growth? DGBAS, R.O.C (2010) National Accounts Yearbook 2009;Macao SAR Government (2009) Yearbook of Statistics 2008; World Bank (various years) World Development Indicators South Korea, Taiwan and Hong Kong have recorded commendable GDP growth rates throughout the 1960s to 1980s. But the situations began to change starting from the 1990s. And the last decade was the most difficult period for East Asian people who have long lived in a rising economy in the past few decades Quite exceptionally, thanks to its successful casino industry, Macau’s GDP growth rates have jumped significantly from the 1990s onwards

  12. Inflation (% per annum) ADB (2010) Key Indicators 2010; ESCAP, United Nations (2010) Statistical Yearbook for Asia and the Pacific 2009 While the GDP growth rates have slowed down, the inflation rates have accelerated after the Asian Financial Crisis

  13. Unemployment Rate (%) DGBAS, R.O.C. (2009) Yearbook 2009; ESCAP, United Nations (2010) Statistical Yearbook for Asia and the Pacific 2009 Unemployment rates have fluctuated responding to the situation of the economy, but statistics show that the number now is higher than that in the early and the mid-90s

  14. Examination of the East Asian Welfare Model – A Young Population? • Less new births, while people are getting older • Ageing population poses new challenges for the whole world United Nations (2010) World Population Ageing 2009, p.61

  15. Age Structure in Selected Regions, 2009 United Nations (2010) World Population Ageing 2009 People in East Asia (34.8) are still younger than the people in North Europe (39.6), West Europe (42.1) and North America (36.8), as shown in the median age Because East Asia has a relatively high proportion of people aged between 0-14 (19.5%) and 15-59 (67.0%) and low proportion of people aged 65 or above (34.8%)

  16. Age Structure in Selected Cases, 2010 CIA World Fact Book; DGBAS, R.O.C. (2009) South Korea has a relatively higher proportion of people aged between 0-14 (16.8%) Macau has a relatively higher proportion of people aged between 15-64 (76.2%) And Hong Kong has a relatively higher proportion of people aged 65 or above (13.1%)

  17. Ageing Population Projection, 2019 As compared with the demographics in 2010 in the previous table, the share of youth population (0-14) will become less, and the share of old people (65+) will increase in 2019

  18. Dependency Ratio in Selected Regions, 2009 United Nations (2010) World Population Ageing 2009 Comparatively, the dependency ratio (dependent population / working population) of East Asia is still lower than some other regions In East Asia, the dependency ratio for youth (27.4%) is higher than seniors (13.1%)

  19. Dependency Ratio in Selected Places, 2010 DGBAS, R.O.C. (2009) Yearbook 2009;Statistics and Census Service, Macao SAR Government (2010) Population Estimate of Macao; World Bank (2010) World Development Indicators 2010 The total dependency ratios of South Korea, Taiwan and Hong Kong are close, while the ratio is lower for Macau In South Korea, Taiwan and Macau, the dependency ratio for young people is higher than old people, while the two ratios are the same in Hong Kong

  20. Examination of the East Asian Welfare Model – Strong Families? DGBAS, R.O.C. (2009) Yearbook 2009;ESCAP (1998) Asia and the Pacific into the twenty-first century: prospects for Social Development, quoted in Ramesh (2004: 34); Macao SAR Government (2009) Yearbook of Statistics 2008 The household sizes of all four societies have continued to drop from the 1970s to 2000s. The drop in household size has been significant. In 2006, the mean size of around 3 suggest that a family may include two parents and only one child The premise of “strong families” is questioned

  21. More Female Workers – Female Labor Participation Rate Census and Statistics Department, HKSAR Government (2001 & 2006) 2001 & 2006 Population Census; DGBAS, R.O.C. (2009) Yearbook 2009;Korean Statistical Information Service; Macao SAR Government (2009) Yearbook of Statistics 2008; More women are absorbed in the working population, who will have lesser time spent on family matters Of course, this is not to lay the blame on women who are willing to work and to contribute to the economy, but that the integration of women into the labor force has really transformed the family structure

