CONFIDENTIAL
the rich and poor appears to have been widening.
Indications are that the trend may well continue during
1974. At present there is no effective mechanism in
Hong Kong whereby such a situation can be rectified.
Only
some 10% of industrial workers are members of Trade Unions.
The Unions themselves are polarised between those which
support Peking and those which favour Taiwan. Collective
bargaining accordingly only exists in very limited areas
The Hong Kong Government tend to follow
of employment.
a policy of non-intervention.
It is argued that to
interfere with market forces would make Hong Kong
manufacturers less competitive;
and that this in turn would
reduce the pressure of demand for labour and give rise to
unemployment. On the other hand wages still form only a
relatively small percentage of total production costs; and
the competitiveness of Hong Kong's exports was indicated by
the fact that in 1973 they increased by 28%.
The implications of these developments for the social
structure of Hong Kong could be serious. By and large the
four million Chinese inhabitants live there because they
believe it is in their interest to do so. Perhaps half of
them, or their families, were refugees from China.
They
have no great loyalty to the British crown as such. Nor
are there representative institutions (other than the Urban
Council which has some representative element) through which
the popular will can be expressed. Business and moneyed
CONFIDENTIAL
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