CONFIDENTIAL
8.
d)
e)
6.
it would be an immensely complicated administrative exercise and the Government has not the ability to do it efficiently; secondly it could not affect imported prices which are at the heart of the problem. It could only affect mark-up, and we believe that the Consumer Council and the pressure of competition can achieve all that can be done. If mishandled
price control could also result in shortage, which would be disastrous).
A
For the Government to declare a minimum wage. (Comment: if it was high enough to affect current wage levels it could result in either widescale dismissals amongst small employers, or more likely evasion by agreement with employees. If it was low it would be valueless. minimum wage may well eventually be appropriate in Hong Kong, but I believe it would be an ineffective method of attempting to raise wages in present circumstances and likely to discredit the principle. The latter might be easier to get accepted in more favourable conditions)
For the Government to expedite its own construction programmes to provide employment, drawing on the reserves for the necessary finance. (Comment: impact on employment would be relatively slow, and could not be of great significance, though an announcement to this effect might have a psychological value. Really extensive use of public works to provide employment would have a serious effect on the balance of payments because of the high import content of all labour intensive construction schemes)
To sum up, while I see danger or little merit on most of the panaceas proposed above, I would not exclude use of the reserves for one purpose or another if real need arose, that is to say if we were heading for crisis conditions. But at this time
CONFIDENTIAL