  22. Examination of the East Asian Welfare Model – Limited Social Unrest? • Very lately in Hong Kong where the government has long been very reserved in spending money, many people and their political representatives have now started to demand a bigger government’s role in welfare provisions and regulations • Even the democratic movement in Macau is limited in scale, the government has distributed cash to the citizens for several times in recent years to win the legitimacy • The Macau government believed that the rapid expansion of the economy has prevented the problem of working poverty. However, concerns have been raised that the lopsided economic development centered on the casino industry may have hurt the potential of Macau’s economy • Eg. Labor protests have become more vigorous in recent years, especially on May 1st Labor Day

  23. Pro-Growth Approach in Managing Changing Socio-Economic Crisis Hong Kong, after the Asian Financial Crisis • The government was very concerned about the financial sustainability in view of growing demand for social welfare benefits • The bar for application for benefits were raised, and benefits were cut • In 2000, the long-discussed pension scheme, the Mandatory Provident Fund (MPF), was set up to ease the government’s long-term financial burden • Workfare programs were launched to promote self-help

  24. Macau, after the Asian Financial Crisis • The government expanded the Social Security System by injecting a special funding, which was mainly used for employment subsidy and training allowance • The government started to promote vocational training and lifelong learning • Workfare programs were also launched to enhance welfare recipients’ working incentives and employability

  25. Beyond Employment Problem • Employment has improved due to economic recovery after the crisis, but wages were still poor • Less employment security due to unstable economic growth and new business means, such as short-term contract, part-time employment, outsourcing, etc. • Working poverty and intergenerational poverty as emerging problems

  26. Hong Kong’s Response to Major Socio-economic Challenges Working Poverty Getting Aware of the Problem • It is generally accepted in the society that the line of working poverty is set at the level of less than 50% of the median income • Lawmakers of different economic philosophies have started to take working poverty seriously, making the issue more political • The government launched a two-year Wage Protection Movement in 2006, and implemented the Transport Support Scheme in 2007 in response to public demand

  27. Some Immediate Responses to 2008 Global Financial Crisis • The Task Force on Economic Challenges was set up in 2009 to generate ideas on economic development after the crisis. • Donald Tsang, the Chief Executive, said that the government’s strategy of economic development is “stabilizing the financial system, supporting enterprises and preserving employment”. The government still adheres firmly to the idea of trickle-down economic development, believing that employment alone can solve many problems. Therefore, six new industries were proposed. • Besides, rather than offering direct financial help to the people, the government decided instead to inject the money into the MPF; that means the money could not be used immediately. The plan was criticized as “saving market, not saving people”

  28. Some Signs of Change • Minimum wage legislation was finally passed in the legislature in July 2010. And since then, after a long and hot debate, the minimum wage level was set at HK$28 per hour later. • Yet other policies proposed by labor unions against working poverty are not in place yet, such as, maximum working hour, the rights to collective bargaining, unemployment benefits, policies against unreasonable dismissal • The implementation of employment benefits, such as the “Transport support scheme” • The government followed the footsteps of the Macau government in March 2011 to decide to give cash to citizens after a great social debate over the use of currency reserve

  29. Increasing Public Concern • Public Opinion Programme of the University of Hong Kong

  30. Decreasing Public Satisfaction • Public Opinion Programme of the University of Hong Kong

  31. Intergenerational Poverty • The Commission on Poverty was set up in 2005. Its final report affirms the idea of “Market Leads, Government Facilitates” and that employment is core to reducing poverty and achieving self-reliance • The HK$200 million Partnership Fund for the Disadvantaged was also launched in 2005 to encourage business sector to take part in helping the needed • The HK$300 million Child Development Fund (CDF) was set up in 2008, which comprises of three components: • Personal Development Plans • Mentorship Programme • Targeted Savings

