XN000022-1991-05-29 — Page 8

-

WEDNESDAY, MAY 29, 1991

CONSEQUENTLY, HE SAID, ADJUSTMENT IN THE LOCAL ECONOMY HAD TENDED ΤΟ WORK MORE SLOWLY THAN BEFORE IN DAMPENING DEMAND. EXPORT PRICES WERE KEPT LOW EVEN THOUGH THE LOCAL INFLATION RATE WAS HIGH.

HAD

SECONDLY, IN LINE WITH HONG KONG'S DEVELOPMENT AS A MAJOR REGIONAL CENTRE IN TRADING, FINANCE AND BUSINESS SERVICES, THERE BEEN A SIGNIFICANT SHIFT IN LABOUR RESOURCES FROM MANUFACTURING TO THE SERVICE SECTORS.

11

**THIS SHIFT HAS BEEN FACILITATED IN PART BY THE RELOCATION OF THE MONE LABOUR-INTENSIVE MANUFACTURING PROCESSES ACROSS THE SIR PIER! NOTED.

BORDER,

THE RESULT OF THIS STRUCTURAL CHANGE IN ECONOMY, ACCORDING TO THE FINANCIAL SECRETARY, WAS THAT AS THE LABOUR MARKET REMAINED TIGHT, .MPLOYERS HAD HAD TO PUT UP WAGES AND SALARIES IN ORDER ΤΟ INDUCE WORKERS TO CHANGE JOBS.

"COMPETITIVE WAGE BIDDING AMONGST EMPLOYERS HAS A DIRECT IMPACT ON INFLATION," HE ADDED.

SAID

THIRDLY, IN THE BUILDING AND CONSTRUCTION INDUSTRY, SIR PIERS A CONSISTENTLY HIGH LEVEL OF ACTIVITY HAD LED TO CONSTRUCTION GES INCREASING MUCH FASTER THAN WAGES IN MANY OTHER SECTORS OVER THE FAST FEW YEARS.

"THE SITUATION HAS BEEN AGGRAVATED BY A SLOW AND DECLINING GROWTH RATE FOR THE LOCAL WORKFORCE, THE FINANCIAL SECRETARY SAID.

IN 1989 AND LAST YEAR, THERE WAS VIRTUALLY NO INCREASE IN LOCAL LABOUR SUPPLY.

THE

"MOREOVER, SOME OF THE SKILLED MANPOWER WAS LOST THROUGH EMIGRATION, HE ADDED.

tr

HE SAID THE LIMITED AVAILABILITY OF LABOUR HAD NOT ONLY KEPT WAGE INFLATION HIGH BUT ALSO ACTED AS A BRAKE ON ECONOMIC GROWTH.

WHAT

F

IF WE ANALYSE THE COMPONENTS OF THE CONSUMER PRICE INDICES WE SEE SUGGESTS THAT THE MOST RAPID PRICE INCREASES ARE OFTEN ASOCIATED WITH ITEMS HAVING A HEAVY LOCAL LABOUR CONTENT, SUCH AS MFALS AT RESTAURANTS, INTERNAL TRANSPORT AND SERVICES FOR HOUSEHOLDS AND INDIVIDUALS," SIR PIERS SAID.

TURNING ΤΟ THE RECENT SITUATION, THE SPATE OF INCREASES IN PROPERTY PRICES AND PUBLIC TRANSPORT FARES HAD ADDED ΤΟ THE INFLATIONARY PRESSURES AND REINFORCED PEOPLE'S PERCEPTION THAT FURTHER PRICE INCREASES WERE YET ΤΟ COME.

"WHAT I WANT TO DO IS TO CHANGE THAT PERCEPTION,

STRESSED.

17

SIR PIERS

ACCORDING то SIR PIERS, THE INFLATION RATE WOULD NOT RISE

INDEFINITELY.

FIRST, DEMAND WOULD SHRINK AS HIGHER PRICES PROMPT INDIVIDUALS AND HOUSEHOLDS TO REVIEW THEIR SPENDING HABITS.

/SECONDLY, THERE