supplied by the outside market but that the Government should, by reasonable coercion if necessary, encourage departments to make greater use of the productive resources of the Correctional Services Industries, subject always to the derstanding that no exemption would be sought from the full commercial rigours of quality and delivery. The Go Ament accepted the recommendations as a matter of policy and between 1977 and 1986 some $18 million has been spent on the expansion of the Correctional Services Industries by way of machinery and equipment.
81. It is an accepted phenomenon of penal institutions that their industrial productivity would be much lower than that in the commercial sector because of the numerous restraints influencing output. The Correctional Services Industries measures its efficiency by relating its costs of production to the commercial value of its output and whilst its laundry, domestic and community services make substantial profits, its manufacturing workshops have returned a poor performance. In 1984-85 the whole of the manufacturing activity produced goods with a commercial value totalling $52 million but it was only just able to cover its costs despite the fact that labour costs are low. The main problems are the inadequate efficiency standards for measuring each activity's productivity and the lack of information on the production capacity of the workshops. These problems were particularly evident in garment-making. For example, between 1982 and 1983 $3 million worth of orders for garments were at first rejected by the Correctional Services Industries because it was thought that it could not produce the quantity of garments required but it was later found that the workshop did have the capacity and about half the rejected orders were recaptured. The labour productivity in the garment-making workshop is exceptionally low. This is illustrated by the fact that the average number of pairs of trousers produced by each worker a day was only one compared to the production target of three a day. Blind factory workers at the Hong Kong Society for the Blind can produce the equivalent of four pairs of trousers a day and skilled workers in a commercial factory can produce about fourteen a day.
82. The productivity of the carpentry workshop has been very low because of high costs and in quoting for Government furniture contracts the Correctional Services Industries has found it difficult to compete with commercial firms, resulting in its share of the Government furniture contracts falling from 46% in 1983-84 to 24% in 1985–86. The main reason for the high costs in the carpentry workshop is the uneconomic use of materials. For example, there was a high rate of wastage of teakwood in making teakwood furniture, with only 55% being recovered from the teaklogs for incorporating in the finished products compared with a normal recovery rate of 75%. It has been estimated by the Correctional Services Industries that with better methods of teakwood cutting, furniture costs could be reduced by as much as 40%.
83. Productive efficiency depends to a large extent on exploiting the full production capacity of the workshops. In 1983 the Finance Committee of the Legislative Council approved the spending of $2 million on shoe-making machinery for increasing the production capacity of the shoe-making workshop from 40 000 pairs of shoes a year to meet the total requirement, by standard and specifications, of 79 000 pairs a year for all Government departments. However, just before the machinery was purchased, it was discovered that the production capacity of the workshop was 78 000 pairs of shoes a year. Nevertheless, it was decided to proceed with the expansion in a modified form because the shoes produced did not meet all the required specifications. The workshop's output consisted mainly of shoes with cemented rubber soles but there was a requirement for only 33 000 of this type, the remainder of the Government's requirement being for shoes with moulded rubber soles and leather soles. It was hoped that the Correctional Services Industries could make the full quantity of all types of shoes required by Government departments when the expansion was completed.
84. The contract for the supply and installation of the new shoe-making equipment at Stanley Prison was awarded in January 1986 for the sum of $1.8 million but the question was raised at the Central Tender Board meeting as to whether Government departments would accept the shoes made by the Correctional Services Industries in its expanded workshop. The Commissioner of Correctional Services was confident that the shoes would meet the required standards and would be accepted by departments. The Board accepted this opinion without more positive assurances from the large potential users, such as the Royal Hong Kong Police Force. These events raise doubts as to whether the supply and demand aspects of the expansion of the shoe-making workshop were fully analysed.
85. I have recommended to the Commissioner of Correctional Services that the efficiency of the Correctional Services Industries should be improved firstly, by developing better efficiency standards for measuring workshop productivity, including standards for material usage and proper productivity targets, secondly, by assessing the maximum production capacity of each workshop and thirdly by taking additional measures to encourage departments to use the products of the Correctional Services Industries so as to overcome any possible prejudices against them. I have also suggested that plans for further expansion of the Correctional Services Industries should be suspended until the above recommendations have been implemented.
86. The Commissioner of Correctional Services agrees that the productivity in the Correctional Services Industries has been low because the industries are operating under a number of constraints in that there is a lack of adequate incentives to encourage increased output from the labour force, a lot of the labour are not as skilled as their private sector counterparts and as a matter of operational necessity their working hours are shorter than those of workers in the private sector. However, he agrees that in order to establish the Correctional Services Industries on a more balanced and rational footing after a period of rapid expansion, consolidation is necessary. He has therefore accepted my recommendations but envisages that additional resources will be required to speed up the process of developing a set of efficiency standards for the workshops.
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