Annex to despatch of 28 May 1974
The Social Impact of Economic Conditions - May 1974
Wage and salary earners are undoubtedly worse off than a year ago. The index of real average wages for industrial workers shows that real wage rates have fallen over the last year by 11% of which 3% is over the last six months. There is also a certain amount of short time being worked in a number of factories so that take home pay in some cases will be even more affected. More detailed information is being sought in this area. There is, however, an average of two earners to every household and the average household in the household expenditure survey now in progress has an income of about $1,700 a month, so that there is some considerable degree of latitude before the poverty line is reached.
2. The public assistance scheme should moreover pick up all those who fall below the poverty line (about $400 plus rent etc. for a four person household. This will be $500 plus by 1st June). There is, however, no sign of increase in the number of applicants for public assistance. In fact the number of applicants for public assistance in April 1974 is less than in the previous month (1,789 instead of 1,864). Moreover the increase in public assistance scale rates in January by 21% did not bring a rush of new applicants as it should were there a large body of persons near the poverty line.
3.
The evidence of how people are managing on their reduced incomes is mixed. Certainly there is clear evidence that a high percentage of household income is being spent on food and is now over 50% for those with household incomes up to $3,000 a month, although it still does not exceed 60% for the lower incomes. Of this a higher proportion is being spent on rice, which is not surprising as the price of rice has doubled over the past year. Low grade rice has few buyers on the market however partly because of the narrow price differential. Restaurants report poor business and some are taking extraordinary measures to improve trade. Some are reported to be reducing prices. Meals bought away from home, however, still account for 14% of household expenditure. The expenditure survey indicates that less is being spent on clothing and consumer durables. Expenditure on fresh fish, fresh pork, fresh vegetables and fresh fruit is still high proportionately. The Hong Kong and Yaumati Ferry Co., the principal operator in this field, reported no fall-off as yet in recreational journeys although they were selling somewhat less soft drinks aboard after a recent price rise. The Happy Valley race course is of course packed to capacity, although the number of holiday trips to Macau has fallen by 18% compared with a year ago. There are no outward signs of unemployment or depression.
4.
Taxis are experiencing poor business after a recent rise in fares, which in more prosperous times might have passed without a tremor. Minibuses are doing less well. Other forms of public transport are carrying about 10% more passengers than a year ago. More car licenses are currently being cancelled than registered. (The home market such as tailors, waiters, car salesmen and newspapermen will not receive wage increases in line with the cost of living.)
5.
There is no sign of any fall-off in school attendance. Indeed this would be a serious matter at the primary level, but even private secondary school operators have not experienced any fall-off in clients.
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