The World Employment Programme (WEP) was launched by the International Labour Organisation in 1969, as the ILO's main contribution to the International Development Strategy for the Second United Nations Development Decade.
The means of action adopted by the WEP have included the following: -short-term high-level advisory missions; -longer-term national or regional employment teams; and -a wide-ranging research programme.
Through these activities the ILO has been able to help national decision-makers to reshape their policies and plans with the aim of eradicating mass poverty and unemployment.
A landmark in the development of the WEP was the World Employment Conference of 1976, which proclaimed inter alia that "strategies and national development plansshould include as a priority objective the promotion of employment and the satisfaction of the basic needs of each country's population". The Declaration of Principles and Programme of Action adopted by the Conference will remain the cornerstone of WEP technical assistance and research activities during the 1980s.
This publication is the outcome of a WEP project.
Richard Anker and Catherine Hein (editors) SEX INEQUALITIES INURBANEMPLOYMENTINTHETHIRD WORLD
W. R. Bohning STUDIES IN INTERNATIONALLABOURMIGRATION
Enyinna Chuta and Carl Liedholm EMPLOYMENTANDGROWTH IN SMALL-SCALE INDUSTRY
Ghazi M. Farooq and George B.Simmons (editors) FERTILITYIN DEVELOPING COUNTRIES
Dharam Ghai, Crist6bal Kay and Peter Peek
LABOUR AND DEVELOPMENTIN RURALCUBA
Dharam Ghai, Azizur Rahman Khan, Eddy Lee and Samir Radwan (editors) AGRARIANSYSTEMS AND RURALDEVELOPMENT
Jeffrey James and Susumu Watanabe (editors) TECHNOLOGY, INSTITUTIONS AND GOVERNMENTPOLICIES
Azizur Rahman Khan and Dharam Ghai COLLECTIVE AGRICULTURE AND RURALDEVELOPMENTIN SOVIET CENTRAL ASIA
NgSek-Hongand Victor Fung-Shuen Sit LABOUR RELATIONS AND LABOUR CONDITIONS IN HONG KONG
Guy Standing
UNEMPLOYMENTAND FEMALE LABOUR
Wouter van Ginneken and Christopher Baron (editors)
APPROPRIATE PRODUCTS, EMPLOYMENTAND TECHNOLOGY
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LABOUR RELATIONS AND LABOUR CONDITIONS IN HONG KONG
by
NgSek-Hong
and
Victor Fung-Shuen Sit
A study prepared for the International Labour Office
M
MACMILLAN
cInternationalLabourOrganisation 1989
Softcover reprint of the hardcover 1st edition 1989 978-0-333-49123-2
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First published 1989
Published by THE MACMILLAN PRESS LTD Houndmills, Basingstoke, Hampshire RG21 2XS and London Companiesand representatives throughout the world
BritishLibrary Cataloguingin Publication Data Sek-Hong, NgLabourrelations andlabourconditionsin Hong Kong.-(Macmillanseries ofILO studies)
1. HongKong. Industrial relations
I. Title II. Sit, Victor Fung-Shuen
III. InternationalLabourOffice
331'. 0951'25 ISBN 978-1-349-10824-4 ISBN 978-1-349-10822-0 (eBook)DOI 10.1007/978-1-349-10822-0
The designations employed in ILO publications, which are in conformity with United Nations practice, and the presentation ofmaterial therein do not imply the expression of any opinion whatsoever on the part of the International Labour Office concerning the legal status ofany country, area or territory or of its authorities, or concerning the delimitation of its frontiers.
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PREFACE
This monograph gives an introduction to labour conditions in Hong Kong and reviews the pattern of industrial relations that has emerged within the territory, especially against the background of its contemporary industrial development and eGonomic growth. The first two chapters are contextual, outlining in turn Hong Kong's historical profile and its institutional framework. The ensuing five chapters are intended to be both narrative and analytical, dealing respectively with the topics of trade union organisations, collective bargaining and industrial conflict, workplace industrial relations, and women and young workers, subcontract labour and "social wages". After discussing the role and implications of foreign enterprises for labour relations practices in this cosmopolitan territory, Chapter VIII raises certain key issues on its present labour agenda.
This study is based on a report prepared by the authors for the International Labour Office in connection with research undertaken by the ILO on labour relations issues in a number of export-oriented economies.
In preparing this monograph, I wish to thank Miss Y.W~ Lai for her kind suggestions with regard to presentation and I am most grateful to Mr. Jacques Monat, former Chief of the Participation and Personnel Policies Section of the ILO for his patient guidance and expert advice. My thanks also go to Mr. David Levin, of the Sociology Department of the University of Hong Kong, for his penetrating comments, as well as my co-author, Dr. Victor Sit, of the Geography Department of the same university for his collaboration in this project. Of course, the typing support of Mrs. Winnie Lee was also indispensable in the preparation of the manuscript from my original handwriting, which is bizarre, chaotic and untidy.
vii
Last but not least, special mention should be made of Mr. Peter Williams, Mr. Neil Henderson, Mr. Lao Mou-chi, Mr. Lin Huo-fu and Mr. Tsui Tim-fook, who have at various times served on the directorate of the Labour Department of the Hong Kong Government during the last ten-year period. As senior officials who have either retired or are about to retire from the civil service, they have been distinctive personalities in the contemporary scene of our labour administration. Their work, in spite of their departure from office, will lay a very positive benchmark in the evolution of Hong Kong's labour history. They are also the key personalities to whom I owe my profound and personal thanks for their important enlightenment that gave me an insight into the understanding of labour matters. It was my privile-ge to have been able to work under their leadership and benefit from their patient guidance, as a junior officer in the Labpur Department during their terms of office.
Ng Sek-Hong University of Hong Kong
CONTENTS
CHAPTER I: HISTORICAL DEVELOPMENT AND ECONOMIC AND SOCIAL SETTING .................. 1
CHAPTER II: INSTITUTIONAL FRAMEWORK............... 37
CHAPTER III: FREEDOM OF ASSOCIATION AND WORKERS' AND EMPLOYERS' ORGANISATIONS ........ 59
CHAPTER IV: COLLECTIVE BARGAINING AND INDUSTRIAL CONFLICT . . . . . . �E. . . . �E . . . . . . . . . . . . . . . . 87
CHAPTER V: WORKPLACE INDUSTRIAL RELATIONS ........ 111
CHAPTER VI: WORKING CONDITIONS AND WAGES .�E........ 123
CHAPTER VII: WOMEN AND YOUNG WORKERS, SUBCONTRACT LABOUR AND HOMEWORKERS, AND "SOCIAL WAGES" .�E.....�E.......�E...... 157
CHAPTER VIII: FOREIGN INVESTMENT AND SOME CURRENT INDUSTRIAL RELATIONS ISSUES ......... 191
APPENDIX A: WAGE NEGOTIATION IN HONG KONG 227
APPENDIX B: INTERNATIONAL LABOUR CONVENTIONS
ON WHICH A DECLARATION HAS BEEN
MADE FOR HONG KONG BY THE
GOVERNMENT OF THE UNITED KINGDOM 235
TABLES
I.l Size of the manufacturing sector, 1947-84 6
I.2 Industrial and sectoral shares of GDP in real terms, 1970-80 ...........�E�E�E.......�E 7
ix
!.3 Sectoral and industrial distribution of the labour force, 1961-81 �E. . . �E. �E . . . . �E �E . �E 9
!.4 Distribution of the working population by occupation, 1961-81 �E.�E............�E�E. 10
!.5 Average annual growth rates of real GDP and GDP per capita, various countries or areas, 1960s to 1980s ......�E.�E�E.�E...�E 11
!.6 Average annual growth rates of GDP and GDP per capita in Hong Kong, 1961-82 12
1.7 GDP per capita in selected countries and areas, 1980 or 1981 ..�E.�E.�E..�E..�E�E..�E�E.�E�E 12
!.8 Percentage shares of operating surplus (gross of depreciation), employee compensation and indirect taxes, various countries or areas and years 14
I.9(a) Educational attainment of the population aged 15 and over(%), 1961-81 �E�E�E�E�E..�E.�E�E 15
1.9(b) Educational attainment of the labour force, 1961-78 �E�E.�E�E�E�E�E..�E.�E..�E�E.�E�E�E�E�E�E.. 16
!.10 Composition of Hong Kong's manufacturing industries, 1948 �E �E �E . �E �E . �E�E. �E. . �E. �E �E . . �E �E �E . . 20
I.ll Share of employment in registered and recorded factories by industry group, 1955 . . . �E . . . . �E. �E �E �E �E �E . �E. �E. �E. �E. �E �E �E . �E. . �E. �E �E . 23
1.12 Structure of Hong Kong exports, 1955-56 .�E�E 24
1.13 Average monthly earnings of employees by sector (excluding fringe benefits), 1976 29
I.l4(a) Average monthly earnings by size of enterprise excluding new-wage benefits 30
(b) Employees receiving sick pay and/or medical care by size of enterprise 30
III.l III.2 III.3
III.4
IV.1 IV.2
VI.l
VI.2
VI.3 VI.4
VII.l VII.2 VII.3
(c) Size of enterprise and employment status (security) among industrial blue-collar workers . �E �E �E . �E �E . �E �E �E �E �E �E �E �E . �E �E �E . �E �E �E . �E �E . . . .�E �E 30
(d) Typical bonuses, allowances and welfare benefits received by employees in each ownership group �E �E . �E �E . . �E �E . . . . �E . �E �E �E �E �E �E . �E �E �E 31
Trade union membership, 1968-84 ..�E�E.�E....�E 75
Trade unions by affiliation, 1984 �E.�E...�E�E. 77
Trade union density by major economic sectors, 1981 �E�E�E�E�E..�E�E...�E�E�E.........�E.. 80
Union membership by selected manufacturing industries, 1981 �E..�E�E�E.�E�E.�E�E...�E�E...�E�E.. 82
Work stoppages in Hong Kong (1950/51-84) 96
Various countries and areas: working days lost through industrial disputes per 1,000 people employed, 1968-77 �E�E�E.�E�E 97
Index of nominal and real average daily wages (including fringe benefits) in the manufacturing sector, 1978-82 �E�E..�E�E�E 130
Increases in real wages in various industries, 1973/74-82 �E.�E�E�E�E.....�E....�E�E 131
Skill-based differentials: Two estimates �E 134
Percentage of employees receiving bonuses, allowances and welfare benefits by ownership group �E �E . . �E �E �E . �E �E . �E �E . .. �E �E . . . . . . �E 135
Views of female employees in industry concerning protective labour legislation 164
Subcontracting: Sources of orders for small-scale enterprises .�E.....�E.. �E...�E�E. 167
Subcontracting: Sources of orders for small-scale enterprises by type of industry �E �E �E �E �E �E �E �E �E �E �E �E �E . . �E �E �E . . . . . �E �E . . �E �E �E �E �E 168
VII.4 Composition of government expenditure in Hong Kong, 1975-76 to 1984-85 �E�E.�E�E... 179
VIII.l Indicators of Hong Kong's industrial growth, 1971-81 . . . .�E �E . �E . . . . �E �E �E �E . . �E . �E. �E . �E 192
VIII.2 Size of employment in manufacturing, 1981 . 193
VIII.3 Direct overseas participation in Hong Kong manufacturing industries by industry on 31 December 1982 �E.�E�E�E�E�E�E.�E�E�E�E�E�E�E�E�E.�E�E 194
VIII.4 Direct overseas participation in Hong Kong manufacturing industries by source on 31 December 1982 �E�E�E�E�E�E�E�E�E�E�E�E�E.�E�E�E�E.�E.�E�E�E 195
VIII.5 Importance of investment factors to foreign enterprises �E�E.�E�E�E..�E�E.�E�E�E.�E.�E.�E. 197
VIII.6 Favourability of investment factors in Hong Kong . �E �E �E �E �E �E . �E . �E �E . �E �E �E . . . �E �E �E �E �E . �E �E �E . . �E 198
VIII.7 United States direct investment in South-East Asia, 1981 and 1980 �E.�E�E.�E�E�E.�E 199
VIII.8 Distribution of employees by enterprise ownership or ethnic origin, and size in Turner's sample �E�E..�E.�E...�E.�E�E�E�E�E...�E. 201
VIII.9 Labour force characteristics, 1979-85 210
VIII.lO Percentage distribution of immigrant workers by economic sector, 1980 �E�E�E�E�E�E�E�E 212
VII1.11 Characteristics of immigrants and non-immigrants, 1985 �E�E�E�E�E�E�E.�E�E�E�E�E�E�E�E�E.�E�E 213
CHAPTER I
HISTORICAL DEVELOPMENT AND ECONOMIC AND SOCIAL SETTING
I. INTRODUCTION
Hong Kon.g is at present one of the United Kingdom's largest overseas territories. Geographically, it is situated on the southern coast of China at the entry to the Canton delta in the province of Guangdong. As such, it serves as one of China's key maritime openings to the Pacific and the South China Sea. The territory itself consists of 236 islands, of which Hong Kong Island constitutes its "metropolitan" centre, and part of the mainland extending into Chinese territory. The latter (mainland) portion is in turn made up of the Kowloon Peninsula -a relatively established urban area -and the New Territories -formerly a rural area but now undergoing rapid modernisation. The total land area of Hong Kong stretches over 1,055.6 square kilometres, with an estimated population at the end of 1984 of 5.4 million.
II. HISTORY OF THE TERRITORY
Hong Kong was ceded to Great Britain by the Imperial (Manchu) Chinese Government in 1842 after losing the first Opium War of 1840-41 under the Treaty of Nanking. British merchants, initially restricted to a small warehouse or "factory" area on the Pearl river near Guangzhou (Canton), had established a profitable trade in the export of tea from China by the middle of the last century. However, a shortage of silver bullion in India and Europe led to the use of opium as payment for goods from China. Many people in the country were addicted in the opium "epidemic", resulting in a heavy drain on its silver reserves, widespread corruption and weakened morale. In 1839, the Chinese Special Commissioner responded to the malaise by
1
enacting a law that prohibited the drug traffic and sequestered all opium stocks. The suppression of the opium trade by the Chinese authorities led to the outbreak of Sino-British hostilities. The First Opium War was the prelude to an era of conflicts of attrition between China and Great Britain. These were concluded by treaties which created the Crown Colony of Hong Kong and later increased its scope. The landmark events included: (i) the Treaty of Nanking, 1842 (the ceding of Hong Kong Island); (ii) the Convention of Peking, 1860, that ratified the Treaty of Tientsin, 1852 (the ceding of the Kowloon Peninsula); and
(iii) the leasing of the New Territories to Great Britain in 1898.
