16.
10.
CONFIDENTIAL
The last two years brought home to me how
totally dependent the economy of Hong Kong is on foreign
markets. As world recession deepened and demand
dropped in America and Europe, the value of Hong
Kong's domestic exports was 12.4% less and the volume 15.7%
less in the last quarter of 1974 and the first quarter
of this year than the corresponding period a year
previously, and a drop in economic activity resulted
of a sharpness and depth not experienced before in
modern industrial Hong Kong. In these circumstances
the traditionally good and pragmatic relations between
management and labour and the ingenuity and vigour
of the former and realism of the latter showed up
extremely well. Everything possible was done to
maintain employment by work sharing, by trimming margins
and by searching for new markets. Timely legislation
and the good sense of employers assured proper redundancy
payments where redundancy was inevitable. But at the
trough in March, the number of unemployed was probably
over 10%, or 190,000 (by the American method of compilation
which does over-estimate in comparison with the British).
Not surprisingly, public assistance for the year was
$74.5 m. more than in 1974 and about 300% more than in
1973. Though by March it was clear that the economy
was bottoming out the Government had been so concerned
CONFIDENTIAL