Generation 40s – 四十世代

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Would Asia’s army of migrant domestic workers stay home if they could?

CommentInsight & Opinion
Theophilus Kwek says governments and scholars portray domestic workers, mostly women, as voluntary migrants. But applauding choice must not distract us from tackling coercion

Domestic employment in Southeast Asia’s rich metropolitan centres is often presented as a lucrative, even strategic choice for thousands across the region pursuing better livelihoods, or an improvement in living standards.

In a recent address, a Singapore minister praised his country’s foreign domestic workers (colloquially referred to as “maids”) for choosing to “support their families back home” in this way. His language echoed that of reports in Singapore’s national broadsheet, typecasting domestic workers as “women from impoverished families seeking higher incomes abroad”. Unsurprisingly, state-supported charities like the Foreign Domestic Worker Association for Social Support and Training have made it their aim to maximise returns on these women’s decisions to migrate: by “adding value to their work”, and hence “enhancing their future employability”.

Academics within and beyond the region are prone to entrenching this view. Southeast Asia’s domestic workers are mostly portrayed as voluntary migrants who, as one researcher put it, set out to “make money, save it up, and invest it strategically in a transnational manner”. This reading has also begun to shape policy discourse. A briefing released by the UK’s Department for International Development in early 2016, authored with a team at Singapore’s Asia Research Institute, framed labour migration as a “pro-poor livelihood strategy”, undertaken especially by women from “poor households” to support “productive investments” in education and other areas.

A narrative that characterises the decision to seek foreign domestic work as a free, informed, and laudable choice, however, conceals the fact that labour migration in Southeast Asia is chiefly produced by deep-seated drivers of displacement.

Taking a more nuanced perspective would not only allow us to account for the causes of forced migration within the region, but also to address them.

Sending states are a key piece of the puzzle. As early as 2001, Indonesia’s new minister of Manpower and Transmigration stated that his government would “facilitate labour export” as a solution to unemployment, given that “about 40 million people [were] jobless” at the time.

Professor Stephen Castles, a former director of the International Migration Institute, has pointed out that encouraging emigration to ease joblessness can bring “long-term costs to the economy and society”. Nevertheless, political leaders in the region who are unable or unwilling to create employment at home may well perceive exporting domestic labour to be an attractive, and no doubt affordable, policy solution.

But states rarely urge their citizens directly to take up poorly remunerated and ill-protected jobs overseas. Instead, conditions can be created (or left to occur) in which those in difficult positions view the sacrifices involved in doing so as the least bad option relative to other life choices.

A 2015 study by the Humanitarian Organisation for Migrant Economics found that close to two-fifths of Indonesian, Filipino and Myanmese foreign domestic workers had migrated “to be able to send their children to school”, while 15 per cent reported either problems in the household or a lack of available jobs as reasons why they left.

Solutions to such problems should rightfully be demanded from national governments.

Still, pressures for displacement are not created by sending states alone. The umbrella of responsibility extends much further, to transnational employment agencies which charge extortionate rates and wilfully distort information about working conditions abroad, as well as intermediate authorities at home who willingly overlook stricter safeguards during the recruitment process.

Global and regional market dynamics are also to blame.

Skyrocketing inequality in Southeast Asia means that any gains in regional wealth are enjoyed by a thin, privileged elite, leaving few options for those struggling to make ends meet. This makes domestic work, often in unappealing conditions and far from home, still a desirable option.

To be clear, we cannot afford to overlook the agency of migrant workers in determining their futures: indeed, the willingness of so many to make the best of their circumstances speaks of great personal fortitude and hidden sacrifice.

Yet, applauding choice must not distract us from tackling coercion. A narrative which foregrounds only the voluntary aspects of migration tempts us to think that migrants bring upon themselves the trials they face abroad, and allows those responsible for deprivations endured elsewhere to get away with easy solutions.

We owe them, and ourselves, a better explanation.

Theophilus Kwek is a writer, editor and researcher based in Singapore. He has recently completed a master’s degree in refugee and forced migration studies at Oxford University

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Hong Kong should make the best of being a low-fertility society

CommentInsight & Opinion
Paul Yip says high costs and changing social norms will keep Hong Kong stuck in a low fertility trap. Instead of focusing on trying to raise fertility rates, the city should also improve health, skills and education to meet the challenge

Is Hong Kong doomed to be a society of low birth rates and eventually declining population? Austrian demographer Wolfgang Lutz has put forward the hypothesis of a “low fertility trap” that illustrates the challenges we face. When fertility rates fall below a certain threshold, he says, it could be trapped at a level of around 1.2 children per woman, far below the replacement level of 2.1. This is not just due to the demographic transition of fewer marriages, but also the self-reinforcing changes in social attitudes towards family formation.

