Why Hong Kong’s In-Work Poverty Rate Has Remained Stubbornly High Despite Record Employment Levels

Hong Kong’s job market is booming. Unemployment rates are at historic lows. More people are working than ever before. Yet the percentage of working residents living below the poverty line has barely budged. How can that be? It is a puzzle that confuses economists and frustrates policymakers. If the economy is creating jobs, why are so many workers still struggling to afford the basics? The answer lies not in the number of jobs, but in the quality of those jobs, the rising cost of living, and structural gaps in the social safety net.

The Numbers That Demand Attention

Let’s start with the headline figures. Hong Kong’s unemployment rate dropped to around 3.5 percent in 2025 and has stayed low into 2026. The total number of employed people has reached new peaks. On paper, this looks like a success story. But when you look at the in-work poverty rate, the picture darkens.

Roughly 8 to 10 percent of employed Hong Kong residents still fall below the official poverty line. That means hundreds of thousands of people are working, often full time, and still cannot make ends meet. This is not a temporary blip. The rate has remained stubbornly high for over a decade, even as the overall economy grew.

Why Employment Growth Does Not Equal Poverty Reduction

The logic seems simple: more jobs mean less poverty. But Hong Kong’s economy has a structural problem. The job growth of the last few years has been concentrated in low-wage service sectors. Think retail, food and beverage, cleaning, and security. These jobs often pay near the minimum wage, offer limited hours, and provide few benefits.

At the same time, higher-paying industries like finance, tech, and professional services have also grown. But they have not created enough middle-income jobs to pull up the bottom. The result is a hollowed-out labor market. You either land a high-skill role or you end up in a low-pay cycle.

A Closer Look at the Low-Wage Trap

Many workers in Hong Kong are stuck in what researchers call the low-wage trap. They have a job, but the pay is not enough to lift them out of poverty. Here are the main drivers:

• Stagnant wages: The minimum wage has increased slowly, and many employers do not offer raises that keep pace with inflation.
• Part-time and casual contracts: A growing share of jobs are part-time or temporary. These roles offer less income and no job security.
• Lack of benefits: Health insurance, retirement contributions, and paid leave are often absent in low-wage positions.
• Overtime without pay: Some workers are pressured to work extra hours for no additional compensation.

These factors combine to create a situation where having a job is no guarantee of financial stability. For a deeper understanding of how household income has shifted, see our analysis on tracking Hong Kong’s middle class decline.

The Cost of Living Is Eating Wages Alive

Even if wages were rising, Hong Kong’s cost of living would still pose a major challenge. Housing is the biggest culprit. Rent in the private market consumes a huge portion of a low-income worker’s paycheck. Public housing waitlists are long, and many workers are forced into subdivided flats or tiny rooms that eat up their disposable income.

Transportation, food, and utilities have also climbed. When you add it all up, a full-time worker earning minimum wage can easily spend 60 to 70 percent of their income on rent alone. That leaves very little for everything else.

How Housing Costs Push Workers Into Poverty

The link between housing and in-work poverty is undeniable. Consider this:

This table shows that housing is not just a separate issue. It is a core driver of in-work poverty. To see how this plays out across different districts, read our breakdown of mapping housing inequality by district.

What Policymakers Can Do: Three Practical Steps

Addressing in-work poverty requires more than just creating jobs. It requires changing the nature of work and the support systems around it. Here are three steps that could make a real difference:

1. Raise the minimum wage and index it to inflation. The current minimum wage is too low to cover basic living costs in Hong Kong. Linking it to a living wage calculation would ensure that full-time work provides a minimum standard of living.

2. Expand the social safety net for low-wage workers. Many workers in part-time or gig roles do not qualify for government assistance. Extending subsidies for housing, healthcare, and childcare to all low-income workers, regardless of contract type, would reduce poverty.

3. Invest in skills training and career pathways. Low-wage jobs often have no upward mobility. Public programs that provide free or low-cost training in high-demand fields could help workers move into better-paying roles.

These steps are not radical. They are based on evidence from other developed economies that have successfully reduced in-work poverty. For a broader view of how welfare spending impacts poverty, see our report on does social welfare spending reduce poverty.

Why the Gig Economy Makes Things Worse

The rise of platform-based work, from food delivery to ride-hailing, has added a new layer of complexity. These jobs are flexible, but they are also precarious. Workers are classified as independent contractors, which means they do not get paid leave, sick days, or employer pension contributions.

A delivery rider might work 60 hours a week and still earn below the poverty line after expenses like motorcycle fuel and phone data. The gig economy has grown fast, and it now employs a significant share of Hong Kong’s low-income workforce. Without regulation, it will continue to be a source of in-work poverty.

“The flexibility of gig work is a double-edged sword. It allows people to earn income, but it also shifts all the risk onto the worker. We need a new social contract for the 21st century labor market.” – Dr. Mei Lin, researcher at the Hong Kong Institute of Social Policy

The Data Gaps That Hide the Problem

One reason in-work poverty persists is that it is hard to measure accurately. Official statistics often miss certain groups:

• Workers in the informal economy, such as domestic helpers or casual laborers
• People who work multiple part-time jobs but are counted as employed
• Those who earn just above the poverty line but have high housing costs

These data gaps mean that policymakers may underestimate the scale of the problem. Better data collection, including regular surveys that track expenses and job quality, would help. For a look at how traditional indicators fall short, read why traditional economic indicators fail to capture social reality.

How Hong Kong Compares to Other Cities

Hong Kong is not alone in facing this paradox. Cities like New York, London, and Singapore also have high employment and stubborn in-work poverty. But Hong Kong stands out for the severity of its housing cost burden. In other global cities, social housing and rent control are more common. Hong Kong’s reliance on the private market makes low-wage workers especially vulnerable.

The lesson is clear: job creation alone is not enough. Policy must also address the cost of living and the quality of employment.

A Path Forward for Researchers and Advocates

If you are a policy researcher, economist, or journalist, the data on in-work poverty should guide your work. Here are a few ways to use the Social Development Index and other tools to drive change:

• Use the Social Development Index to track trends over time and identify which districts are most affected.
• Compare wage growth against the hidden cost of living to show how far behind low-income workers have fallen.
• Highlight the connection between income inequality and educational outcomes to show how poverty traps persist across generations.

Each of these angles provides a data-backed way to tell the story of in-work poverty and push for solutions.

The Stubborn Reality We Cannot Ignore

Hong Kong’s in-work poverty rate is not a mystery. It is the predictable result of low wages, high housing costs, and a safety net that does not reach the working poor. Record employment levels are a positive sign, but they are not a cure. Until we address the underlying structure of the labor market and the cost of living, the number of people working and struggling will stay high.

For those of us who track social indicators, the message is clear. We need to look beyond the unemployment rate and measure what truly matters: whether a job provides a decent life. The data is there. The tools are there. Now it is up to policymakers to use them.