In the years following the Second World War, the dynamic drive of Hong Kong's people enabled the territory to make rapid economic and social progress. Despite ~n almost complete absence of natural resources, it has now become a leading international manufacturing, trading and financial centre. With the advent of the 1980s, many questions remain unanswered concerning the future of Hong Kong after the expiry in 1997 of the lease of the New Territories:
In the late 1970s, as the period before the termination of the New Territories lease continued to shorten, concern about the future of Hong Kong began to be expressed both in the territory itself and among foreign investors. In particular there was increasing realisation of the problem posed by individual land leases granted in the New Territories. It was clear that the steadily shortening span of these leases and the inability of the Hong Kong Government to grant new ones extending beyond 1997 would be likely to deter investment and damage confidence. 1
Growing political uncertainty and the intensification of polemics regarding the prerogative to govern this territory and its sovereign right precipitated informal consultation with the Chinese official leadership in March 1979. Bilateral diplomatic negotiations follow between the Chinese and British Governments, initiated in Beijing in July 1983 after the 1982 visit by the British Prime Minister to China and lasting through 22 rounds of plenary talks until mid-September 1984, when the negotiators produced a draft agreement. This occurred after the United Kingdom conceded that "the continuation of British administration after 1997 would not be acceptable to China
in any form" and sought to enshrine the arrangements "other than continued British administration . �E �E to maintain the stability and prosperity of Hong Kong". 2 The Agreement was initialled by both Governments in Beijing on 26 September 1984 and was subsequently signed by the British Prime Minister (Mrs. Margaret Thatcher) and the Chinese Prime Minister (Mr. Zhao Ziyang) on 21 December. Following the debates in the British Parliament at the beginning of 1985, the two Governments exchanged instruments ratifying the Agreement. At the same time, the Agreement was registered simultaneously by the two nations at the United Nations on 13 June 1985, thereby confirming their acceptance of its internationally binding nature.3 It came into effect before 30 June 1985.
In essence, the Sino-British Agreement provides, among other things, for the transfer of Hong Kong from the United Kingdom to China with effect from 1 July 1997, upon expiry of the New Territories lease. Upon resuming the exercise of sovereignty, the People's Republic of China is to establish, by virtue of Article 31 of its Constitution, a Hong Kong Special Administrative Region upon which a high degree of autonomy will be devolved. This latitude includes executive, legislative and independent judicial power, except for foreign and defence matters which are incumbent on the Central People's Government. A Basic Law to be promulgated by the National People's Congress of China for the Hong Kong Special Administrative Region will prescribe: the continuation of the current social and economic systerns and life-styles; the protection of private property and the ownership of enterprises; and the guarantee of such rights and freedoms as those of the person, of speech, of the press, of assembly, of association, of travel, of movement, of correspondence, of strike, of choice of occupation, of academic research and of religious belief.4
III. SOCIO-ECONOMIC BACKGROUND
Hong Kong is a "new" society that has been built from successive waves of inunigrants, mostly from China. Its experience of socio-economic development largely mirrors its demographic history of population movements. The society was in a transient state before the Second World War. In 1845 Hong Kong's population totalled a mere 23,817, including 595 Europeans. The 1850s saw the first major influx of refugees in the history of Hong Kong -from
China seeking asylum from the Tai Ping Rebellion.
Migration from China was virtually responsible for a steady
rise in the Colony's population from 32,983 in 1851 to
878,947 in 1931. Sino-Japanese hostilities towards the end
of the 1930s triggered a massive refugee tide from China
again, inflating the population to an estimated 1.6 million
at the outbreak of the Second World War. There was a
temporary drop in population during the Japanese
Occupation. However, it recovered quickly after the Second
World War, rising from about 600,000 in 1945 to 1.8 million
by the end of 1947.
In essence, Hong Kong had existed as a commercial city-port offering urban wage employment to migrantseasonal workers (often of agrarian background) from southern China. From these early days, its population has fluctuated cyclically always coinciding with civil upheavals in China that produced a wave of refugees who used Hong Kong as a temporary shelter. Thus it was noted by a 1939 report of labour conditions in Hong Kong:
Some may return when the trouble is over, others
remain at least for a time to seek a livelihood. The
population at the present time is unnaturally swamped
with refugees and embusques. It is impossible to say
how many of these will endeavour to make a permanent
home in the Colony and how many businesses transferred
from Shanghai and elsewhere will take root. That
depends on the future of China, but it is impossible
to build the future of the Colony on such a fluid and
unstable foundation. 5
After the Chinese Revolution in 1949, however, HongKong became increasingly a host society of permanentsettlement for immigrants from the mainland. The first
influx of refugees came almost immediately after the Second World War, estimated at 1.2 million between 1945 and 1949. Subsequently, events such as the Revolution and the Korean War, and their attendant turmoils, swamped Hong Kong with a continuous inflow of refugees. The territory's population rose sharply from 600,000 in 1945 to over 2 million in 1951, averaging an annual increase of 39.4 per cent duringthe period. Responding to the stampede, the Chinese and Hong Kong Governments introduced strict migrationcontrols. But domestic population growth persisted until the end of the 1960s, when both the birth and death rates started to settle down to low levels.6 However, by the beginning of the 1980s a new influx of Chinese inunigrants and Vietnamese refugees upset the equilibrium once again -ra1s1ng the population to a new height of almost 5.2 million in 1981.
Following the decline in the number of immigrants resulting from tightened immigration policy in the early 1980s, the annual growth rate of the population fell to an average of 1.3 per cent for the period 1981-84, compared to
3.9 per cent over the period 1978-80 and 1.6 per cent for the period 1974-77. By the end of 1984, the total population was 5,397,500, representing an increase of 23 per cent over the 1974 population estimate of 4,374,800.
These demographic changes were crucial in affecting the course of Hong Kong's economic development. Before the Second WorlQ. War, this territory depended essentially upon entrepot trade, supported by a fringe of maritime industries such as shipbuilding and repair. The trade embargo following the Chinese Revolution in 1949 and the Korean War in 1950 curtailed much of this traditional mercantile activity. However, at the same time, immigrants from Shangai and other major Chinese cities transferred to Hong Kong their capital, skill, technology, marketing know-how and entrepreneurship. The input of these resources helped to initiate an "industrial revolution" in Hong Kong, and since the early 1950s, an export-oriented manufacturing sector started to grow rapidly. Table I .1 illustrates the sustained growth of the manufacturing sector, in terms of the number of establishments and people employed. This has hitherto accounted for the largest share of the employed labour force, although recently the proportion has been trimmed down slightly -as a result of the expansion of other tertiary services, notably in restaurants and hotels, wholesale and retail trade, commerce and finance. As table 1.2 demonstrates, the composition of the economy's gross domestic product (GDP) in terms of major sectoral shares has remained generally stable from the 1970s to the present, although the performance of both the primary and secondary sectors has declined slightly, vis-a-vis the tertiary sector.
Specifically, primary production (agriculture and fishing, mining and quarrying) remains very limited, with a relatively insignificant contribution to GDP. Within the division of secondary production (manufacturing, electricity, gas and water, and construction), manufacturing still accounts for the largest share of GDP, Table I.l Size of the manufacturing sector, 1947-84
Year No. of establishments No. of persons employed
1947 961 47 356 1950 1 478 81 718 1955 2 437 110 574 1960 4 784 215 854 1965 8 137 329 214 1970 16 507 549 178 1975 31 034 678 857 1979 42 282 870 898 1982 47 089 856 137 1983 46 817 865 073 1984 48 992 904 709
Source: Census and Statistics Department, Hong Kong Statistics, 1947-67, Hong Kong, 1969, table 4.1,
p.
48; idem, Hong Kong Social and Economic Trends, 1967-77, Hong Kong, 1978, table 2.4,
p.
12; Commissioner for Labour, Hong Kong, Annual Department Report 1979, table lA(l), p. 44; Hong Kong Government, Hong Kong 1985: A Review 1984, Hong Kong, Government Printer, 1985, Appendix 13, p. 323.
albeit its slow decline from 29 per cent in 1971 to about 23 per cent in 1981 and to about 22 per cent in 1983. The relative contribution of the construction sector seems to vary cyclically, having increased from about 4 per cent in 1971 to about 8 per cent in 1981, with a decline to about 6 per cent in 1983. On the other hand, the relative importance of the tertiary services sectors (wholesale and retai1 trade and restaurants and hotels; transport, storage and communication; financial and related business services; and community, social and personal services) increased slightly between 1971 and 1983, registering a GDP share of 63 per cent in 1971 and 64 per cent in 1981 and 1983. Notwithstanding, the relative size of the financial, insurance, real estate and business services sector advanced significantly from 17 per cent in 1971 to 24 per cent in 1981, though dropping to about 19 per cent in 1983. Overall, there was a relative shift in the distribution of employment away from the manufacturing sector towards such
non-industrial activities as finance, insurance, real estate, business services, restaurants, hotels and tourism.
Thus, employment in the manufacturing sector, though still accounting for the largest share of the total employed labour force, has declined in relative terms from
47.0 per cent in 1971 to 41.2 per cent in 1981 and to 37 per cent in 1984, while the share of the tertiary service sectors rose from 42.8 per cent in 1971 to 46.8 per cent in 1981 and to 54 per cent in 1984. Tables I.3 and I.4 describe the recent shifts in the sectoral and occupational distribution of employment.
Overall, Hong Kong has had a high rate of post-war economic growth compared with other economies in the world, both developed (e.g. the Federal Republic of Germany, the United Kingdom and the United States) and developing (e.g.
India, the Philippines and Thailand) see table I.S.
During the period of conspicuous industrial and
technological advances from 1961 to 1982, Hong Kong
recorded an average annual growth rate in real GDP of 9.5 per cent, yielding in turn a rather remarkable annual growth rate of 6.9 per cent in terms of GDP per head, even taking account of the population growth during the period (table 1.6).7 More recently, during 1984, GDP grew by an estimated 9.6 per cent in real terms, but the growth rate appeared to have slowed down, to an expected level of 4.5-5 per cent for 1985, probably reflecting global economic pressures and strains.8
This industrial society has been able to experience growing affluence and steady improvements in the standard of 1iving as a result of its rapid process of economic growth. In 1975, its per capita GDP was US$1,700, advancing to US$2,400 in 1977 and US$4, 768 in 1981. Table
I.7 gives per capita GDP in selected countries and areas. Compared to other Asian economies, Hong Kong's level of GDP per head is now second only to that of Japan and Singapore, although it remains relatively modest vis-a-vis Western industrialised countries. As an earlier labour study in the late 1970s concludes, Hong Kong is readily "comparable with that of a rather forward developing economy". At
9
the same time, the unemployment level has always been low, varying around 3-4 per cent since the turn of the decade. In parallel, overall wages were estimated to have increased at the annual rate of 5.5 per cent during the ten-year period between 1963 and 1973. 10 Nevertheless, the industrial wage level in the manufacturing sector rose by
Table I.3 Sectoral and industrial distribution of the labour force. 1961-81
Industry Percentage of total labour force
1961 1966 1971 1976 1981
PrimAr�D ~rQdY~tiQn 8.0 5.4 4.2 2.7 2.0
Agriculture and 7.3 5.2 3.9 2.6 1.9 fishingMining and quarrying 0.7 0.2 0.3 0.1
~~~Qnd~r�D ~rQdY~tiQn 49.8 46.3 53.1 51.4 49.8
Manufacturing 39.9 39.3 47.1 45.3 41.2 Electricity, gas and 1.5 0.9 0.6 0.5 0.6 water Construction 8.4 6.1 5.4 5.6 7.9
I~rti~r~ ~rQdY,tiQQ 40.4 47.4 42.8 46.0 46.8
Wholesale and retai1 trade, restaurants and hotels 11.0 16.6 16.2 19.4 19.2
Finance, insurance,l real estate and ) business services) 2.7 3.3 4.7
Transport, storage 7.2 6.8 7.4 7.3 7.6 and communication
Corrmunity, social 22.2 24.0 15.0 15.3 15.4 and persona1 services
Activity unclassi-1.3 0.3 1.5 0.7 1.4 fiable
Total size of the 1 191 099 1 400 350 1 547 000 1 867 500 2 486 736 labour force
-=Nil or negligible.
~: Census and Statistics Department, HQng KQng Statistics. 1947-1967, Hong Kong, 1969, p. 27, table 2.20; idem, HQng KQna 1981 Census: Basic Tables, pp 20-21; Reoort Qf the AdvisgryCQmmittee Qn DiversificatiQn 1979, op. cit., p. 27, Annex (15),p.22.
Occupation Number of workers 1961 1978 1979 1981
Table 1.4 Distribution of the working population by occupation, 1961-81
Professional, 59 059 120 000 138 600 145 738
technical and related workers (4.96) (6.00) (6.50) (5.90)
Administrative 36 629 39 100 52 100 64 574
and managerial workers (3.08) (2.00) (2.50) (2.60)
Clerical workers 71 615 235 300 262 300 299 055
(6.01)) (11.80) (12.40) (12.0)
)
Sales workers 162 984) (13.68) 217 300 (10.90) 226 000 (10.70) 254 986 (10.30)
Service workers 180 242 313 100 336 200 387 462
(15.13) (15.60) (15.90) (15.60)
Agricultural, animal husbandry and forestry workers and 92 280 (7.75) 31 700 (1.60) 28 400 (1.30) 52 050 (2.10)
fishermen
Production and 578 099 1 040 800 1 071 800 1 264 217
related workers, transport equip- (48.53) (52.00) (50.60) (50.80)
ment operators and labourers
Unclassifiable/ miscellaneous 13 191 (1.11) 5 400 (0.27) 4 600 (0.20) 18 654 (0.70)
1 191 099 2 002 700 2 119 900 2 486 736
Source: Hong Kong, Census and Statistics Department, Hong Kong Population By-census, 1966; ibid., Labour Force Surveys, September, 1978 and 1979; ibid., Hong Kong 1981 Census: Basic Tables, pp. 20-21.
