Should the Universal Retirement Protection Scheme Be Established in Hong Kong?

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Furthermore, the Universal Retirement Protection lowers the productivity of labours. The scheme provides a higher subsidy to support citizens when they are retired. There are articles that refer to foreign research, indicating that with an increasing amount subsidy, the welfare system will reduce the labours’ intention of saving money. The New York Times (2013) reported that France’s sin isn’t excessive debt, especially lousy productivity because it’s not just a too-big welfare state - France’s welfare state is even bigger(new, 2013). Also, “essa” (2014) reported that ESSA Economic Debate charged that “distortionary, bad welfare” has been lulling able Australians into thinking that they cannot work, leaving human capital to rot and suppressing productivity(essa, 2014). It found that after Austria established the Age Pension, multi-factor productivity has fallen 2.1% between 2001 and 2012(essa, 2014). Therefore, welfare is negatively related to productivity as citizens do not need to worry about their life when they turn old anymore. They would not remind themselves to save more money, neither nor striking for more savings. As a result, labours’ motivations to work decreases a lot. The productivity of Hong Kong would be lower, negatively affecting the long-term economic development of Hong Kong. Therefore, the Government should not establish the URP scheme.

It has been argued that the poverty of elderly brings heavy financial burden to teenagers nowadays. The Universal Retirement Protection Scheme provides a subsidy for elderly helping youngsters supporting their parents, so their financial pressure would get less heavy. It cannot be denied that the scheme gives money for the elderly protecting their elderly life. However, this is not the whole picture.

This is because the burden of youngsters does not fall but rise. As mentioned, the contribution of the project is much higher than that of the existing MPF scheme. Financial Secretary John Tsang Chun-wah said there could be adverse consequences, including raising contributions or deferring the retirement age to pay the rising bill(Tsang Chun-wah, 2016, ‘Sustainability the key’ to retirement protection scheme, para. 9). Nowadays, it is hard for teenagers to find a stable job, especially when they are just graduated that they have only a few working experiences. Their salaries are just enough for their daily life. Facing the inflation is already a torture for them. How could they afford the contribution? Also, the project can only be carried out for about fifty years. Then what about the youngsters? They are not protected in this scheme. In short, they cannot get back anything when they get retired. This scheme significantly rises teenagers’ burden, making them hard to save money and rise their living standard. In fact, the scheme is just using youngsters’ and the next generation’s long-term retirement life to immediately and temporarily solve the problem of poverty among elderly. This kind of exchange is cruel and it is just making the problem explode in the future. Obviously, URP is a scheme which requires huge cost but unable to solve the social problem and completely ignore the economic problem of young people.

In conclusion, the Universal Retirement Protection Scheme should not be established in Hong Kong. It does not only rise the financial burden of the Government, suspending other project benefiting the society, but also totally ignore the situation of the younger middle-class. What worst, it lowers the motivations to work as well as productivity of labours. On the other hand, due to its low sustainability, the teenagers cannot even be supported by the scheme for their elderly life. Although it helps youngsters supporting their parents, the financial pressure of youngsters is actually higher. Therefore, the scheme would harm the long-term social and economic development of Hong Kong. The nature of the problem is not just the short-term interests of the community, but also the labour productivity, public finance and human rights of Hong Kong. The Government should effectively balance every social interest and find another way to deal with the poverty of elderly. Otherwise, there would be a social movement in long-term, making the society much more frustrated.

References:

- Chow, W. S. (2014). Research Report on Future Development of Retirement Protection in Hong Kong (Executive Summary, pp. 1-43, Issue brief). The University of Hong Kong Department of Social Work and Social Administration. doi:http://www.cpu.gov.hk/doc/en/research_reports/Future_Development_of_Retirement_Protection_in_HK_english_executive_summary.pdf

- Duphie, V. A. (2014, August 19). Give more elderly Hongkongers social security benefits to reduce poverty: study. South China Morning Post. Retrieved March 10, 2017, from http://www.scmp.com/news/hong-kong/article/1576264/expand-existing-social-security-reduce-old-age-poverty-study-says

- Eichhorst, W. , IZA. (2011). Pension systems in the EU – contingent liabilities and assets in the public and private sector (DIRECTORATE GENERAL FOR INTERNAL POLICIES POLICY DEPARTMENT A: ECONOMIC AND SCIENTIFIC POLICY) [EN]. European Parliament. doi: http://www.europarl.europa.eu/document/activities/cont/201111/20111121ATT32055/20111121ATT32055EN.pdf

- Siu, P., & Ngo, J. (2015, December 23). War of words: Carrie Lam says Hong Kong government adviser on retirement protection doesn’t fully understand public financing. South China Morning Post. Retrieved March 10, 2017, from http://www.scmp.com/news/hong-kong/economy/article/1894060/war-words-carrie-lam-says-hong-kong-government-adviser

- Features of the MPF System. (2015, July 31). Mandatory Provident Fund Schemes Authority. Retrieved March 10, 2017, from http://www.mpfa.org.hk/eng/mpf_system/system_features/contributions/

- Ponzi Scheme. (n.d.). In Investopedia. Retrieved March 10, 2017, from http://www.investopedia.com/terms/p/ponzischeme.asp

- Hong Kong Population Projections 2012-2041 (with photo/video). (2012, July 31). new.gov.hk. Retrieved March 10, 2017, from http://www.info.gov.hk/gia/general/201207/31/P201207310344.htm

- Krugman, P. (2013, November 9). More Notes On France-Bashing. The New York Times. Retrieved March 10, 2017, from https://krugman.blogs.nytimes.com/?s=productivity france&_r=0

- Lessons drawn from pension systems of Taiwan and Australia. (2014, November 25). Savantas Policy Institute. Retrieved March 10, 2017, from

- Social welfare for the elderly. (n.d.). Senior CLIC. Retrieved March 10, 2017, from http://www.s100.hk/en/topics/Work-and-retirement/Social-Welfare-for-the-Elderly/Old-Age-Living-Allowance/

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