A decomposition analysis to examine the change in the number of recipients in the comprehensive social security assistance (CSSA) system

Abstract

Social security is an important social and public policy measure to help address poverty in any contemporary society. The Comprehensive Social Security Assistance (CSSA) system in Hong Kong provides a safety net for those aged children and adults below 65 years old who cannot support themselves financially. It is designed to bring their income up to a prescribed level to meet their basic needs. The rapid increase in social welfare expenditure in the last decade has become a concern to the Hong Kong SAR Government. The overall social welfare expenditure has accounted for nearly 15.6% of government expenditure in 2018, with the total amount increasing from $58 billion to $90 billion (an increase of 72.4%) for the period 2014-2018. However, the amount spent on CSSA only increased from $20.7 billion to $22.3 billion with an increase of 7.7% only for the same period. The much slower magnitude of increase is related to the reduction in the number of CSSA recipients, which decreased from 237,501 to 185,528 over the period. A decomposition method was used to assess the changes in the number of people in the CSSA system. It showed that the rate of arriving into the system has been decreasing due to a robust economy with a very low unemployment rate; whereas moving out of the system has also been decreasing in the past 5 years. This phenomenon can be partly attributed to the widening of the income gap in the community in the period. Despite the increase in population size, as long as employment conditions remain strong and the momentum of leaving the system can be maintained, the number of CSSA recipients will continue to decrease. However, the results also suggested that a certain proportion of CSSA recipients will not be able to move out of the system and have been trapped. Some innovative methods to help them out of CSSA are discussed. In view of the poor economic outlook arising from the COVID-19 pandemic, it is important for the Government to have effective measures to keep people in their jobs. If the unemployment rate will does not substantially increase and then increase of in CSSA recipients can be contained.