Table I.S Average annual growth rates of real GDP and GDP ~er ca~ita, various countries or areas, 1960s to 1980s
Country or area Period GDP GDP per capita % growth % growth
Germany, Federal 1960-70 4.4 3.5 Republic of 1970-81 2.2 2.0
Hong Kong 1961-70 9.8 7.3 1970-81 9.6 7.0
India 1960-70 3.7 1.5 1970-80 2.9 0.9
Indonesia 1960-70 0.4 1970-83 4.3
Japan 1960-70 10.5 9.4 1970-81 4.6 3.5
Korea, Republic of 1960-70 8.6 5.7 1970-81 7.0 5.3
Philippines 1960-70 5.1 2.1 1970-81 5.9 3.1
Singapore 1960-70 7.9 5.4 1970-81 9.8 7.7
Thailand 1960-70 7.2 5.0 1970-81 6.7 4.2
United Kingdom 1960-70 2.9 2.3 1970-80 2.0 1.9
United States 1960-70 4.3 3.0 1970-81 2.6 1.5
Taiwan, China 1960-70 9.6 6.7 1970-81 9.2 7.1
Source: United Nations, Statistical Yearbook, New York, 1947 Edward Chen, "The Economic Setting", in Dav: Lethbridge (ed.), The Business Environment in Ho1 Kong, Hong Kong, Oxford University Press, 2nd editio1 1984, table 1.2, p. 6.
Table 1.6 Average annual growth rates of GOP and GOP per capita in Hong Kong, 1961-82 (at 1973 constant prices)
Period GOP GOP per capita %growth %growth
1961-66 10.9 8.0 1966-71 7.6 5.4 1971-76 8.8 6.8 1976-81 12.4 9.5
1961-81 9.9 7.4 1961-82 9.5 6.9
Sour~e: Census and Statistics Department, Estimates of Gross Domestic Product, 1983; Hong Kong Government, 1983 Economic Prospects, 1983; Edward Chen,"The Economic Setting", op. cit., table 1.1, p. 5.
Table I.7 GOP per capita in selected countries and areas1 1980 or 1981
Country or area Year GOP per capita (US$)
Germany, Federal Republic of 1981 11 135 Hong Kong 1981 4 768 India 1980 213 Indonesia 1981 559 Japan 1980 9 136 Korea, Republic of 1981 1 644 Philippines 1981 770 Singapore 1981 5 375 Sweden 1981 12 855 Thailand 1981 744 United Kingdom 1980 7 920 United States 1981 12 567
Source: International Monetary Fund, International Financial Statistics, Washington DC, February 1983; Edward Chen, "The Economic Setting", op. cit., table 1.3, p. 7
an apparently lower percentage of 84 per cent during the period 1964-82 -giving rise to an average annual rate of increase of 3.7 per cent, which probably suggests a slower increase in the real wage rate than in labour' productivity.
Despite the very considerable improvements in living standards experienced by the average Hong Kong worker, the relative position of the wage earner has not advanced by any significant extent as compared to other economic groups. Specifically, there has been no long-run shift of income from capital to labour, in terms of factor shares of the economy's GDP (see table I.8). Neither has there been
any conclusive evidence of narrowed income inequality, as gauged by the Gini ratio. The ratio was 0.44 for 1971, having receded to 0.43 in 1976, but it rose again to 0.462 in 1981. Notwithstanding, economic growth has been paralleled by socio-economic developments ,in other areas. One important indicator is the sustained decline in the illiteracy rate and the commensurate extension of education in Hong Kong. Table I.9 shows that both the general population and the labour force have become steadily better educated over the last two decades.
IV. INSTITUTIONAL FRAMEWORK
IV.l Hong Kong as a capitalist society
The fast growth that this industrial society has accomplished is always attributed to its institutional framework that purportedly supports "free enterprise" capitalism. A central feature of the reign of the "invisible hands" and the primacy of private ownership of property and economic freedom is the limited scope of the Government. Public expenditure, despite recent expansion, has been maintained quite steadily around the low level of 15 to 16 per cent of the economy's GDP -compared with SO per cent for both the Federal Republic of Germany and the United Kingdom, and 24 per cent for Singapore, whose stage of development is rather comparable to Hong Kong's. Moreover, the Government has consistently refrained from active intervention in the conduct of private business, since it would be "futile and damaging to the growth rate of the economy for attempts to be made to plan the allocation of resources available to the private sector and to frustrate the operation of market forces". 11 Thus, as observed by Turner et al. on the institutional openness of the economy:
Table I.8 Percentage shares of operating surplus (gross of depreciation), employee compensation and indirect taxes, various countries or areas and years
Country or area Year Operating Employee Indirect taxes surplus compensa-less subsidies tion
Hong Kong 1961 1970 50.0 38.8 50.0 55.6 5.4
1971 39.7 55.0 5.1
1972 42.8 51.7 5.3
1973 44.8 50.2 4.8
1974 41.2 54.2 4.4
1975 35.5 59.2 5.1
1976 41.5 53.1 5.3
1977 45.7 48.9 5.3
1980 50.5 49.5
Germany, Federal Republic of 1973 31.0 69.0
Japan 1973 40.0 60.0
Korea, 1973 64.0 36.0
Republic of
Sri Lanka 1970 54.0 46.0
Thailand 1973 71.0 29.0
United Kingdom 1973 21.0 79.0
United States 1970 25.0 75.0
-=data not available.
Source: Cheng Tong Yung, The Economy of Hong Kong, Hong Kong, Far East Publications, 1977, table 8.5,
p. 147; Hong Kong Government, The 1980-81 Budget:
Estimates of Gross Domestic Product, 1966-78, 1980, table I, p. 37; Census and Statistics Department, Estimates of Gross Domestic Product, 1966-84, p. 54.
Table I.9(a) Educational attainment of the population aged 15 and over (%), 1961-81
Sex Level 1961 1971 1981*
Male No schooling/ kindergarten Private tutor Primary Secondary Post-secondary and university Total Number of persons 9.4 7.5 48.1 29.7 5.3 100.0 943 764 9.9 6.8 42.8 34.5 6.0 100.0 1 280 482 7.6 36.8 47.5 8.1 100.0 1 961 803
Female No schooling/ kindergarten Private tutor Primary Secondary Post-secondary and university Total Number of persons 48.2 4.2 30.6 15.0 2.0 100.0 908 849 35.9 3.8 34.7 22.9 2.8 100.0 1 248 244 25.5 31.4 38.0 5.1 100.0 1 787 250
Both No schooling/ kindergarten Private tutor Primary Secondary Post-secondary and universityTotal 28.4 5.9 39.5 22.5 3.7 100.0 22.7 5.3 38.8 28.8 4.4 100.0 16.1 34.2 43.2 6.7 100.0
Number of persons 1 852 613 2 528 726 3 749 053
* The 1981 Census places those with private tuition in the primary group.
Source: Hong Kong, Census and Statistics Department, Hong Kong Statistics, 1947-1967, p. 189: ibid., Hong Kong Population and Housing Census: 1971 Main Report, p. 68; ibid., Hong Kong 1981 Census: Basic Tables, p. 12.
Table I.9(b) Educational attainment of the labour force, 1961-78
Level of attainment 1961 1966 1971 1976 1978
No schooling/kindergarten 20.1 19.0 16.4 13.8 12.6
Primary 52.6 53.3 50.7 45.0 42.9
Secondary 24.4 24.4 29.8 37.5 39.7
Tertiary (including 2.9 3.3 3.1 3.7 4.8 post-secondary and university)
Total 100.0 100.0 100.0 100.0 100.0
Source: Hong Kong Government, Report of the Advisory Committee on Diversification 1979, p. 29, note (49).
The Government has quite deliberately refrained from direct economic involvement; except to the inevitable extent that it is the largest employer and constructor, and must finance itself. There are two or three public corporations in which it has a majority shareholding (like the MTR), but these are quite exceptional. Free trade, free competition and free mobility of resources in search of the highest return are central precepts of economic policy. There is not even a central bank: In official theory, there is thus no macro-economic management. The level of domestic income �E �E �E is regarded as determined by the country's export carriages, and adjustment to the fluctuations and opportunities of overseas markets is held to depend on the unhampered flexibility of labour and capital, in terms of both cost (or income) and mobility.12
Interestingly, the relatively unrestrained pursuit of the market economy system has not provoked any large-scale popular movement that contests or challenges the status quo. Instead, a laissez-faire policy is widely tolerated
or even inculcated as the basis of this society's survival. Hence, economic arguments endorsing the market economy system are rather commonplace:
Laissez-faire capitalism is another institutional dictum of the utmost importance for understanding the recent growth of Hong Kong's economy Instead of appeals to national pride or imposition of overriding national aims to benefit future generations, self-interest has been the prime mover of Hong Kong's economic growth.13
The practice of free enterprise at the "grass-roots" level is also held by the administration to typify the assumptions and behaviour of ordinary workers. A top government official once observed:
I do think Hong Kong people tend to be individualistic and to rely on themselves and their families. In a way, they regard themselves as little capitalists selling their labour and it is not uncommon for people to switch in and out of jobs to take advantage of changing situations -so there has been no tradition of trade unionism in Hong Kong. 14
IV.2 Social structure and values of employment
As a new society, Hong Kong is complex and fragmented, with diverse social structures, yet lacking in distinctive and consolidated class boundaries. The weak class tradition is also attributed in part to the absence of a stable hereditary class structure in the social order of pre-industrial China, as a sociologist notes:
No leisure class, no group of idle rich, has evolved to any extent in Hong Kong By and large, the children of the rich are expected to pursue a career, and nearly all do so conscientiously China had gentry, or a scholar class, but never a landed gentry or aristocracy, with inherited wealth passing down from generation to generation, from eldest one to eldest one.
15
Such structural fluidity has therefore contributed to the people's ethos of "instrumental and competitive" success, as Turner et al. describe:
Social mobility has been high: there are spectacular and exotic instances of meteoric success, and more than a few people in lowly jobs who held status in pre-revolutionary China. The society is very much an open one. Partly as a key to personal advancement, there is a competitive thirst for education .�E.16
This pragmatic mood of "materialistic egotism" -used popularly to represent the image of Hong Kong workers and their assumptions (especially work orientation) -may also be explained by other contingent factors. One such source of indigenous influences is the refugee character of the society. Many people who arrived in 1948 and 1949 chose Hong Kong as a place of safety, from which they could not escape without money. The uncertainty frequently associated with the experience of the refugee -let alone th~ insecurity felt over the political future of Hong Kong(in anticipation of the expiry of the New Territories lease by 1997) -has compressed the people's time perspective and raised the premium they attach to money. Another influence is identified in the Chinese traditional culture that highlights the importance of the family. By virtue of the centrality of the family's claims on the individual, workers are commonly said to approach employment as a secondary and instrumental concern; its meaning depends largely upon whether jobs might enable them to acquire the income necessary to support their families. In this connection, "identification is rather with the family group -so that the Hong Kong worker is not collectively-minded, and does not identify in a class or occupational sense".
17
Taken together, these varied arguments "suggest that Hong Kong people define their work in a largely instrumental manner; that is, as essentially a means to
18
ends which are extrinsic to their work situation". It appears that, in part, the logic of industrialisation and industrialism is comprised of the instrumentalism of its workforce, a psychology that is indivualistic, cash-oriented, and collectively Ond politically docile attributes that are compatible with the free enterprise system. 19 The traditional system of Chinese family values has also been said to provide the ideological basis whereby employers, by the exercise of "benevolent paternalism", encourage their employees' loyalty to the enterprise. This provides the raison d etre for managerial autocracy in the decision-making process of the traditional Chinese firm:
Given this set of values .�E. what is significant is
the use of traditionally ideal patterns of social
relationships to define the structure of work
organisation and bolster managements' prerogatives ..�E
It is at once a method of self-reassurance, an
instrument of persuasion, and a technique of seeking
legitimation of authority.20
V. HISTORY, STRUCTURE AND COMPOSITION OF THE MANUFACTURING SECTOR
V.l Early Hong Kong industry and working conditions
The history of Hong Kong's economic growth since the Second World War is very much its history ,of industrial development. Table I .10 shows the steady increase in the number of industrial establishments and the size of the industrial workforce over the past three decades. At the end of the 1940s and beginning of the 1950s, industrial
undertakings were few and small in terms of workers employed -except for the textile mills, the two major shipyards, the sugar refinery, the public utilities and the public transport companies. As the economy was then in the doldrums in the face of the pressure of population growth, the scramble for jobs was keen and it was reported that a manual worker would be happy to find a job paying HK$3 a day. Women were paid less, as little as HK$2-2.50 a day, and working hours might be as long as 13 hours daily without a break (since women in industry were allowed to be employed between 7 a.m. and 8 p.m. each day). A ten-hour day in industry was common practice, and the only exception was probably the group of big textile mills which operated three shifts a day by the eight-hour standard.
