CO129-599-2 Salaries Commission- 1947 Report 1-1-1947 - 31-12-1949 — Page 16

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level. We have also referred to the reports of various recent Salaries Commissions in other Colonies and in particular to those dealing with the public services in West Africa and Palestine.

Permanent decrease in the purchasing power of money.

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21.

Another subject which has figured prominently in our deliberations has been the assessment of the permanent decrease in the purchasing power of money since the war. We have reluctantly, but unavoidably, had to put on the prophet's mantle in the perhaps foolhardy attempt to state how much of the present rise in the cost of living is due to temporary dislocations caused by war such as the shortages of essential foodstuffs, textiles and transport which can be expected to right themselves in time and how much of the rise might be regarded as permanent. Cost of living indices for Hong Kong for the period after the First World War are not available, but those for Singapore show that the cost of living for Asiatics rose to 110 above the 1914 level in 1920, gradually declined to 50% in 1922 and remained at about 50 to 60, above the 1914 level until 1930 when the effects of the world slump began to make themselves felt. The cost of living for Europeans in Singapore in 1920 rose to about 30, and in the next ton years settled down to about 55,, to 60, above that of 1914. Similarly, in the United Kingdom it is understood that the decreased purchasing valuc of money after the First World War was reflected in a 35% to 40 increase in salaries and wages.

The rise in the cost of living which has occurred in the Far East after the Second World War has been on a Par greater scale. The whole economy of the area has been dis- rupted by the tide of war and it has seemed to us reasonablo to assume that it will take longer than it did after the First World War for stable economic conditions to be regeincd, It is clear that for some time to come, it will be necessary

which for Government to pay in addition to revised salaries, will to some extent reflect the decrease in purchasing power of money, a variable cost of living allowance, bcaring in mind that the total emoluments of officers in the public service should be sufficient to keep them on a reasonable standard of living appropriate to their status. With this consideration in view we have, if anything, erred on the conservative side in making our general recommendations for revised basic salaries in the knowledge that it is always easier to adjust upwards than downwards. The effect of the price of rice on the economy of South East Asia is of such fundamental importance and so far reaching that a policy of caution appears to us to be essential, since it is obvious that great damage could be done to the economic position of the Colony if the maximum rates which we prescribed proved either to be too high to enable Hong Kong concerns employing staff of similar grades to Government to compete in world markets, or to have a general inflationary effect in the Colony. We are indebted to Professor R. Robertson, Professor of Economics in the Hong Kong University and to lir. W. M. Thomson, Director of Supplies, Trade and Industry, for the information and advice which they gave us on probable price trends and on the general post-war economic position and to the Labour Officer for his views on post-war wage rates and wage tondencies. Our conclusions on this subject are that it is unlikely that the minimum wage for unskilled labour will

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