CONFIDENTIA:
Prices are seldom fixed exclusively by costs in any case. Morcover, although the simple cause and effect situation described may have existed in the early days of Hong Kong's development say 1950 to 1960 the industrial/manufacturing labour force is now less than, half of the total employed labour force.
11. The non-intervention policy of the Hong Kong Government can be contrasted with Singapore. The Singapore Government has already acted on somewhat similar cost of living increases to those experienced in Hong Kong by accepting their National Wage Council's recommendation that workers earning less than HK$2,000 a month should receive from 1 February 1974 an interim wage supplement of HK$50 a month. This is awarded pending a substantive wage award which will be decided on later to take effect from 1 July 1974.
12.
A suggestion has been heard that the Public Assistance rates could provide a safety net. This could only happen if these rates were adjusted upwards to take account of the increased cost of living and began to overlap the lower levels of wages. (The Public Assistance rate for a family of four is HK$400 a month). There is an awful historical warning about this approach. "In 1795 high prices created a position so desperate that it was universally recognised that something must be done for the agricultural labour whose wages no longer maintained him. Arthur Young came forward with a proposal for the regulation of wages, and he was supported by Whitbread and Fox. Whitbread introduced two Bills for this purpose in 1795 and 1800, but Pitt threw his great influence against them and this plan was rejected. The method of relief adopted, that of making up wages out of the rates, has become famous in history as the Speenhamland system. When the Royal Commission in 1833 examined the problem of Poor Relief, they discovered a number of abuses, but the abuse that stood out in their minds as the main cause of degradation and extravagance was the Speenhamland plan. (Quoted from 'The Bleak Age' by J Land B Hammond).
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13. If the cost of living as measured by the MCPI should continue to rise and the March statistics when analysed show a continued fall in real wages (the broad statistics could be amplified by a small sampling survey of lower paid workers and poorer households) - then there is a strong case for Government publicly advocating that private employers should make similar adjustmente based on the MCPI (within similar wage bands) as the Hong Kong Government itself
/will be
collective agreement for the UK knitwear and garment-making industry provides for a 5 day, 40 hour week. Knitters are paid £1 an hour, with overtime beyond 8 hours at time and a half; makers-up at 70p an hour; shirt makers 60p an hour. At these rates, labour costs approximate to 30% of the cost of the finished product. (In wool textiles 25%). A knitter in Hong Kong averages rather less than $2 a day. Other operators earn about £1.50 a day. With Hong Kong wages thus approximately one-quarter of British wages, and raw material costs about the same, labour costs as a proportion of total production costs ought to be much less than the British average of 30%, given reasonable efficiency. Increases in Hong Kong wage rates have therefore much less impact on production costs than many Hong Kong employers are prepared to admit.
5 CONFIDENTIAL