Hong Kong's industrial structure was embryonic on the eve of the 1949 political upheavals in China. Besides the public utilities and shipyards, the limited number of factories were small workshops engaged in activities either ancillary to the maritime trade or to cater to domestic consumption needs. These included the machine shop and vehicle repair trade, furniture-making, manufacture of miscellaneous metal and glassware, the metal industry, printing, the rubber industry and the electric torch industry; together they employed 61,714 workers -mostly craftsmen or unskilled labour in 1948. Table I.lO indicates the industrial composition of Hong Kong's
Table 1.10 Composition of Hong Kong's manufacturing industries, 1948
Industries No. of No. of persons enterprises employed
Food and beverage 97 3 430 Tobacco 3 1 224 Textiles 387 13 347 Footwear 45 1 316 Wood and cork 34 536 Furniture and fixtures 8 309 Paper and paper products 6 130 Printing 77 3 904 Leather and leather products 5 141 Rubber products 52 5 171 Chemical products 55 2 235 Non-metallic mineral products, 39 1 672 petroleum and coal Basic metal industries 24 966 Manufacture of metal products 122 4 982 (except machinery, transport and equipment) Manufacture of electrical 45 3 623 machinery and apparatus Manufacture of transport 13 12 949 equipment Miscellaneous 39 1 295
Source: Commissioner of Labour, Annual Departmental Report, 1948.
industry at that time, according to the number of firms and size of employment.
Variations in employment practices were discernible. Chinese employers, as observed by the Commissioner of Labour in his 1948 report, were more concerned with short-term pecuniary rewards than their British counterparts. "Wage rates paid in Chinese-managed industries are frequently higher than those paid in European concerns, but usually the work is of a far less permanent nature. Piece-rates are also very common. Should there be a falling off in business and a lowering in living costs, attempts to reduce wages in Chinese concerns may well be a source of industrial
unrest."21 There appeared to be little historical evidence of the norm of permanent employment that has often been said to typify the "benevolent patriarch" approach of the Chinese employers.
Rudimentary among these petty Chinese workshops were not only safeguards for job security but also their working conditions. Although there were 17 public holidays a year, in addition to Sundays, most small (Chinese) concerns were observed to be reluctant "to grant holidays at all, even without pay".2 2 Hours of work could be equally onerous: "Workers in Chinese-owned industries continue to work longer hours, nine hours a day being standard. These hours are often combined with a seven-day week."23 However, labouring for an extended day, it was argued officially, might conform to the Chinese ethos of work:
�E �E �E but in many cases workers do not know what to do with the increased leisure resulting from shorter hours and prefer the increased wages from which they benefit in a longer working week �E�E�E in the textile industry, where work is often particularly light ..., many women are content to sit and watch for 12 hours. They resent interference with their desire to earn more money by working the longer hours.24
Notwithstanding these relatively meagre employment conditions in industry, a modest list of labour legislation had already been on the statute book by this time.25 These were identifiable as follows:
(i)
The Employment and Servants Ordinance (1902) governing the notice period for terminating a contract of employment;
(ii)
The Trade Boards Ordinance (1940) on the machinery for fixing minimum wages;
(iii) Employment of Young Persons and Children at Sea Ordinance (1932);
(iv)
The Merchant Shipping (Hong Kong) Order (1936);
(v)
The Trade Unions and Trade Disputes Ordinance (1948) on the compulsory registration of trade unions and authorisation of arbitration on trade disputes;
(vi)
The Factories and Workshop Amendment Ordinance (1947) which empowered the Commissioner of Labour to make regulations, subject to the approval of the Legislative Council, to ensure safety and health in industrial undertakings. These regulations also governed, inter alia, the hours of industrial employment of women and young persons.
V.2 Industrial "take-off" in the 1950s and 1960s
Like other developing societies, Hong Kong owes its impetus for post-war industrialisation principally to the rapid growth of its manufacturing sector during the 1950s and 1960s. According to Szczepanik's calculation, which used 1948 as the bas~ year (100), the index of factories by1956 increased to 253 and the index of industrial employment to 226. 26 "It appears that by 1955 about
one-third of the total gainfully employed population was engaged in manufacturing industry, which thus became the main source of employment in the Colony."2 7 The accompanying rise of manufacturing employment has been described as "dramatic":28 it increased by well over 200 per cent between 1931 and 1961, and half of the labour force in 1961 was engaged in manufacturing and construction compared with one-quarter in 1931. In 1966 "Hong Kong had a higher percentage of its labour force in industry than any other Asian country". 29
There occurred a corresponding shift in the relative importance of various manufacturing industries in favour of "new" export-oriented production. In 1947 shipbuilding and ship repairing was the most important industry, absorbing 28 per cent of the industrial labour force, but in 1955 this leading position was taken over by the textile industry, as reflected in table I.ll. Textiles also became the pillar of Hong Kong's growing sector of domestic exports. In 1955-56, this industry was responsible for approximately 60 per cent of the total value of locally manufactured goods and about the same percentage of Hong Kong exports (see table I.l2).
A further aspect of Hong Kong's "industrial revolution" was the increase in the volume and value of exports of locally manufactured goods. In 1947 they formed only 10 per cent of �Ptotal exports, but this share rose to 25 per cent in 1952 and 30 per cent in 1953. 30 In 1970,
Table I.ll Share of employment in registered and recorded factories by industry group, 1955 (percentage of total)
Industry group
Textiles
Metal products except machinery, transport and equipment Transport equipment Electrical machinery, apparatus, appliances and supplies
Rubber products
Printing, publishing and allied industries
Food manufacturing industries, except beverages
Foptwear, other wearing apparel, and made-up textile goods Chemicals and chemical products Machinery, except electrical machinery Non-metallic products, except products of petroleum and coal
Wood and cork, except furniture
Basic metal industries
Electricity, gas and steam
Tobacco manufactures
Personal services (laundries)
Beverage industries
Communications
Metal mining
Furniture and fixtures
Commerce (petroleum installations)
Paper and paper products
Storage and warehousing
Recreation services (motion picture production)
Leather and leather products, except footwear
Stone, clay and sand quarrying not elsewhere classified Construction (terrazzo works) Transport (cargo packing) Manufacture of products of petroleum and coal Miscellaneous manufacturing industries
Total Per cent
28.43 13.28
9.09 7.07
6.39 5.33 5.20 5.20
2.65 1.93 1.83
1.49 1.42 1.11 1.06 1.04 0.79 0.70 0.52 0.51 0.41 0.36 0.35 0.31 0.20 0.10
0.07 0.05 0.01 3.23
100.00
Source: Commissioner of Labour, Annual Departmental Report, 1954-55.
Table !.12: Structure of Hong Kong exports, 1955-56 (percentage of total value)
Product
Textiles Miscellaneous cotton goods Cotton yarns Cotton singlets Shirts Towels, not embroidered Linen, embroidered Outerwear, embroidered Clothing (other), embroidered Underwear and nightwear, embroidered Textiles, total
Footwear Household utensils, enamelled Electric torches Foodstuffs and beverages Lanterns, metal Lacquer varnishes, paint, enamel, etc. Iron and steel bars Plastic articles Household utensils, aluminium Torch batteries VacuUIII flasks Cement Torch bulbs Iron and tungsten ore Matches
Total
Source: Hong Kong trade statistics, 1955-56.
about 65 per cent of locally manufactured
1955 1956
24.9 22.1 13.7 12.5 8.1 9.6 9.0 9.1 1.8 1.8 1.2 1.4 0.9 0.9 0.5 0.8 0.4 0.4 60.5 58.6
14.3 9.8 7.7 9.7 6.9 6.4 2.2 2.5 1.8 2.2 1.7 1.9 1.2 1.9 1.1 1.2 1.3 1.1 1.2 1.1 1.1 1.0 0.9 1.0 0.8 0.8 0.6 0.6 0.3 0.1
100.0 100.0
products were
exported.31 "Starting from the early 1960s, Hong Kong has been the largest exporter of manufactured goods among the developing countries. By the end of the last decade (1970s), she held nearly one-fourth of total manufactured exports to developed countries from developing ones."32
V.3 Factors conducive to industrial growth
The success of Hong Kong's industrial take-off in the 1950s is always attributed to a large extent to the permissiveness of its economic system. In other words, Hong Kong possesses some salient characteristics of a "free" export processing zone by virtue of its entrepot tradition and laissez-faire framework. In essence, "the Colony has remained nominally a free port in that there are no general tariff and protective duties. All Hong Kong's trade controls are exceedingly simple, especially in comparison with the contemporary restrictionist world".3 3 Writing in the late 1950s, Szczepanik hence describes the Hong Kong "growth" case as the outcome of a "combination of a number of basic developmental factors: good location, cheap and skilled labour, adequate supply of capital, and excellent entrepreneurship" -favoured by a socio-economic context constituted of "(a) flexible institutional framework within which a responsive infrastructure could develop; (b) violent population pressure and the resulting bulk injection of excellent labour, capital and entrepreneurship; (c) absence of opportunities for any substantial development of primary industries; (d) decline in the traditional source of income generation which consisted in entrepot trade".34
Also contributing to Hong Kong's economic growth is the character of the labour force, commonly described as adaptive, industrious and hard-working. Owen, for instance, cites an example in the textiles industry during the mid-1960s with reference to the average number of hours worked per loom, concluding that no other country " �E�E. approaches within 75 per cent of the Hong Kong figure of 8,160 hours per loom which ... is the highest possible annual maximum, entailing 24-hour operation for 360 days in the year. Such a mode of operation suggests a strongly economically motivated labour force".35 Another concomitant element of the manpower pool was its relative cheapness and abundancy that made possible the thriving of labour-intensive production activities. "Thus, in comparison with Britain, where in December 1955 the average weekly earnings of industrial workers amounted to about �G9 a week, the Hong Kong worker was earning only one-third as much as his British counterpart . �E . The main hardships of Hong Kong workers are to be found in the very low housing standards. Expenditure on rent in the Colony was relatively higher than in Britain, and the standard of accommodation obtainable was much lower."36
The role of external capital is worth noting too, in the context of industrial development. Owen commented in the early 1970s that a significant component of Hong Kong's "growth" was "simply a transfer of economic activity from one industrial centre to another".37 Initially, the textile industries that spearheaded Hong Kong's industrial take-off were established after being transplanted from Shanghai. During the 1960s, Hong Kong began to experience another form of overseas economic transfer, with the advent of the multinational enterprises. The pioneering non-British foreign investments were American operations in the electronics manufacturing industry. In the late 1960s, overseas capital accounted for less than 1 per cent of total fixed investment in the manufacturing sector. However, by 1976, there were 297 industrial plants either wholly or partly owned by overseas interests, 50 per cent and 15 per cent of which were respectively of American and Japanese origin. Foreign investment was most predominant in electronics (33 per cent), followed by textiles (15 per cent) and clocks and watches (10 per cent). The situation has remained by and large the same today, with American ventures still holding the leading position among foreign investors. However, their share of overseas capital in Hong Kong has declined (to 47 per cent in 1982), largely in favour of the expanding Japanese share (30 per cent). A 1981 survey revealed that these expatriate companies together employed 90,000 persons (10 per cent of Hong Kong's industrial employment) and had an export value of over HK$ll,OOO million (17 per cent of the territory's domestic exports), largely including products such as electronics, textiles, electrical goods, chemicals, watches, food and beverages. The implications of foreign capital will be further considered in Chapter VIII.
VI. SOME FEATURES OF THE EXPORT-ORIENTED MANUFACTURING SECTOR AND EFFECTS ON EMPLOYMENT
This section identifies some of the more important attributes of the manufacturing sector and their impact on employment.
First is the orientation of this sector to external demand. Constrained by Hong Kong's dearth of natural resources, its modest level of technological development and its reliance upon "human capital", such an export-oriented approach (directed at overseas markets, especially in the United States, Europe, Japan and, more recently, other Third World countries)38 has given the industrial structure its present character an emphasis on light industries that produce consumer goods using relatively simple, adaptive and labour-intensive technologies. The rate of capital utilisation has hitherto been high, complemented by an industrial workforce that supplies predominantly cheap, semi-skilled and dextrous labour. Since the early 1960s, when the initial unlimited supply of labour had been exhausted, such a labour pool has been maintained by an increase in the female labour participation rate.39
A parallel feature is the rather variable industrial composition of the manufacturing economy. The textile industry, for instance, has taken first place but has undergone maj~r changes of internal composition. The importance of the spinning and weaving sector declined in the last decade, giving way to the rapid growth of the clothing sector previously subsumed under the textile group but now increasingly segregated from the conventional branches of spinning, weaving, finishing and knitting activities.
The decline of the spinning and weaving industry was coupled with the swift contraction of the footwear industry that once accounted for about 3 per cent of domestic exports and of industrial employment in the 1950s and 1960s. Perhaps more dramatic was the short-cycle performance of the wig industry, which experienced inflated growth during the late 1960s and early 1970s, reaching a peak in 1970 of almost 8 per cent of total domestic export and 39,000 in employment. Following the sharp fall in world demand, the wig industry shrank rapidly and has virtually disappeared today, leaving a mere 59 workers in the industry by 1977.40 All these sectoral retrenchments, however, have been offset by the rapid growth of the plastics and electronics industries since the 1960s and, more recent1y, by the manufacturing of watches and clocks (whose share in domestic exports rose rapidly from 1.5 per cent in 1973 to
7.3 per cent in 1978 and 9.6 per cent in 1980).
Clearly, it is usual for industrial capital to be committed to production systems that have to shift readily between a variety of product lines in response to changing patterns of overseas demand and, more recently, in order to meet with the pressure of the international competition emanating from the territory's neighbouring economies.
Such structural readjustments have been facilitated, furthermore, by (i) the nature of most factories as small or medium-sized processing workshops for semi-finished producer goods; and (ii) the transferability of labour and skill between industries. This brings into focus the role of small businesses in the export-oriented manufacturing economy and its implications for employment conditions.
Arguing that small businesses proliferate in Hong Kong, Lethbridge concludes broadly that "the overall degree of concentration appears to be low in manufacturing industry".41 However, contrary observations are made by Cheng:
In the manufacturing sector, a government census shows that four-fifths of Hong Kong's industrial workforce is concentrated in only one-fifth of its factories and, more important, 80 per cent of Hong Kong's domestic exports are produced by ll per cent of all manufacturing firms. Among major industries in Hong Kong, manufacturers of yarn knitwear, garments, electronic products and plastic toys show a comparatively strong concentration. For example, some 69 and 252 in a total 2,560 garment firms conunanded nearly 50 and 75 per cent of sales for the industry.42
Whether Hong Kong industries can be said to be relatively concentrated or otherwise is difficult to determine, especially since this depends, inter alia, on how the size boundary between small and large businesses is defined.
