12.
compared with 6% and 3% respectively in 1972/1971, and for
first time since the 1950's, therefore, real wage rates a
actually declined. Even so, the gross domestic product
increased, in real terms, by as much as 12%, its highest growth
rate since 1969. Although part of this reflected increases in raw material stocks which cannot be separately be identified (and hence excluded), the clear implication is that there was
a substantial shift of incomes during the year from wages to profits (and this suggests that producers may have over-
reacted in their employment policies to many of the difficul- ties with which they had undoubtedly been faced).
(h) The Oil Crisis and World Recession
25. Then, in October 1973, came the oil crisis, followed by
its deflationary impact on the world economy and hence on Hong Kong. In 1974, Hong Kong's domestic exports actually declined, in quantity temas, for the first time since the 1950's, by about 7%, thereby eliminating the increase in out-
put achieved in 1973. As a result,manufacturing employment alão declined, by about 69,000 workers, or by 10%. Reported vacan-
cies continued to fall and unemployment which, in December 1973, stood at around 100,000 or 6% of the economically active population (the working population plus the unemployed) increased significantly. Activity in the building and con-
struction sector also showed signs of easing, though the sig-
nificant reduction in expenditure on projects for the private sector (about 13%, in real terms) was very nearly off-set by increased real expenditure (about 30%) on projects for the public sector (this reflecting the acceleration of the govern- ment's expenditure programmes announced in 1972). In the ser- vices sector, employment overall remained about stationary,
but the situation for individual trades and professions was
rather varied; Faced with rising costs, many firms moved out
of the central business districts and this contributed to an
actual decline in office rents in the second half of the year (of 8% compared with increases averaging 50% in 1973). Against this background, the demand for labour became even
sluck and in consoquonco monoy wage rates in 1974 hardly
increased at all.
26.
Consumer prices for 1974 as a whole were some 14% higher
than in 1973, but they had stabilised by the second half of the year and the decline in real wage rates, therefore, also
levelled off. Nevertheless, with declining employment and evidence of short-time working and working by rotation, it
soms Mhilu that than was a further shift of incamas from
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