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large group of workers, must of whom have enjoyed regular employment and some of the best conditions in Hong Kong,

represents a latent security threat.

to again later.)

This is referred

15. The weakness of the unions and the relative

docility of labour in a steadily widening labour market have been the main factors inducing the low priority given to labour relations. Except in the public utilities, paternalism at best and neglect at worst has been the attitude to worker/employer relations. The virtual demise of the communist unions has further emphasised a gap which was already wide. Recent events have, however, made clear to employers the need for a stern re-appraisal, particularly as regards communication between employers and employed; and there are welcome signs of a new outlook emerging and a readiness to adopt a new approach.

16. An ingredient in the re-appraisal is the sturdy refusal of the Hong Kong workers to be swayed by communist agitation. Trade unionism having largely failed, the development of improved constitutional relationships based on the individual factory or establishment is the only

possible alternative and it is in this direction that local thinking has progressed. In the view of the Commissioner of Labour, the setting up of works committees

and established joint consultative procedures is the best

solution in the circumstances; but while the larger

employers are generally in agreement with this, they are understandably reluctant to accept compulsory works committees backed by legislation. It may well be that ultimately compulsion may become necessary, but first it would seem wise to spread a wider understanding of the principles and problems of application of joint

consultation, and thereafter in the light of experience to consider the need for legislative action.

17. In these circumstances, I would recommend that a

specialist in the operation of joint consultative machinery, preferably with an employer background, should be engaged on contract by the Hong Kong Government. His duties would comprise the active propagation of joint consultative methods and practical advice to employers'

/ organisations

CONFIDENTIAL

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