However, a significant role has always been played by small-scale enterprises since the industrialisation of Hong Kong. The 1979 Committee on Diversification identified a number of manufacturing industries in which enterprises employing fewer than 20 workers accounted for a major share of the industry's workforce and output, including fabricated metal products, jewellery, footwear, non-electrical machinery and even watches and clocks.4 3 Small firms are said to be able to respond far more quickly to market forces and "if productivity is measured by value added per unit of fixed asset investment, then that of small businesses in Hong Kong is higher than that of large businesses and they also utilise their assets more fully".4 4 Mostly organised as putting-out shops, these small factories "operate as subcontractors of larger
companies, enabling the latter to respond more readily to changes in market demand for particular products".4 5 The "ambulatory" labour subcontracting system in the export-oriented manufacturing sector, developed by the medium-sized and small enterprises in the 1960s and 1970s to cope with the problems of skill shortage, will be considered in further detail in Chapter VI.
The export-oriented manufacturing sector, in spite of its strategic importance to the economy, is a low-profit and hence low-paying sector. This element of industrial production activities is highlighted by Turner to explain certain patterns of inter-sectoral differences in employment conditions. According to the 1976 Census of Industrial Production, the "profit content" of output for manufacturing was 11 per cent, compared to 27 per cent and 33 per cent for the other sectors of "mining and quarrying" and "electricity and gas" covered by the Census. It follows that "manufacturing is a low-pay sector relative to others", as indicated in table I.l3.
Table I.l3 Average monthly earnings of employees by sector (excluding fringe benefits), 1976
Sector Average monthly earnings(HK$)
Manufacturing 808 Commerce 917 Construction and engineering 1 060 Transport and communications 1 244 Services (including government) 1 325
Sources: Turner's employee survey, 1976; H.A. Turner et al., The last colony: But whose?, Cambridge, Cambridge University Press, 1980. p. 69, table 7.1.
As suggested by table I.l4, the Turner study of 1976 further revealed the general incidence of higher earnings, as well as superior fringe and welfare benefits, in bigger firms than in smaller ones, and notably a distinct variation between the patterns of formal security granted
Table I.l4(a) Average monthly earnings by size of enterprise excluding new-wage benefits
Size of enterprise Average monthly earnings (HK$)
1-19 employees 835
20-99 employees 831 100-499 employees 926 500 and over employees 1 297
iQ2 Employees rece1v1ng sick pay and/or medical care by size of enterprise
Size of enterprise Percentage receiving sick pay and/or medical care
1-19 employees 10
20-99 employees 14 100-499 employees 41 500 and over employees 71
~ Size of enterprise and employment status (security) among indus-trial blue-collar workers
Percentage of blue-collar workers employed as: Size of enterprise 1-19 20-99 100-499 500 and
over
Permanent employees (Cheung-kung) Long-term casual employees (Cheung-saan-kung) Temporary casual (Saan-kung) so 33 17 44 32 24 42 36 22 46 26 28
to workers by large and small enterprises. In summary, these findings enable Turner to postulate the existence of a "rather highly stratified labour force" in Hong Kong. On top is an "upper crust" of workers in public services and large firms, who are distinctively better paid and enjoy greater employment security and welfare conditions than those at the base, "a mass, mainly but not exclusively, of less-skilled workers -perhaps between 30 per cent and 40 per cent of all employees -largely employed by smaller, Cantonese firms, and concentrated in manufacturing".46 The latter are low paid and enjoy little security or welfare provision. Between these upper and lower levels is a group, or rather groups, totalling 40-50 per cent of all workers, and including many white-collar employees as well as service and blue-collar workers with diverse skills. "These are mostly (but again not quite exclusively) in larger or medium-sized firms; and their conditions are quite widely variable by different criteria "47
Notes
"A draft agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the People's Republic of China on the future of Hong Kong", 26 Sep. 1984, Hong Kong: Government Printer, 1984, "Introduction", para. 5, p. 2.
2 ibid., "Introduction", para. 10, p. 3.
Mr. Peter Williams (Secretary, General Duties, Hong Kong Government), "Hong Kong The way ahead", a speech delivered to the Royal Institute of International Affairs, London, 30 Sep. 1985, "Final agreement", p. 3.
4 "A draft agreement on the future of Hong Kong", op. cit., "Joint declaration of the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the People's Republic of China on the question of Hong Kong", clauses 1, 2 and 3.
5 H.R. Butters, Report by the Labour Officer on labour and labour conditions in Hong Kong, Hong Kong, Government Printer, 1939, p. 163.
6
For instance, the birth rate declined to 20 per thousand and the death rate to 5.1 per thousand in 1970 -
g1v1ng rise to a "moderate" rate of natural increase of
14.9 per thousand.
7
Edward K.Y. Chen, "The economic setting", in David Lethbridge, The business environment in Hong Kong, Hong Kong: Oxford University�PPress, 2nd edition, 1984, pp. 4-5.
8
Hong Kong Government, Hong Kong 1985: A review of 1984, Hong Kong: Government Printer, 1985, p. 89. Also see "The Governor's annual address to the Legislative Council: Hong Kong, 30 Oct. 1985", section 3(a), para. 16.
9 H.A. Turner et al., The last colony: But whose?, Cambridge: Cambridge University Press, 1980, p. 5.
10 ibid., pp. 62-63. The trend after 1973 is, according to Turner et al., more blurred. However,, it is generally accepted that a two-thirds increase has occurred in the real wages of Hong Kong industrial workers over the 15 years prior to 1978. Today, Hong Kong's industrial wage rates are generally equivalent to those of Singapore, both ranking second to Japan in East Asia.
11 Philip Haddon-Cave, "Introduction: The making of some aspects of public policy in Hong Kong", in David Lethbridge (ed.), The business environment in Hong Kong, Hong Kong: Oxford University Press, 1980, pp. xii-xiii.
12 Turner et al., op. cit., pp. 6-7.
13 E.R. Szczepanik, The economic growth of Hong Kong, London: Oxford University Press, 1958, p. 7.
14 South China Morning Post (Hong Kong), 3 Feb. 1981. The opinion was expressed by Sir Jack Cater, the former Chief Secretary of the Hong Kong Government, in a press interview.
15 Henry Lethbridge, "The social structure: Some observations", in David Lethbridge (ed.), The business ::::e.:.:n:..:v~ic::r:..::o~n.::m::::e:::.:n::;.t_:=.in:..:._-..,o:H::::o.:.:n:.cg.__~K~o~n=g , Hong Kong : Oxford University Press, 1980, p. 65.
16 Turner et al., op. cit., pp. 9-10.
17 ibid., p. 13.
18 The classic reference on the notion of "orientation towards work" (as represented in a typology of "instrumental orientation", "bureaucratic orientation" and "solidaristic orientation") may be found in John H. Goldthorpe et al., The affluent worker: Industrial attitudes and behaviour, Cambridge: Cambridge University Press, 1968, pp. 38-42.
19 A related and popular theory in the 1950s and 1960s also claimed that these workers were wary of becoming involved in any collective actions that might implicate them in political agitation -which could invite trouble with the authorities.
20 Joe England and John Rear, C=h-=i.:.:n.=e.=s..::e_:o.la==-b;o_;:_o.=u-=-r_u=n"'-d':'-e:'-"-r British rule, Hong Kong: Oxford University Press, 1975, pp. 48-49.
21 Commissioner of Labour, Annual report, Hong Kong: Government Printer, 1 Apr. 1947 to 31 Mar. 1948, p. 11, para. 31.
22 ibid., p. 12, para. 33.
23 ibid., p. 12, para. 32.
24 ibid., p. 12, para. 32.
25
ibid:, pp. 26-27, paras. 80-86. 26 Szczepanik, op. cit., p. 61. 27 ibid., p. 63. 28 Joe England, "Industrial relations in Hong Kong",
in Keith Hopkins (ed.), Hong Kong: The industrial colony, Hong Kong: Oxford University Press, 1971, p. 209. 29 ibid., cited from ILO Year Book of Labour Statistics, Geneva, 1967, table 2A. 30 Szczepanik, op. cit., pp. 63-64. 3 1 Cheng Tong Yung, The economy of Hong Kong, Hong Kong: Far East Publications, 1977, p. 155. 32 ibid., p. 174.
33 Szczepanik, op. cit., pp. 64-65.
34 ibid.' p. 8.
35 Nicholas C. Owen, "Economic policy in Hong Kong", in Keith Hopkins (ed.), Hong Kong: The industrial coloriy, Hong Kong: Oxford University Press, 1971, pp. 149-150.
36 Szczepanik, op. cit., pp. 70-71.
37 Owen, op. cit., p. 149.
38 Thus, characteristic of the industrial structure is the relative concentration of its commodity pattern and overseas export market mix. The 1979 Diversification Committee observed that since 1961 four major product groups had consistently occupied about three-quarters of domestic exports and warned that the trend towards the end of the 1970s could suggest a "more specialised and narrowly based" export structure over time. Strategic vulnerability also arises from the over-dependence of export trade upon a few key overseas markets -notably, the United States, the United Kingdom and the Federal Republic of Germany, which together absorbed 58 per cent of Hong Kong's domestic exports in 1977. If Australia and Japan were also taken into account, these five major importing countries were then responsible for two-thirds of the 1977 export value. In this context, it can be easily understood that the Diversification Committee exalted economic diversification not only in terms of industrial products but also in the direction of exploring new export markets, especially in Eastern Europe and the Third World.
39 Edward K.Y. Chen, "The economic setting", in David Lethbridge (ed.), The business environment in Hong Kong, Hong Kong: Oxford University Press, 1980, p. 13.
40 ibid.' p. 26, also David Lethbridge, "The business environment and employment", in Lethbridge, 1980, op. cit., p. 78.
41 ibid., pp. 74-77.
42 Cheng Tong Yung, op. cit., p. 68.
43 Hong Kong Government, Report of the Advisory Committee on Diversification 1979, Hong Kong: Government Printer, 1979, p. 71.
44 Lethbridge, 1980, op. cit., p. 75. 45 ibid., p. 71. 46 Turner, op. cit., p. 81. 47 ibid.
CHAPTER II INSTITUTIONAL FRAMEWORK
I. GOVERNMENT AND LEGISLATIVE SYSTEM
I.l The principal organs
Hong Kong is one of the British-governed overseas territories administered by the Hong Kong Government, consisting of the Governor, the Executive Council and the Legislative Council. As a result of the 1984 Sino-British Agreement on the Future of Hong Kong, this territory is in a process of transition until 30 June 1997, when its sovereignty is to be restored to the People's Republic of China with effect from 1 July 1997.
The Governor is the representative of the Queen of the United Kingdom of Great Britain and Northern Ireland, but in practice he is nominated by the British Government headed by the Prime Minister. As such, he heads the Government and the armed forces. He presides over the Executive Council, the function of which is to advise the Governor on important matters of governance. The Governor in Council (i.e. the Governor deliberating in consultation with the Executive Council) is also the competent authority for making certain subsidiary regulations, rules and orders under local legislation. Meeting in closed session normally once a week in a manner analogous to a Cabinet advising a Prime Minister, the Executive Council consists of four ex officio members, plus 12 members appointed by the Governor on fixed terms (ten of whom are unofficial and two official).
Parallel to the Executive Council is the law-making Legislative Council formerly compn.s~ng exclusively members appointed by the Government. The Council, sitting in public each fortnight except for a two-month recess,
37
enacts ordinances (which are the legislative instrwnents) and approves the fiscal budget of the administration. Open debate was uncommon when membership of the Council used to be entirely determined by appointment but is likely to increase now that an elected segment is being progressively introduced under the political reforms initiated under the officially promulgated "White Paper on the future development of representative government" (Nov. 1984). Notwithstanding, the conception and formulation of new legislation, prior to and during the bill-reading stages in the Council sessions, usually entails a considerable amount of backstage lobbying, consultation and reconciliation of
divergent sectional interests and opinions on the
subject-matter at issue.
The initial stage of the democratisation of the
Legislative Council was implemented in 1985. Before that, the Council was made up of a maximwn of 61 members, comprising 29 official members and 32 unofficial members. As a sequel to its reconstitution in September 1985, the overall nwnber of official members was reduced to ten, while the size of appointed unofficial membership was trimmed down to 22. Concurrently, elected members were introduced, including 12 from an electoral college drawn from 12 constituencies ten being district-based geographical ones and two being special ones made up of members of the Urban Council and Regional Council. There is another division of 12 elected members, returned from nine functional constituencies designated by the Government by virtue of occupational criteria (namely, commercial, industrial, financial, labour see pp. 41-42 social services, education, legal, medical, and engineering and associated professions). The ultimate objective of this reform is to evolve eventually into an entirely elected legislature.
1.2 The Constitution and process of legislation
The legal basis for structuring the Government of Hong Kong is provided by the Letters Patent and Royal Instructions decreed by the British Crown.
The Letters Patent create the office of Governor and define his powers and duties given by the Queen or the Secretary of State; authorise the creation of the Executive and Legislative Councils; instruct all officers to obey the Governor; and make provision for filling the
office of Governor when the incumbent is temporarily absent. They establish the basic framework of the administration of Hong Kong and, together with the Royal Instructions, form the Constitution of Hong Kong. On the other hand, the Royal Instructions supplement the Letters Patent -by laying down, inter alia, the details of the composition, power and procedures of the Executive and Legislative Councils, the methods of appointment and dismissal of the members. They also specify who is to preside over the sessions of the Councils, how decisions are to be taken and how ordinances are to be conceived.
Taken together, the Constitution of Hong Kong is "a very short and simple Constitution", which has hitherto concentrated power in the hands of the Governor.
