CONFIDENTIAL
Mr Henderson feared that Professor Turner would recommend some varient of the minimum wage concept, something which he said the unions did not want because a minimum would be likely to become a maximum in the particular conditions of Hong Kong, and the effect would be to squeeze out people on the fringes of employment.
Housing
16. I had meetings with the Secretary for Housing and the Director of the Housing Authority and visited a number of public housing estates old and new. More than two million people (46% of the population) now live in government-subsidised housing and the Hong Kong Government have every reason to be proud of their achievements in this field. I was struck by the fact that although rents in the new and superior housing blocks are five-six times higher than those in the old Mark I and II resettlement blocks (which are now - and not before time being gradually converted or demolished) the cost of public housing as a percentage of real wages has steadily declined over the years. This was clear not only from the figures but also from the television sets, hi-fi equipment and other consumer durables to be seen in the flats I visited and through the windows of others. I was also impressed by the evident success of the Housing Authority's Home Ownership scheme (the sale of flats in specially built blocks). The 8500 flats which will be available in 1979-80 have been heavily over-subscribed, and applicants have to be chosen by ballot.
17. A good deal of sub-standard housing remains, but most of it is now privately owned. With this in mind I asked whether there was not a risk that a serious gap might develop between standards in public housing and those at the lower end of the private market. Those to whom I spoke thought that market forces would eventually ensure that private developers raised their standards.
The Civil Service
18. The Civil Service has expanded by more than 50% since I was last in Hong Kong in 1969 (from around 80,000 to around 126,000 established posts). This expansion reflects the great increase in Government activity which has taken place in the last ten years. The Governor maintains that the Civil Service is now under consider- able strain, particularly at middle management levels and I am sure he is right. There is certainly a fair amount of unrest in the public service, and a greater readiness to resort to industrial action (social welfare assistants, postmen and nurses are recent examples). Whatever the reasons for this - and I suspect they are complex - there is a need for better machinery for dealing with disputes when they arise. The Secretary for the Civil Service is working on pro- posals.
19. The quality of people at the top of the Civil Service struck me as generally good, though there is some dead wood. But there is a shortage of talent lower down and it may be difficult to find adequate candidates for some senior posts in two or three years time. However, I was very favourably impressed by the intelligence and
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/enthusiasm