It is a trap because of the involuntary nature of such a possibly irreversible demographic regime change. As more people choose to have fewer children, young people growing up will begin to accept small family size as the norm. This in turn affects their future aspirations to have children.

In Hong Kong, surveys show that the ideal family size is 1.6 children (that is, the number of children families want to have), while the total fertility rate is around 1.2 (the children they actually have). If the city’s youth aspire to have even fewer children, ideal family size will fall further, and so will the fertility rate.

All high-income Asian economies, including South Korea, Japan, Singapore and Taiwan, have a total fertility rate of about 1.2, lower than the average of 1.5 in the West, even though their governments have spent considerable resources in ­an attempt to raise fertility rates.

For example, the Korean government provides universal free childcare services to parents, and spent more than 61 trillion won (HK$424 billion) from 2011-2015, with little impact on improving women’s labour participation rate and fertility rate. It is going to spend another 108.4 trillion won from 2016-2020. The universal childcare service welcomes these initiatives as mitigating the pressure of raising families, but there is still little impact in raising fertility rates.

Taiwan has provided much support to families with more children, in the hope of reversing the fertility decline. Likewise, the Singaporean government has gone all out to promote marriage and fertility by offering affordable housing loans and other incentives.

Low fertility rates in these countries are not just due to financial considerations but some very practical issues, such as long working hours and gender inequality, such as the unequal burden on women of childrearing and housework. The unstable employment situation, expensive housing and high educational expenses are real barriers to bigger families.

In Singapore and South Korea, population policy committees are housed in the prime minister’s and president’s office, respectively, to reflect strong government commitment. Singapore treats its population policy as a priority in the national policy agenda. With a population about 2 million short of Hong Kong’s, and 30 per cent non-permanent residents, it is a matter of survival for Singapore to maintain a sizeable, quality population.

Compared with other advanced Asian economies – Japan, South Korea, Singapore and Taiwan – Hong Kong has the lowest average ideal family size, of 1.6 children.

In Japan and Korea, the ideal is 2.4 and 2.2 children, respectively. Thus, even amid ultra-low fertility, the two-child norm is still very strong these countries, but ­appears to be eroding in Hong Kong.

In the latest survey by the Family Planning Association, about 28.4 per cent of respondents reported that their ideal number of children was zero, reflecting that nowadays in Hong Kong, a certain proportion of couples voluntarily choose to be child-free and live the DINK (double income, no kids) lifestyle. About 40.4 per cent reported that their ideal parity was one, while only 29.4 per cent reported that their ideal parity was two.

So aspiration for family formation among our young people is not high, and the fertility intention is even lower. With expensive housing and job instability, Hong Kong has all the elements to remain in this low fertility trap for a long time.

On the other hand, we enjoy one of the longest life expectancies in the world. With the workforce ­expected to shrink from 2018, we do need to plan ahead to avert crisis.

Improving productivity and ­relying less on labour-intensive work should be the top priority. The relatively low labour costs have not provided the incentive for investing in technology to ­improve the working conditions for the three “D” work categories, namely, difficult, dirty and dangerous work. Further, replacement migration is not only an option but a real necessity, to maintain the quality of service and timeliness of completion of work.

Given the challenges, Hong Kong’s fertility rate of about 1.2 is unlikely to see much ­improvement anytime soon. The average duration between marriage and the first birth is also getting longer, to about three years now. Apparently, the gap between the ideal and reality is also growing larger.

There are too many barriers for women in Hong Kong to achieve the ideal family size, not least the financial burden of high housing prices and costs of a quality education.

If we can’t see an end to the low fertility trap, perhaps we need to ­adjust our mindset for living with a low-fertility society, and ­improve on education, skills and health to offset the population size deficit.

By making Hong Kong an ­attractive place, we still can attract the right people with the right skills to maintain the city’s sustainable development.

Paul Yip is chair professor in the Department of Social Work and Social Administration at the University of Hong Kong

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Why Hong Kong is failing to rein in housing prices

CommentInsight & Opinion
Victor Zheng and Roger Luk say the government’s control measures, which are meant to favour end users, are in fact working at cross purposes due to the over-regulation of mortgages. As a result, the secondary market is stagnant and unable to match supply with demand to moderate prices

Last November, the Hong Kong government again raised the stamp duty for buying residential property, yet housing prices also reached a new high. Apparently, these additional “spicy” measures could not arrest the price hike. For the past four years, the government has endeavoured to stabilise the housing market, but in vain. So, why don’t these demand-side measures work?

When the global financial tsunami hit in September 2008, Hong Kong’s housing market was already grossly imbalanced, with a mismatch in demand and supply. Owing to the city’s linked exchange rate system, low interest rates and quantitative easing in America, excessive liquidity has altered the landscape of the housing market.