1
The legislative process is in large measure analogous to that in the United Kingdom. When a bill seems likely to arouse some controversy, the administration will consult not only the advisory body attached to the department concerned but also other interested parties before publishing the bill. The stages of a bill in the Legislative Council generally follow the model of those in the British Parliament. In Hong Kong, the first reading of the bill in the Legislative Council is by and large ceremonial and ritualistic, involving merely the formal recitation of the title of the bill. The member (usually an official introducing the bill) makes a brief speech covering the main points of the bill, followed by the adjournment of the debate. The second reading debate is usually resumed in the next or the next-but-one session of the Council. If there are no substantial objections or problems, the bill will be immediately referred to the committee stage. Otherwise, the objections will be voiced at the second reading session. The debate, however, normally focuses on specific consideration of possible amendments rather than a thorough and wide-ranging review of the principles of the bill. If the debate turns out to be very controversial, the second reading session may be adjourned a second time to allow consideration of amendments.
The committee stage that follows the second reading is normally convened in committee of the whole Council. The Attorney General (who heads the Legal Department) moves various amendments so as to remove ambiguities in the draft legislation or to incorporate the Government's concessions on it. Thereafter the Attorney General reports to the
Council that the committee stage has been completed and moves the third reading of the bill. This is generally passed without any speeches, criticisms or defence. The Governor then signifies his assent, which is announced in the next edition of the Government Gazette. Constitutionally, the Queen has the power to disallow laws enacted in Hong Kong according to the aforesaid procedure; and indeed four of the bills passed in the first year of the Legislative Council's inception were disallowed by the British sovereign. Moreover, British laws may be made to apply in Hong Kong by a specific reference to a legal requirement as implied from an Act passed by the British Parliament, or by the Queen by an Order in Council. However, unless expressly provided or having a legal requirement, United Kingdom Acts from 1843 do not apply in Hong Kong.
The Hong Kong judicial system follows the British model. The highest court in Hong Kong is the Court of Appeal, from which appeals may be brought to the Judicial Committee of the Privy Council in London. In addition, there are the High Court, the District Court, the Magistrates' Courts, the Coroners' Courts, the Tenancy Tribunal, the Labour Tribunal, the Lands Tribunal and the Small Claims Tribunal. English common law and the rules of equity are in force in Hong Kong in defining judicial proceedings and judgements.
1.3 Trade union participation in the Government
Historically, the Hong Kong Government has been a colonial administration which is appointed under decrees from the United Kingdom, instead of being elected by democratic mandate. There is no elected parliament, and the main legislative body -the Legislative Council -was until 1985 appointed by the Governor, who is the ruling representative in Hong Kong of the United Kingdom sovereign, the Queen. In so far as the political process in the domestic arena is concerned, partisan and electoral politics have hitherto accounted for only a relatively peripheral kind of activity, in which the local trade unions have never been a crucial element.
However, since the Second World War, there has been an apparent liberalisation within the local administration, coupled with a conscious effort to move away from its colonial past. As it stands, the present Government (in
1985) can be described as highly responsive and permissive towards the people it governs, though constitutionally it is not ultimately answerable to them, in spite of the extension of representative government under the present democratic reforms. It has extended significantly the scope of representation on the Legislative Council bytransforming its composition to incorporate an increasingelectoral component, and (much in the British tradition) it has continued to maintain its customary practice of administration by consultation. The appointment of two trade union activists and one worker representative to be legislative councillors in 1976 may be said to mark the first formal recognition of the importance of workers' interests in the formulation of public policies. This recognition is further consolidated under the present administrative reforms outlined in the 1984 White Paper. The registered trade unions are given the electoral capacity to return two elected members from the labour "functional constituency" -and the first election took place in September 1985. On the other hand, trade union and employee representatives have always been involved in the consultative machinery over matters affecting labour, training and other relevant topics. The most notable examples are the Labour Advisory Board, a tripartiteadvisory committee to the Government on labour legislation and other labour matters, the Vocational Training Council and the Consumer Council.
It may be said that the relatively "apolitical" nature of the official administration in the territory does not call for any alliance between the Government and the trade union movement, especially in the light of the latter's fragmentation. The domestic pressure upon the administration to mobilise any major labour or political forces in its support probably has been and is likely to remain low, so that the prospect of any union-government coalition in the future is still remote.
II. LABOUR LAW AND INTERNATIONAL LABOUR CONVENTIONS
II.l Characteristics of labour law in Hong Kong
Labour law is that part of the law which deals with individuals and legal persons in their capacity as employees or as employers. By its very nature, it is
concerned with "labour or work" and the relationships arising from it. Given the British tradition, the notion of subordination has been a key criterion for determining whether an employment relationship exists or otherwise. This, in turn, rests upon the cardinal test of whether or not a person works under the command, the authority and the control of an employer. In Hong Kong, as is common in other countries, labour law is concerned with both the individual and collective aspects of the employment relationship. Basically, individual labour law is that part of labour law which regulates the individual employment relationship between the employer and the employee as it arises from the contract of employment. On the other hand, collective labour law deals with collective industrial behaviour and labour relations, both between employer and employee, and between employers and employees, as well as the institutions for their regulation.
The legal system in Hong Kong has evolved largely from its British heritage. Labour law offers no exception and comprises two principal core components, i.e. common law and statute law. Common law is that part of the law of England formulated, developed and administered by the old common law courts, based originally on the common customs of the country, and largely unwritten; whereas statute law is the law enacted by the legislature, laid down in Acts of Parliament (as in the United Kingdom) or Ordinances of the Legislative Council (as in Hong Kong). Echoing the British situation, there has also been a gradual process of expansion in statutory labour law in Hong Kong, especially where common law has been increasingly considered inadequate for protecting and regulating the interests and rights of the employee and the employer.
The traditional British approach to industrial relations and labour law has been based upon voluntary rather than legalistic intervention in the field of industrial relations. Although this situation has been progressively modified with the introduction of more items of protective and regulative labour legislation, the canons of common law are still evident -either in shaping certain ingredients of the enacted statutes themselves or in judicial rulings over various labour relations issues. Because of the strong affinity between the legal systems of the United Kingdom and Hong Kong, common law has also been instrumental in a similar role in the formulation of local labour law for Hong Kong.
II.2 International labour Conventions as a source of labour law
Instruments promulgated by the ILO on labour standards, legislation, policy and practice have been a major factor in influencing or even shaping labour law in Hong Kong. It has been the declared intention of the Hong Kong Government to adopt as far as practical the scope of labour standards set by the ILO.
The participation of Hong Kong in the ILO is, on account of its "dependency" status, not that of a full member nation but a non-metropolitan territory affiliated to the United Kingdom. As such, Hong Kong is represented in the ILO by that member State.
In terms of formal procedures, it follows that Hong Kong does not ratify any international labour Convention but, instead, declarations in respect of Hong Kong on the application of Conventions ratified by the United Kingdom are made by the latter on Hong Kong's behalf after full consultation between the two Governments. In making a declaration for Hong Kong, the Convention in question can be one:
(i)
which is applied without modification, meaning acceptance of all provisions contained in the Convention;
(ii)
which is applied with modification, implying acceptance not of all but of some specified provisions of the Convention;
(iii) on which a decision is reserved, when the Convention cannot be accepted for the time being since its major part cannot be implemented by legislative or administrative measures;
(iv) which is inapplicable to the extent that the subject-matter of the Convention is not deemed relevant to Hong Kong because of geographical or physical factors, or other inherent constraints.
A member State is required under the ILO Constitution to report on measures taken to implement the ratified Conventions once every two years. In this connection�E the Government of the United Kingdom reports on behalf of Hong Kong on all the Conventions ratified by the United Kingdom
(except those which have been declared inapplicable to Hong Kong), as well as those unratified Conventions, should they be called upon to do so by the ILO.
The effective number of international labour Conventions on which a declaration can be made for Hong Kong is 75. Their respective status of application is given in Appendix B.
III. LABOUR ADMINISTRATION IN HONG KONG
III.l Administrative framework and functions
Perhaps readily applicabLe to Hong Kong is Roberts's account of the general profile of labour administration in the British overseas (dependent) territories during their early days of colonisation. "Day-to-day labour matters might be dealt with by administrative officers in the course of their other duties; and the outlines of labour policy were decided on in the secretariat of each territory, after consultation with various government departments concerned and with other interests, as part of the general administrative functions of government."2 In Hong Kong, therefore, the enactment and enforcement of labour legislation was not the special concern of any one department of government until 1927, when a Labour Subdepartment was established in the Secretariat for Chinese Affairs. Created in the aftermath of the Hong Kong Canton Boycott Strike of 1925-26, this relatively circumscribed unit specialised in dealing with guilds, unions, labour disputes, the cost of 1 i ving and wages. 3 However, labour admininstration was not immediately and fully integrated as a result. Notably, the regulation of industrial employment of women and children and of industrial safety did not come under the administrative auspices of the Labour Department until it became a full-scale establishment within the civil service in 1947. Before that, the role of enforcing standards in this area belonged to the Secretary for Chinese Affairs between 1922 and 1927 (by virtue of his capacity as the Protector of Juvenile Labour under the 1922 Industrial Employment of Children Ordinance); but later this was transferred to the purview of the Chairman of the Urban Council as the Protector of Labour under the 1937 Factories and Workshops Ordinance.
A series of circular dispatches to the various colonial governments in the British Empire by the Secretary of State in the Colonial Office, calling for adequate, properly co-ordinated arrangements for supervision of labour contracts, stimulated the development of modern labour departments in most dependent territories during the period 1938-40.4 The impact was felt in Hong Kong too.
In 1939, the first Labour Officer was appointed. However, his office was placed under the supervision of the Secretariat for Chinese Affairs. It was not until after the Second World War, in answer to the need for a centralised and systematic approach to labour administration amidst post-war poverty, unemployment, economic dislocation, inflation, wage demands and other problems of rehabilitation, that the Labour Department was established in full in October 1947.
The Labour Department is headed by the Commissioner for Labour, who is the principal adviser to the Government on labour and employment matters. As the Government's chief agency for labour administration, the Department is responsible for initiating and enforcing labour legislation, as well as dealing with the various aspects of industrial relations, employment and manpower training in the private sector. It has achieved significant growth in both establishment and activities during the recent two decades. The size of its staff expanded by over 250 per cent during the ten-year period beyween 1968 and 1978, compared to a more modest growth of 150 per cent for the previous period between 1958 and 1968. The Department contributed to the enactment of 171 items of legislation in the relevant fields between 1970 and 1980, or of 155 items between 1975 and 1984. The legislative pace on the labour front accelerated and then stabilised. "Up to 1968 an average of seven such items were adopted in each year, but from 1969 to 1977 the figure more than doubled, to 15."5 In 1981, 26 items of legislation of concern to the Labour Department were enacted, enabling Hong -Kong to improve declarations in respect of eight international labour Conventions.6 However, the tempo slowed down by 1982, during which half of the volume 13 items of labour legislation -was enacted. The number decreased further to 11 items in 1984.
For reasons which will be discussed later in this chapter, the initiative for advancing employee protection "has mainly come from the administration, and specifically the Labour Department".7 It has become the purported and express policy of the administration to achieve "a level of legislation governing safety, health and conditions of employment at least broadly equivalent to the best in our neighbouring countries whose stage of economic development and social and cultural background are similar to our own". 8 There are, quite inevitably, cost implications of these legislative and regulatory measures for private industrial enterprises, as outlined by the Committee on Diversification in 1979:
To the extent that such legislation raises labour costs, or makes terms and conditions of service more restrictive, it reduces the ability of employers and employees to respond flexibly to changes in demand or technology, and influences industrialists in their choice of products and production processes. it is possible to set requirements and standards so ~igh that, with present technology and given the industrial environment of Hong Kong (where industries tend to be crowded together), it may be impossible for some industries to meet them ..�E the legislation could act as a deterrent to diversification. Where the legislation is aimed at protecting lives, we recognise that there is no room for compromise. 9
In spite of these considerations, the Government is committed to building, or sponsoring the building of, a statutory base of employment rights in the work situation, as discernible from the following summary of the recent agenda of labour legislation:
Of 78 "major" legislative items, passed from 1963 to mid-1977, 44 involve safety or health, workmen's compensation, or physical working conditions �E�E�E seven concern the protection of women and young persons �E.. Six other items of legislation, all in the 1970s, provide for one rest day weekly for all workers within the Employment Ordinance's scope; ten paid statutory holidays a year; up to 30 days' sick leave annually,
to be paid at two-thirds the normal wage-rate; and seven days' paid annual leave �E�E�E10
The series of legislation at present administered by the Labour Department comprises the following main statutes:
(i) the Employment Ordinance, which provides for the regulation of contracts of employment, protection of wages, paid maternity leave, rest days, hours
of work�E sickness allowance�E statutory holidays with pay�E severance payment on redundancy, long-service payment, protection against anti-union discrimination, paid annual leave and control of employment agencies;
(ii) the Protection of Wages on Insolvency Ordinance, which establishes a statutory and centrally administered fund�E by way of a general levy on all businesses, to provide a measure of public insurance to workers against defaults of wage payments by private employers;
(iii) the Labour Relations Ordinance, which makes provisions for improvement of collective labour-management relations and the settlement of trade disputes and lays down statutory backing for the conciliation work of the Labour Relations Service;
(iv)
the Employees' Compensation Ordinance, which specifies employees' entitlement and employers' obligations in respect of 1nJuries or death caused by accidents or occupational diseases at work;
(v)
the Pneumoconiosis (Compensation) Ordinance, which establishes a central levy scheme in vulnerable industries to compensate employees or their dependants for incapacity or death resulting from this family of occupational diseases;
(vi)
the Factories and Industrial Undertakings Ordinance, which governs the registration of industrial enterprises and prescribes minimum safety standards, in general and for specific trades and industries;
(vii) the Contracts for Overseas Employment Ordinance, which protects local manual workers recruited for employment abroad and regulates the contracts they enter into;
(viii) other miscellaneous items of legislation covering smoke abatement, control of radioactive substances and safety measures for pressure equipment.