  32. Quality of Life of Children in Poor Families • The Society for Community Organization released a research report in July 2011, which revealed that the children in poor families are short of: • Education resources, e.g. computer equipments, tutorial classes • Participation in social activities • Food and nutrition • Self confidence and self esteem

  33. Macau’s Response to Major Socio-economic Challenges Working Poverty Seems More Generous to the People • Macau has been experiencing a burgeoning economy in recent years due to rapid developments of the casino industry and tourism • The government has offered more direct financial help to citizens after the financial crisis, for example, reducing 25% of salary tax and distributing money to citizens • Besides, very recently, it has successfully expanded the social security system from one-tier (the Social Security Fund) into a two-tier system with the introduction of the non-mandatory Central Provident Fund

  34. The Problem of Migrant Workers • Various polls over the years show that a majority of citizens disapprove the growing number of migrant workers from Mainland China and Hong Kong, leading to social conflict like the protests on 1st May Labor Day No Minimum Wage • No minimum wage legislation yet. But the Temporary Income Supplement Scheme was launched in 2008 to secure the basic living standards of workers at the level of HK$12,000 per quarter • Does not have a well-accepted definition of working poverty

  35. Intergenerational Poverty • The Macau government believed that the rapid expansion of the casino industry and tourism has prevented the problem of working poverty • Paradoxically, the lopsided economic development centered on the casino industry has hurt the potential of Macau’s economy • The government has turned to education for the strategic long-term development of Macau, also solving the problem of intergenerational poverty (such as expanding compulsory education and upgrading higher education)

  36. Discussion: Unchanged Melody in Social Welfare Model • In the past many governments in East Asia maintained their political support by becoming a “developmental state” in solely developing the economy • Recent years’ polls showed that Hong Kong and Macau people have been very concerned with livelihood problems • Challenges for Hong Kong are greater since it is hard for the HKSAR government to surpass the performances of its British predecessor, and that people are demanding more accountability from the government in the process of democratization

  37. The Hong Kong government has started to overhaul the long-term development of the welfare system by issuing the second Long-term Social Welfare Planning in Hong Kong consultation paper in April 2010 • The consultation paper attaches much importance to the concept of “self-reliance” and does not propose a fundamental change in welfare philosophy • For Macau, the government seems to be complacent with the present welfare system and only aims to focus on short-term measures instead of a comprehensive and long-term overhaul of the welfare system • As Chief Executive Fernando Chui said in the 2010 Policy Address, one of the five major policy objectives of the government is to “implement short-term livelihood enhancing measures to cope with the post-financial crisis”

  38. Discussion and Conclusion • The two SAR governments are not directly elected; their political legitimacies largely build upon citizens’ approval of policies related to their livelihoods • The “productivist welfare capitalism” approach is no longer valid. Without any new thinking, the Hong Kong and Macau governments, as well as other East Asian countries, are increasingly confronted with rapid socio-economic, political and welfare challenges

  39. Selective Welfare States:Sustainable? • Economic growth • Social policy as an instrument for economic policy • Selective orientation • Strong and effective government • But encountering: • Changing values of development and the quest for ‘sustainable diversity’ • Alternatives: Welfare at the crossroads

  40. Changing Governance and New Social Contract • Politics of ‘fiscal constraint’ • Legacy of welfare template • Public discourse on ‘welfare expansion’ • Political bargaining with the business coalition of ‘anti-welfare regime’ • Bringing ‘local politics’ back in when debating welfare regime • Less political in Macau and reluctant welfare expansion

  41. End of Presentation Thank you very much Ka-Ho Mok Associate Vice President (External Relations) Dean, Faculty of Arts and Sciences The Hong Kong Institute of Education Chang Jiang Chair Professor, Zhejiang University, China Address: Rm B1-1/F-47, 10 Lo Ping Road, Tai Po, New Territories, Hong Kong Personal webpage: https://oraas0.ied.edu.hk/rich/web/search_staff_result.jsp?r=MOK,%20Ka%20Ho%20Joshua Email: kahomok@ied.edu.hk

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