(17865) Dd.145178 400m 5/73 G.W.B.Ltd. Gp.863
NOTHING TO BE WRITTEN IN THIS MARGIN
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2.5
Sir M MacLehose emphasised that he had not yet
discussed his proposals in Hong Kong. Also, he was not sure how quickly the proposals could be implement-
ed. He had therefore proposed new two-year ExCo and LegCo appointments on the existing basis to fill
vacancies from the end of June. These would not
prejudice the scope for manoeuvre.
2.6
Lord Goronwy-Roberts agreed that the
Governor should proceed with the appointments which he had already proposed.
3.
3.1
Social Questions
Sir M MacLehose had described Hong Kong's current social and economic situation in his despatch dated 28 May. It was unfortunate that, just as the
financing requirements of the Government's new social
be felt programmes were beginning to bite, the budget should
be adversely affected by external constraints. The
oil crisis, with its effect on overseas markets and on
the cost of raw materials, had squeezed profit margins; and a simultaneous tightening of liquidity had caused
particular difficulty to small firms. Workers lacked
bargaining power, and real wages had dropped by about
11% in the past year. Hong Kong had no unemployment
statistics, and there were also no figures for non- industrial employment (which accounted for more than half the total work-force). However, a special new
working group was monitoring monthly economic and social trends, using sampling techniques, and was beginning to produce results.
3.2
The economy was still functioning fairly satisfactorily in macro terms; and, although belts had
had to be tightened, the human picture was not one of
real want. The Communists were unable to make trouble,
because much of the rise in the cost of living was due
to price increases of basic foodstuffs imposed by the
Chinese Government. The rises seemed now to have
levelled out; a Consumer Council had been set up to
investigate allegations of profiteering; and there was
the prospect of an improvement in real wages during
the second half of the year. The Government would be
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