To administer this complex of labour legislation and to promote official policies in the diverse functions of labour administration, the Labour Department has over time evolved an elaborate organisational structure compr~s1ng, inter alia, the Labour Relations Service, the Employees' Compensation Division, the Factory Inspectorate Division, the Occupational Health Division, the Women and Young Persons Division, the Selection Placement Division, the Youth Employment Advisory Service, the Overseas Employment Service, and the Local Employment Service and the Special Register. The duties and responsibilities of each of these bodies are briefly described below.
The Labour Relations Service is responsible for:
(i)
the administration of the Employment Ordinance and the Labour Relations Ordinance;
(ii)
a promotional service -visiting employers and their associations, and trade unions, to discuss and review their labour relations practices and, where necessary, help them to achieve better mutual relationships at work on the basis of the Code of Labour Relations Practice;
(iii) a conciliation service monitoring industrial peace and conflict, investigating labour-management disputes and intervening to help solve differences between the parties;
(iv)
the enforcement of legislation investigating complaints arising from the Employment Ordinance or contracts of employment, assisting the aggrieved party to seek a remedy and initiaLing prosecution on indictable breaches of ' the Employment Ordinance;
(v)
an advisory service advising employers and employees on a wide range of matters relating to labour relations, legislation and personnel management, and trade union affairs.
Since 1984, the service has taken on an additional role in establishing under its auspices the Wage Security Unit. The Unit serves as the secretariat to the statutory Protection of Wages on Insolvency Fund created to protect the wages of employees affected by business insolvency.
The Employees' Compensation Division assists workers or their dependants to obtain compensation when a worker is injured, develops an occupational disease, or is killed at work; and is responsible for administering the Employees' Compensation Ordinance, under which an employer is liable to pay compensation to a worker who receives personal injury arising out of and in the course of employment or to the dependants of a worker who is killed in such an accident. The Division is also responsible, since 1981, for administering centrally a pneumoconiosis scheme financed by a Pneumoconiosis Compensation Fund with contributions based on a levy from the construction and quarrying industries. Through its Employees' Compensation Assessment Unit, the Division collaborates with the Occupational Health Division (specifically, the Occupational Medicine Unit) and hospitals to operate the two-tier Employees' Compensation Assessment Board, which i~ a statutory board for assessing the loss of earningcapacity suffered by injured employees.
The Factory Inspectorate Division is responsible for the enforcement of the Factories and Industrial Undertakings Ordinance and its subsidiary regulations, which entail the registration and inspection of factories in order to ensure safety, health and welfare in industry. It also helps administer the Boilers and Pressure Receivers Ordinance. The factory inspectorate offers, in addition, free advice to factory managements on the prevention of industrial accidents and promotion of industrial safety, as well as the planning and layout of factories in compliance with such standards. It provides, as a corollary, administrative and technical support for five industry-based tripartite safety subcommittees. These tripartite subcommittees, formed under the auspices of the Committee on Industrial Safety and Accident Prevention of the Labour Advisory Board, are strategic to sustaining a voluntary safety movement in industry. This Division also runs an industrial safety training centre to provide safety training and promote safety consciousness in industry.
The Occupational Health Division provides an advisory service to government and industry on matters concerning the health of workers and hygiene at the workplace, in addition to its supervisory role in maintaining occupational health standards and practice. It is constituted of the Occupational Medicine Unit and the Occupational Hygiene Unit. The former is mainly concerned with the assessment of workers and the effects of
employment on health, including the conduct of medical examinations to assess injury and recovery or in order to ascertain the degree of risk exposure to compressed air, ionising radiation and other health hazards. The latter is concerned with the identification, evaluation and control of physical, chemical and biological hazards in the working environment.
The Women and Young Persons' Division is staffed by labour inspectors who visit industrial enterprises where women and young persons are employed to ensure that their hours of work, meal breaks, rest days and overtime accord with the Women and Young Persons (Industry) Regulations, 1980, subsidiary legislation of the Employment Ordinance. The inspectorate also enforces another subsidiary code, the Employment of Children Regulations, 1979, to ensure that no persons under the age of 15 are engaged for employment, either industrial or non-industrial. Inspections are also carried out to ensure employers' compliance with Part IV of the Employees' Compensation Ordinance on compulsory insurance for employees and to ascertain the "employability" of employees at the workplace, which depends upon the possession of valid proof of identity as required by the Immigration Ordinance. Inspectors also advise managements of industrial enterprises employing or intending to employ women and young persons on the provisions of the relevant legislation.
The Selective Placement Division provides free employment assistance to both physically and mentally handicapped people in seeking jobs in both the private sector and civil service.
The Youth Employment Advisory Service furnishes young people, especially secondary school students, with careers guidance by way of school talks, exhibitions and seminars, as well as through a network of careers information centres operated by the service. It is also engaged in the compilation of careers publications and the training of careers teachers.
The Overseas Employment Service administers contracts in accordance with the Overseas Employment Ordinance, which requires that the terms of employment for manual workers going overseas must be clearly laid down in a contract attested by the Commissioner for Labour. Such contracts, setting out the rights and obligations of both employer and employee, reduce the risk of misunderstanding and disputes arising from employment. An effective overseas contract must therefore meet the standards stipulated by the Ordinance whose provisions are also in conformity with the corresponding international labour Conventions. These requirements include defining the right of the employee to repatriation, the obligation on the part of the employer to pay the passage, the duration of the contract after which the employee must be offered leave to visit his family before renewal of any further contract, and provisions for remittances to be made to the employee's family. In addition, the contract must also set out hours of work,
holidays and rest days, provisions for sick leave, wages, overtime pay, and compensation for injury at work.
This Service also attests employment contracts concluded between local employers and domestic helpers recruited from overseas and settles any disputes arising
from them. In this connection, it collaborates with the Immigration Department to regulate and protect, principally via administrative measures, the local employment of these foreign workers recruited for domestic service. Besides, it administers the Employment Agency Regulations, a body of subsidiary legislation under the Employment Ordinance and Part XII of the Ordinance itself. In this capacity, the Service supervises and regulates the operation of profit-making employment agencies, including those which deal exclusively with expatriate domestic helpers -mostly from the Philippines.
The Local Employment Service provides a free job exchange and placement service for the private sector. In addition, it registers unemployed able-bodied people and assists them to apply for public assistance as an equivalent to unemployment benefit. It also co-ordinates the recruitment of janitors for the civil service.
The Special Register administers a specifically tailored placement service for jobseekers who possess post-secondary, university or professional qualifications.
III.2 Labour policy formulation and its philosophy
Following the British practice, it is customary for the Government to circulate drafts of labour legislation on important policy proposals to the "representative" bodies of the interested parties concerned. In essence, these are the major trade unions and employers' organisations. The
situation prior to 1980 had been one of partial and fragmented consultation, largely because of the abstention of the powerful left-wing trade union centre, the Hong Kong Federation of Trade Unions (FTU), from the process of regularised dialogue with the colonial administration after their 1967 political confrontation in the wake of the cultural revolution. Where "the FTU had previously ignored requests to conunent on Labour Department drafts of legislation", the Department had afterwards, "in a curious desire to avoid discrimination", not normally sent such drafts to their right-wing counterpart, the Hong Kong and Kowloon Trade Unions Council (TUC). 11 The result had been, until recently, the rather one-sided procedure of their "restricted circulation to the major employer organisations". 12 Nevertheless, since "the employer organisations apparently dispose of a good deal more ~etailed expertise and (perhaps partly because they are more representative of bigger firms) have publicly objected to very little of the improvement in labour legislation since 1967", 13 labour reforms have not been seriously inhibited as a result of this partiality.
Other than circulating proposals and drafts to business and employers' organisations, the Government had relied principally upon the Labour Advisory Board for consultation on labour law and policy formulation. The Board, created in the 1930s as a result of model reconunendations dispatched by the British Colonial Office (to its overseas dependencies), is a tripartite consultative conunittee chaired by the Commissioner for Labour (or the Deputy Conunissioner) to advise him on legislative and public policy on labour matters which he refers to it -including international labour standards promulgated by the ILO. The Board's membership, besides the ex officio chairman, comprises parity employee-employer representation, with six representatives from each side. Of the six employee representatives, four are nominated from and elected biennially by the registered employees' trade unions in Hong Kong, while the other two are appointed directly by the Government. Each of the four major general employers' organisations in Hong Kong is responsible for nominating one employer representative, with the remaining two employer representatives chosen by government nomination.
Annexed to the Board are three conunittees, each specialising respectively in: (i) employment services that cover placement of the handicapped, vocational guidance for young people and other employment matters; (ii) implementation of international labour standards; and
(iii) industrial safety and accident prevention, notably the sponsorship of an array of industry-specific tripartite subcommittees on safety.
However, the efficacy of the Labour Advisory Board as the Government's chief "transmission belt" with labour and capital on employment and industrial relations policy decisions is at best limited. The first problem rests in its dubious representativeness. "The advice of the Labour Advisory Board", as noted in a Legislative Council debate, "cannot be said to represent the views of all interested parties �E.�E, and the Board does not provide a sufficiently large and representative forum from which a consensus can be drawn."14 The situation was slightly improved in 1981 when the FTU ~nded its boycott of the balloting process for the Board's election and returned a candidate winning with the largest vote. Nevertheless, "the basic problem remains that the trade union organisations have hardly excelled as authentic and independent spokesmen of the 'labouring mass' in Hong Kong", 15 although the situation has begun to improve as a result of introducing the "labour" constituency to the elected segment of the Legislative Council under the present programme of widening "representative" government.
Another problem intrinsic to the Board has been the limited prerogative entrusted to it by the Government, so that the effective role of this tripartite body has been relatively low key, confined merely to commenting on legislative or other proposals referred to it by the Commissioner for Labour. 16 Of course, this is not an unusual feature of the tradition of labour administration within the British Empire, as Roberts reflects:
The functions of the boards have generally been rather limited. They usually have met only at the request of the Government to discuss specific questions which the Government has submitted to them. These might have included, for example, the content of important labour legislation, the possible application of international labour Conventions, the possibility of taking measures to increase the supply of labour, appropriate means of improving industrial relations or the formulation of recommendations to employers on other welfare amenities.17
It may be argued that the Board's self-effacing position is not inconsistent with the fundamentally "non-interventionist" approach of the Government towards labour administration. Just as the notion is considered to be derived from a state of collective laissez-faire in the United Kingdom, the application of such a policy is also deemed to be commensurate with the free market economy of Hong Kong. However, it has been argued that such an analogy between the British and Hong Kong cases is more apparent than real because what has prevailed in the former is a collective form of laissez-faire, whereas in the latter the situation is one of individual laissez-faire. The crux of the problem is therefore: "collective laissez-faire has worked in Britain because labour unions there have been power centres, effective in organising themselves and in dealing with employers, �E�E. By contrast, the labour movement :in Hong Kong has been known for its docility and ineffective organisation".18
The contradictions implied in such power imbalances stemming from ineffective unionism have given way to strains and tensions, because "the practice of voluntarism in the individualised laissez-faire economy of Hong Kong has perpetuated a vacuum as far as collective labour relations are concerned and, at the same time, created expectations at the grass-roots level that the Government will impose mandatory standards of employment and intervene to determine their levels, in a market situation that is otherwise vulnerable to excessive uncertainty".1 9 Responding to increasingly widespread and vociferous aspirations for a better quality of working life, the Government has since 1968 adopted a more vigorous programme of labour legislation that tends to suggest a modest revision of its abstentionist stance.
There are some paradoxical implications of the official intervention to fill a vacuum left by the weakness of joint regulation between labour and management in collective bargaining or other areas of industrial relations. The government-sponsored programme of labour reforms, modest and gradualistic, has seemingly sustained the workers' psychology of dependency upon official leverage, thereby postponing the advent of any organised labour that seeks a viable and equitable industrial partnership with the employers. Secondly, it is probably true to speculate that the private expectations that the administration will regulate for certain mandatory standards are also shared by employers, especially in small
industries, given an otherwise bizarre "unregulated" free market that is susceptible to excessive haggling and uncertainties. While-large-scale bureaucratic firms in the modern sector tend to formulate personnel, wages and industrial relations strategies quite independently, there is an obvious and practical limit to the extent to which their smaller counterparts, as "price-takers" or "pattern-followers", can exploit the so-called state of "workplace permissiveness" without reference to some generalised standards that help to reduce the variability, volatility and anomalies of "open market" competition. By virtue of such a mutual desire for external rule-making in labour practices, the parties to the employment contract, in particular the small employers and their employees, readily assume that they are committed, both legally and morally, to following precisely w-f.lat the law prescribes -no more and no less. Thus, it is possible that labour enactments in Hong Kong have stifled private efforts to negotiate and set contractual terms at levels better than
the parallel statutory provisions on such employment benefits as annual leave, rest days, sickness allowance, maternity leave, severance pay on redundancy, and so on.
It follows that the concern for "legalism" in labour issues has also affected the conduct of industrial conflict, which arises more from workers' defensive acts to protect their established statutory or contractual rights than their attempts to wrestle new concessions from their employers. There persists a widespread assumption among employers and employees, especially in small private enterprises, that their mutual duties and rights are restricted to what are legally provided, so that grievances brought before the Labour Department for conciliation are predominantly concerned with workers' complaints about employers' failure of their statutory obligations regarding, for example, arrears of wages, payment in lieu of notice and severance pay. Accordingly, it is common for negotiations on these labour disputes to focus largely upon the applicability or otherwise of the relevant legal prov1s1ons at issue.20 This, coupled with the growing readiness of the administration to intervene on the labour front, has nurtured a popular impression that "the Labour Department has itself performed much of the role that, in other industrial capitalist economies, would be filled by trade unions".21
Given the absence of more active trade unionism, contemporary industrial relations in Hong Kong, inasmuch as
they are "conditioned to a legalistic framework", 22 are seen to pose a dilemma to a labour administration which still adheres to the "voluntaristic" philosophy of allowing maximum latitude to private actions. Its attitude today is ambivalent, as it attempts to steer midway between "voluntarism" on the one hand and "legalism" on the other. As the Commissioner for Labour recently declared, "We will continue our policy of involvement in the safety, health and welfare of the workforce, but we will continue also to avoid cumbersome regulations and undue interference in labour matters."2 3 How long such a "rope-dancing" approach can be sustained clearly depends upon the future political framework of this society, the work values and social assumptions of its people and, above all, the conditions under which capital is permitted to flourish.
