22 -
-
supplement suggests that recent labour cost increases have been offset to some extent by automation in the financial sector and that the level of rents in Hong Kong is still below those in either Tokyo or Singapore. It also notes that skilled labour can be highly mobile and suggests that if political uncertainty increases and/or wages do not keep pace with inflation (which is less of a concern), such resources may be tempted to other regional centres.
3.17 In this context Chart
4 illustrates the path of
real effective exchange
rates (based on Relative
consumer prices) for Hong Kong, Singapore and Taiwan
since 1980. It is notable
how Hong Kong's relative
position has changed sharply
CHART 4: REAL EFFECTIVE EXCHANGE RATES FOR HONG KONG, SINGAPORE, TAIWAN
1980 = 100
130
120
in the last two years.
However, despite the
110
substantial rise in the real
effective exchange rate,
there is no sign of any loss.
100
of competitiveness in
financial services.
Nevertheless there must be a
risk that a continuing rise would at some stage begin to
affect Hong Kong's share of
the regional market in
financial services.
Skilled Labour
3.18 In the face of
90
90
80
་
1980
1985
HONG KONG SINGAPORE TAIWAN
1990
retrocession, Hong Kong
suffered a labour drain during the second half of the 1980s, as many Hong Kong residents sought non-Hong Kong passports as an insurance policy. Recent anecdotal evidence suggests that this has been reversed as people, having obtained another passport, have returned to work in Hong Kong. Nevertheless the fact that these people now have non-Hong Kong passports means that Hong Kong could suffer a drain, possibly sudden, of part of its skilled labour force,
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