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As we have all these luxury stores around us, and fast food restaurants sell a set lunch for more than HK$100, it is easy to forget there are a lot of less fortunate Hongkongers living around us. Despite its many flaws, the government has continued to impress me with its determination to face the issue of poverty head on.

Poverty is a multifaceted social phenomenon, and we have yet to discover a solution to eliminate it. However, societies differ in terms of how wealth is to be distributed equally. With the creation of the poverty line under Chief Executive Leung Chun-ying's leadership, our city finally became conscious of how serious the problem really is.

The government defines the poverty line as half of the median monthly household income of all domestic households in Hong Kong - prior to government intervention such as tax and social benefits transfers. According to this definition, the poverty line for 2012 was HK$3,600 for a single person, HK$7,700 for a two-person household, HK$11,500 for a three-person household, HK$14,300, HK$14,800 and HK$15,800 for a family of four, five and six above, respectively.

According to figures from the Census and Statistics Department, there are 1.31 million people in Hong Kong receiving incomes below the poverty line as of the fourth quarter of 2012. That means one in six people live below the poverty line. Contrary to common belief, the city's poor are not only those unable or unwilling to work, but also include many honest workers. According to research by Oxfam Hong Kong, more than half of the poor are members of households with at least one employed member.

Oxfam also found that, in 2012, more than half of the working poor households have a monthly income lower than the average Comprehensive Social Security Assistance (CSSA) payment for households of corresponding size. Among those working poor households that meet the criteria for applying for CSSA help, only one-tenth applied for low income CSSA payments. This shows that the poor in Hong Kong value self-reliance and, in general, shun government assistance.

These numbers are shocking and we should be outraged. They point to the failure of the current mechanisms for redistributing wealth equitably.

The government implemented the statutory minimum wage in 2010. Yet, in determining the minimum wage level, the legislation did not consider the fact that they have to support dependent family members. Hence the minimum wage alone is not sufficient to ensure basic living standards for these households. As a result, despite an increase, after the implementation of the minimum wage, in the median monthly income for the lowest 10 percent of the working population, there was no significant reduction in the number of working poor households.

Both internationally and locally, there is an ongoing debate about what the minimum wage should include. Should it be a "living wage", no matter what this term means, or should it be a "family wage", where supposedly the income received should be able to support not only the worker, but his or her family? Naturally, this is not a theoretical debate, but one affecting the size of people's pay-checks.

The Policy Address seems to have settled the debate, at least for now. The proposed "low-income family subsidy" means employees will be fed by their employers, while their children will be supported by the government. While this will bring additional income to families in need, it is also sending a message to employers that they no longer are responsible for their employees' families.

The government claims its definition of poverty is based on the concept of relative poverty as opposed to absolute poverty expressed in terms of basic subsistence, but in fact that is not quite true. Picture yourself living alone in a "single-person household": with $3,600 a month, or $120 a day. Can you really meet all your subsistence needs? With an extra $1,000 or so subsidy from the government, would that substantially improve the living standards of a poor household and allow its children to have a chance to break out of the poverty trap?

While this new subsidy for working poor household is a good start, our city is in urgent need for more quality jobs for the low-income workers and their offspring. This has to be achieved with more reforms and with industrial policy planning. The least we want is for children in poor families remaining stuck in the poverty trap.

The author is a current affairs commentator.

(HK Edition 01/16/2014 page1)