Since 2009, the government has introduced various measures in an attempt to cool excessive demand, including increasingly aggressive controls, from 2012 onwards, that are meant to prioritise homebuyers and depress investment demand, particularly from non-residents. Yet, prices had risen a further 50 per cent by the end of last year, notwithstanding the fact that the US Federal Reserve had started to raise interest rates a year earlier, in 2015.

The measures were supposed to drive away speculators and investors, leaving behind end-users. But it has not been the case. Where did the “spicy” measures go wrong?

The taxation measures set out to suppress non-user demand with a levy, while the mortgage measures are meant to give users priority. Together, they are supposed to facilitate the ownership of housing at an affordable price with affordable financing. Unfortunately, as it turned out, the measures worked against each other, with undue restrictions on mortgages offsetting the advantages in taxation.

Mortgages are probably the safest form of lending but our bureaucrats think otherwise. With the financial crises of 1997 and 2008 still fresh in their minds, they fear a recurrence of negative mortgages and systemic risk. Those so-called “countercyclical” measures – including a 40 per cent down payment, stress test, maximum tenure, maximum debt service requirements and so on – induce a sense of comfort among bureaucrats, but they fail to see that the subprime mortgage crisis was unique to America.

The over-regulation of mortgages has brought undesirable side effects. Trading up is out of reach. The secondary market is quiet, thus losing its role of matching demand and supply through price negotiation. When the resale market is not functioning, the primary market (new development) dominates. Around 20,000 units of new private housing come into the market each year, accounting for 5 per cent of the housing stock but 30 per cent of transactions in recent years. Why?

Homebuyers are turning to the primary market due to practical considerations. Developers are counteracting the “spicy” measures with self-financing by way of a second mortgage to help buyers with the down payment. As it is tantamount to a deferral of receipt of payment, sellers in the secondary market are unable to match such terms.

In addition, developers are offering tailor-made units that match affordability. They are building smaller flats while upholding high prices (in terms of price per sq ft). Studio flats of less than 200 sq ft are not uncommon.It explains why many Hongkongers worry about further price hikes despite the government’s control measures.

The taxation measures were supposed to turn the housing market around in the buyer’s favour. However, they have benefited developers simply because the mortgage terms are too harsh. Even genuine homebuyers find it hard to get sufficient financing. The problem with mortgage measures is they are case-based rather than portfolio-based. Regulatory parameters have become the de facto mortgage terms. The collateral damage is a grossly distorted housing market unfavourable to resale.

The “spicy” measures are supposedly contingent and targeted. But the over-regulation of mortgages has thwarted their policy intent and crippled the market. There is no better redress than reviving market dynamics. Actually, banks know better than bureaucrats about credit and risk management. To turn the market around, a two-pronged approach is necessary:

First, abandon case-based regulation, such as setting ceilings on mortgage ratios, debt-service ratios, tenure and so on, and replace it with portfolio- and risk-based regulation. Second, set portfolio-based regulatory parameters in terms of mortgage ratios, debt-service ratios and stress tests. If any bank does not meet them, it should buy mortgage insurance.

The primary argument for demand-side management measures is the prolonged shortage of supply and falling affordability. However, it is not supported by the latest official figures. At the end of 2015, there were 1,092 domestic residences for every 1,000 households on average. The 5 per cent rate of public housing vacancy is structural, but the 14 per cent figure for private housing suggests a mismatch.

One may infer that there are flats seeking occupants and households seeking accommodation. Actually, there has been an excess of private housing for years. If the government’s measures were effective, the excess ratio would not be three times the structural vacancy.

Meanwhile, the policy goal of allotting public rental housing to households within three years of application is still unattainable, and the queue is growing fast. Even if these demand-led measures were needed, they would not help resolve the problem.

Public and private housing are mutually exclusive and interchangeable. The re-emergence of subdivided flats in private housing means that the core problem is not an imbalance but a mismatch of demand and supply. Without a holistic housing policy, the current measures are driving those still eligible for public housing to queue for it indiscriminately, thus distorting the picture. Apparently, the government is still undecided about the policy for subsidised housing, as evidenced by the pilot sale of flats supposedly for rental. Should our housing policy be primarily accommodation-based or ownership-based?

It is often said that businessmen are smarter than bureaucrats in challenging markets. There is no surprise that the “spicy” measures and housing prices are trapped in a vicious cycle as mortgage measures in particular defy market reality. Housing demand and supply are not synchronised. The coexistence of public and private housing only adds to the complexity. Unless and until they are separate markets and market dynamics is restored, the impasse will carry on.

Dr Victor Zheng is assistant director of the Hong Kong Institute of Asia-Pacific Studies at the Chinese University of Hong Kong. Roger Luk is a retired banker and an honorary research fellow at the institute