The impact of the TPS on the labour market for 20 years
In 1998, the Government launched the Tenants Purchase Scheme (TPS) as one of the two core policies for achieving the target of 70% of the people’s home ownership. Another core policy is to build it every year for the next 10 years. 85,000 housing units. However, after the Asian financial turmoil in 1997, under the circumstance of deflation and economic stagnation, the two major policies were put on hold.
Many people still believe that these two core measures should only be put on hold for the time being and should not be revoked. The demand for increasing housing supply has never stopped. The current government is striving to build more houses, and the supply shortage has been accumulating. However, there is no plan to resume the implementation of the rent plan.
The retrospective TPS was implemented 20 years ago between 1998 and 2005. The public housing units were sold to existing tenants. In September 2018, a total of 140 298 public housing units were sold. The value was at least HK$300 billion. The construction cost of the Sha Tin to Central Link is even higher. It is indeed a huge public asset. Such a huge amount is astounding, but fewer people will realize the impact of the rental plan on the labor market.
Changes in employment data
The TPS was implemented between 1998 and 2006 and included 39 public housing estates completed between 1982 and 1994. The other 60 public housing estates were completed in the same period for comparison.
According to the 1996 Population By-census, there are 186,000 households in the 39 housing estates included in the TPS, and the number of households in the 60 public rental housing estates is 209 000. The current year’s TPS has not yet been implemented, and the labor participation rate and unemployment rate of men and women in the general age-appropriate work (18 to 64 years old) of these two groups of households are compared before and after the implementation of the TPS.
In 1996, the working-class participation rate of working-age males living in the above 39 housing estates was estimated to be 0.973, which was slightly lower than the estimated figure of 0.975 for the male residents of the other 60 pure public rental housing estates. As for working-age women, the labor participation rate is 0.578 for those living in the future TPS estates, while the corresponding ratio for the other 60 public housing estates is 0.601. The latter’s labor participation rate is significantly higher [Table 1].
Regarding the unemployment rate, the number of working-age males living in 39 housing estates in the future TPS is 0.043, which is slightly higher than the figure of 0.041 for the other 60 pure public rental housing estates. For the unemployment rate of working-age women, the two groups are Both are 0.039 [Table 2].
According to the statistics of 1996, the situation of the two groups of villages is not much different. After the launch of the TPS, according to the 2001 census data, the situation has changed. The male and female residents of the age-appropriate work in the TPS have recorded significantly higher labor participation rates and lower unemployment rates [Table 1].
Among the working-age males, the labor participation rate in the rented housing estates was 0.950 in 2001, 0.952 in 2006, 0.934 in 2011, and 0.938 in 2016; both were higher than the other group of purely rented public housing estates in 2001. 0.945 in the year, 0.941 in 2006, 0.924 in 2011, and 0.931 in 2016. In 2016, the labor participation rate of male residents in rented housing estates was 0.7% higher; that is, the male working population increased by 1,230. Between 2001 and 2016, the labor participation rate of working-age men increased by an average of 0.8%.
The labor participation rate of working-age women in rented housing estates was 0.675 in 2001, 0.742 in 2006, 0.771 in 2011, and 0.758 in 2016, both higher than the other group of purely rented public housing estates in 2001. 0.673, 0.719 in 2006, 0.742 in 2011, and 0.746 in 2016. In 2016, the labor participation rate of female residents in rented housing estates was 1.2% higher; from the working population, the equivalent female working population increased by 2,000. From 2001 to 2016, the labor participation rate of working-age women increased by an average of 1.6%.
The situation is similar in terms of unemployment rate. Among the working-age males, the unemployment rate in the rented housing estates was 0.083 in 2001, 0.073 in 2006, 0.053 in 2011, and 0.049 in 2016; almost all of them were lower than the residents of pure-rent public housing estates in 2001. 0.080, 0.083 in 2006, 0.062 in 2011, and 0.056 in 2016. In 2016, the unemployment rate for male residents in TPS housing estates was 0.7%; from the working population, the increase in working-age males was 860. Between 2001 and 2016, the unemployment rate of working-age males fell by an average of 0.5%.
Among the working-age women, the unemployment rate in the rented housing estates was 0.047 in 2001, 0.077 in 2006, 0.057 in 2011, and 0.048 in 2016, almost all of which were lower than those of pure rented public housing estates in 2001. 0.044, 0.077 in 2006, 0.060 in 2011, and 0.053 in 2016. In 2016, the unemployment rate of female residents in TPS estates was 0.6%; from the working population, the number of working-age women increased by 680. Between 2001 and 2016, the unemployment rate of working-age women fell by an average of 0.1%.
Why do men and women in working ages in rent-planning estates and pure-rent public housing estates have such differences in labour participation rates and unemployment rates?
In labor participation behavior, owners are often seen as different from tenants. Economic theory also tells us that no matter whether the household or individual increases in wealth, they will demand more leisure and less work.
Labor population growth momentum
Although the landlord under the TPS has to pay a land price equal to half of the price of the purchase unit, it is still a must-see investment for most people, and the units held will also appreciate. As the wealth increases, the owners under the rent-based plan should have lower labor participation rates and higher unemployment rates. However, from the above data analysis of the two types of households, the facts are just the opposite. The reason is the rental of public housing policy.