TNAG-0647-FCO40-795-Study-of-labour-relations-in-Hong-Kong-by-Professor-H-A-Turn-1977 — Page 278

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government pay policy sets a broad norm around which wages in other scctors may eventually be allowed to settle, if the employers feel they can afford it and don't want to appear niggardly to their workers.

A final note: by maintaining its own employment levels in times of capitalist recession, government acts as a stabilizing factor in the management of aggregate demand the log in expenditure reviews ensures that public spending will be roaring ahead in a recession and alowing down in a boom (if the cycle is as short as the last one).

(c)

Legislation producing labour market rigidities: The Labour Department has been extraordinarily active in the last few years, mainly because of government's sensitivity to trade union pressures in countries that consume HK's exports. One largely unexplored area (for possible investigation by the team in future) is the effect of all this legislation on the operation of the labour market, particularly on the pattern of demand for different categories of the labour force (men, women, young people, apprentices etc.) The Apprenticeship Ordinance, for example, will have radical consequences for the development of labour relations in the long run and for the mobility/ employment pattern of labour. The restrictions on the employment of women and young persons have had a variable impact, but undoubtedly a simificant

How much have industrial costs actually been pushed up by all this legislation? The shear mass of legislation is yet another reason for abandoning the model of a free, competitive labour market; but in what direction has this legislation pushed the labour market? Certainly the freedom of employers to hire and fire labour at will has been much curtailed in recent years.

The labour market as a whole is less casual now than a decade ago,

at least in part as a result of government legislation.

one.

11. How are wases determined in Hong Kong?

Obviously not just by the operation of the laws of supply and demand, as we have often been told. Labour economists can breathe again the perfectly free labour market does not exist, even in HK. Fragments of answers to the question have been suggested in earlier sections and throughout our notes. Wages are determined by a combination of (a) short-term cyclical market demand in sectors such as manufacturing for export, construction etc. and (b) a system of self-regulation by employers which is most consistent and effective in the large-scale commercial/services firms whose employment structure is more stable and who, together with the government, dominate the colony's political and economic structure.

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If we look at wage trends over the past few years, it is clear that this system has not worked unequivocally in the interests of workers' welfare. The position most commonly adopted by those managers who accept that it is employers who dictate the level of wages is to point to real wage increases during the decade ending in the early 1970's as evidence of their paternalistic concern for the well being of EK as a whole, "keeping one step ahead"

i.. paying out a little more than the rise in the. cost of living every year, to keep the workers happy. But since 1973, labour's share has declined (see the latest economic report from Haddon-Cave's office); even now, while output and prices have risen to beyond 1973 levels and employment is about the came as then, real wages are still below the 1973 level. Inflation has been relatively low in K, while world. prices have risen fact; co employers have clearly benefitted from the shock which the recession gave K's labour force ("very good for discipline", said one employer) and profits have recovered faster than wages so far. No-one has tried to put to the tost how much profits could be squeezed in favour of social expenditure and wages, but the evidence for Hi points to the infOT that the present division of value between capital and labour is more f to capital than has been the case in the recent past a clear indicat wages are not determined by market forces ("the discipline of the worla for our exports" and all that).