Notes
Norman Miners, The Government and politics of Hong Kong, Hong Kong: Oxford University Press, 1975, p. 51.
2 B.C. Roberts, Labour in the tropical territories of the Commonwealth, London: London School of Economics and Political Science, 1964, p. 201.
3 H.R. Butters, Report by the Labour Officer on labour and labour conditions in Hong Kong, Hong Kong: Government Printer, 1939, p. 125, para. 91. In fact, the Butters report pointed out that the Subdepartment was curtailed in operation after 1929 "owing to shortage of staff and the general quiet which descended in Hong Kong as in China over labour matters".
4
Roberts, op. cit., pp. 208-210.
H.A. Turner et al., The last colony: But whose?, Cambridge: Cambridge University Press, 1980, p. 105.
6
Labour Department, Brief on general labour matters -Hong Kong, mimeographed, Feb. 1982, p. 1 (paras. 1 and 3), and p. 24 (para. 85).
Turner et al., op. cit., p. 105.
8
Labour Department, :::B.::r_,i:.::ecof'--_:::co:.:n'-----'g"-'e:::n:.:.e=r-=a:.=l'------'l:::a=-b=-o=u=-r matters-Hong Kong, op. cit., p. 1.
9
Hong Kong Government, Report of the Advisory Committee on Diversification, Hong Kong: Government Printer, 1979, pp. 322-323.
I 0 Turner et a1., op. cit., pp. 105-106.
II ibid.' P�P 104.
I 2 ibid.
I 3 ibid.
14 Hong Kong Hansard, 1976-77' p. 332.
15 Ng Sek-hong, "The formulation of labour policy in Hong Kong", in Hong Kong Law Journal, Vol. 13, No.2, p. 184.
16 Turner et al., op. cit., p. 104.
17
Roberts, op. cit., pp. 228-229.
I 8 ibid�E, pp: 749-750�E
19 ibid., p. 751.
20 Turner et al. note that small group and
individual claims and grievances "overwhelmingly concern matters of 'right'" -from an analysis of official records between 1969/70 to 1977. ibid., pp. 114-115.
21 ibid., p. 112.
22 ibid., p. 117.
23 Opening address by the Commissioner for Labour,
J .N. Henderson, to the Labour Relations Conference, Hong Kong, 20 Feb. 1982 (in the series "Labour and Staff Relations Development Project", jointly organised by the Hong Kong Labour Department, the United Nations Development Programme and the ILO).
CHAPTER III
FREEDOM OF ASSOCIATION AND WORKERS' AND EMPLOYERS' ORGANISATIONS
I. INTERNATIONAL LABOUR CONVENTIONS AS A BENCHMARK
Generally speaking, there are four international labour Conventions of salient importance to Hong Kong in defining and safeguarding the rights of association and combination in the labour and employment sector. A review of their present state of application in Hong Kong hence provides a useful benchmark for ensuing discussions on the workers' and employers' organisations in Hong Kong.
The Right of Association (Non-Metropolitan Territories) Convention, 1947 (No. 84), applies to non-metropolitan territories for the purpose of guaranteeing the rights of employers and workers to
associate for all lawful purposes. It also safeguards the right of trade unions to conclude collective agreements, to enter into joint consultation with employers' organisations and to have simple and expeditious means of settling disputes by conciliation, with the assistance of public officers, if necessary. In Hong Kong, the right of association is therefore regulated under the Trade Unions Ordinance, 1971, and its subsidiary Trade Unions Registration Regulations, whilst the machinery for settling labour-management disputes is provided legally under the Labour Relations Ordinance, 1975, the Labour Tribunal Ordinance, 1972, and administratively by the conciliation facilities of the Labour Relations Service of the Labour Department. The legality of associations of employees and employers is conferred (provided that they are registered with the Government) by the Trade Unions Ordinance, which also grants such a registered trade union certain rights and privileges, including immunity from civil suits in
59
certain cases and prohibition of actions in tort in connection with the contemplation or furtherance of a trade dispute. The unlawful intent of a proposed trade union is one among the very tightly circumscribed range of reasons for which the Registrar can decline registration. In principle, trade unions and employers' associations are free to conclude collective agreements, without being subject to any legislative or administrative constraints. Plant-specific joint consultation has been actively advocated by the Labour Department although its implementation, which is voluntary, has not been widespread so far. The actual extent of the development of collective bargaining, joint consultation and other institutionalised collective employer-employee relations, as well as the limitations these developments have faced in Hong Kong, will be discussed in Chapter IV.
The Right to Organise and Collective Bargaining Convention, 1949 (No. 98), lays down that workers shall enjoy protection against acts of anti-union discrimination in respect of their employment, especially against acts contemplated to link the employment of a worker with\ the condition that he shall not join a union or ~hall relinquish trade union membership; or acts which caus~ the dismissal of a worker by reason of his union membership or because of his participation in union activities. These protective clauses are given effect and implemented by the anti-union discrimination provision of the Employment Ordinance. Under Convention No. 98, workers' and employers' organisations are also entitled to protection against any act of interference by each other or each other's agents or members of their establishment. The Convention, furthermore, stresses the importance of voluntary negotiation between unions and employers or employers�E organisations with a view to the regulation of the terms and conditions of employment via collective bargaining. The right to associate and organise, both of employees and employers, is generally guaranteed to the working community by the Trade Unions Ordinance, 1971. The principal exceptions are members of the armed forces who are governed by the regulations appropriate to their particular service; and of the police force who are prohibited from union membership under the Police Force Ordinance, Chapter 232, although they may join one of the three police staff associations having some of the characteristics of a trade union.
Besides fully applying the foregoing two Conventions, Hong Kong has also applied, with modification, the Freedom of Association and Protection of the Right to Organise Convention, 1949 (No. 87). In essence, this instrument proclaims the right of employers and workers to establish and join an organisation of their own choice without the requirement to seek prior authorisation from the other side. Workers' organisations are also entitled to:
(a)
draw up their own constitutions and rules, freely elect their representatives, organise their administration and activities and formulate programmes;
(b)
freedom from suspension or dissolution by the administrative authorities;
(c)
establish and join fed~rations and confederations, and any such organisation, federation or confederation shall have the right to affiliate with international workers' organisations;
(d)
the right that the acquisition of legal authority cannot be made subject to such conditions or requirements which would impede the exercise of freedom of association.
This Convention has been applied in Hong Kong by the Trade Unions Ordinance and its subsidiary regulations, except for the following modifications:
(a)
that the manner of expenditure of trade union funds is circumscribed by the Trade Unions Ordinance;
(b)
that the administrative authority may intervene to supervise the accounts of trade unions and to ensure the application of the rules;
(c)
that union amalgamation has to be endorsed by the administrative authority, and the same requirement applies to the case of union affiliation with international organisations;
(d)
that federations of trade unions are only allowed for trade unions engaged in the same trade or industry.
On the other hand, the Workers' Representatives Convention, 1971 (No. 135), also declares that workers' representatives in an enterprise shall enjoy effective
protection against any acts prejudicial to them, including dismissal, based on their status or activities as workers' representatives or on union membership or participation in union activities, in so far as they act in conformity with existing laws or collective agreements or other jointly agreed arrangements. However, because the present Employment Ordinance in Hong Kong affords protection only for union members or officials as regards their rights of membership and participation but does not protect those workers' representatives who are not union members or officials, it has not been possible to apply this Convention, but instead to register a "decision reserved" declaration. Moreover, contrary to what the Convention
decrees, it is not mandatory in Hong Kong for facilities to be made available for workers' representatives in order to enable them to perform their functions promptly and
effectively.
II. FREEDOM OF ASSOCIATION AND LABOUR RELATIONS IN HONG KONG
II.l Basic freedom of union organisation and participation
II.l.l Trade union freedom as a legal right
Trade unions in Hong Kong can be described as generally independent of the Government, in so far as there are no legal impediments to employees in associating and organising for collective bargaining purposes, provided
that the unions concerned have registered with the Registrar of Trade Unions. While the Registrar's discretion to refuse registration is limited,1 registration serves to confer upon the union corporate status, immunity from actions in tort, the protection of persons acting in furtherance of trade disputes and freedom from liability for criminal prosecution for conspiracy. Although unions are required to submit their rules, expenditure and accounts to the supervisory control of the
to
Registrar, they enjoy virtually unlimited freedom determine their own leadership, administrative structure,
policy and programme of activities. Unions are generally free to amalgamate and are permitted to federate subject to legally prescribed conditions. Nevertheless, at the international level, they must gain the prior consent of the Governor before they can affiliate with any trade union or other organisation established outside Hong Kong, and the committing of any union fund directly or indirectly to any political purpose outside or within Hong Kong is expressly proscribed. Nevertheless, these legal qualifications have always been claimed by the administration to reflect its concern with containing the excessive political involvement of local unions rather than to restrain the development of bona fide trade unionism in Hong Kong.
Parallel to their freedom with regard to the formation and registration of a new union, trade unions in Hong Kong enjoy more or less the same degree of freedom if they wish to amalgamate with each other. Therefore, they are free to amalgamate across trade or industry or occupation, but the same right does not apply if unions wish to form federations -in which case, the unions federating have to come from the same trade, industry or occupation. By contrast, the freedom for a trade union to seek affiliation outside Hong Kong -that is, to become a member of any kind of trade union or other organisation outside Hong Kong -is even more strictly circumscribed and is only allowed with the consent of the Governor. Presumably, the rationale is to pre-empt penetration of the local union movement by any external or alien political forces, whose manoeuvres using the local unions as a vehicle might prove detrimental to Hong Kong's delicate equilibrium of political stability. Similar considerations could have underlined the legal restriction on the unions' ability to federate across industrial or occupational boundaries that is, for fear of political aggrandisement or provocation that might be otherwise implied.
In spite of these legal restraints, trade union legislation has been generally considered permissive to the formation of new unions, and conducive to the fragmented tendencies of multi-unionism. Since the 1961 amendment of the trade union (registration) law, the Registrar of Trade Unions has lost his former power to refuse registration of a new union on the ground of its duplication with existing unions in terms of objects and/or trade or industry. The liberal approach of the official administration in this regard has enabled unions with the same membership base to be formed along the lines of dialect and ethnic origin or in situations when the applicants were dissatisfied with the administration, political leanings or performance of an existing union, and formed a splinter group.
II.l.2 Trade unions and freedom of the individual
The legal conferment of positive trade union freedom on the individual employee has been relatively recent in Hong Kong, emanating from the Employment (Amendment)(No. 2) Ordinance in 1974. The legislation defines the rights of employees in respect of trade union membership and activities. It lays down that every employee, regardless of employment status or earning level, has the right to become a member or an officer of a trade union, to take part in its activities at any appropriate time (that is, either outside normal working hours or during them, provided this is in accordance with arrangements agreed with or consented to by the employer) or, together with other persons, to organise a trade union and apply for its registration under the TraQe Unions Ordinance.
To guarantee and protect these rights, as defined by Convention No. 98, the same legislation prohibits any employer, or person acting on his behalf, from acting so as to prevent or deter an employee from exercising them. It is also illegal for the employer or his agent to prejudice the freedom of the individual by making employment, or offer of it, conditional on the employee having relinquished his union membership or office, not becoming a trade union member or officer, or not associating with other persons to form or apply for the registration of a trade union under the law. Violation of these anti-union discrimination clauses constitutes a punishable offence, the maximum sanction for which is a fine of HK$5,000. 2
By implication, the "yellow-dog" contract, under which the worker would undertake to leave or not to join a trade union as a condition of employment, is not only void but also illegal by virtue of these anti-discrimination provisions under the Employment Ordinance. Conversely, the existing trade union laws place neither any restriction nor positive recognition on such practices as the closed shop, the union shop, the agency shop and the maintenance of membership. These union-security clauses, generally understood to be not incompatible with the labour law of the British heritage, are in practice relatively unknown in Hong Kong. An important explanation may be sought in the present feeble state of union organisation in the average workplace. In most plants, for instance, there is no shop steward structure or system of rank-and-file delegation which serves firstly to represent the union vis-a-vis its
members or potential members at the workplace, and secondly to act on behalf of the employees or members vis-a-vis management on grievances, discipline, job allocation, demarcation, working environment, custom and practice, work hours, overtime, pay and other issues relating to employment conditions and labour relations.
In spite of the dearth of "closed shop" practices in Hong Kong, a few enterprise-based unions have been able to build up an effective workplace organisation. Notable examples include the Cable and Wireless Limited (Hong Kong) Staff Association, the Association of Chinese Employees of the Royal Hong Kong Jockey Club and the Cathay Pacific Airways Flight Attendants Union. The Cable and Wireless Union has even succeeded in negotiating a "check-off" arrangement in its collective agreement with management. Such a procedure, whereby the employer deducts trade union dues from the payroll of the union members in their employment on the union's behalf, is virtually unique in Hong Kong. As such, it is subject to the prior consent of both the Commissioner for Labour and the individual member employee concerned, lest it might be deemed as an unauthorised form of wage deduction that constitutes an offence under the Employment Ordinance.
1!.2 Legal procedures and criteria governing union organisation and government
11.2.1 Registration
As mentioned earlier, the Trade Unions Ordinance stipulates generally liberal procedural rules for the registration of unions. For the inception of a union, it requires only seven voting members to sign the application for registration -accompanied by the proposed constitution of the union and the titles and the names of the officers on its preparatory committee in the same submission to the Registrar of Trade Unions. The administrative discretion of the Registrar to refuse the application for registration is limited to certain legally specified grounds, which are:
(i)
non-compliance with the Ordinance or its regulations;
(ii)
the purpose of the union being unlawful;
(iii) the proposed name of the union being the same as or similar to that of another union so as to create confusion; or
(iv) the union being substantially one whose registration has been previously and lawfully cancelled.
Upon approving the application, the Registrar has to certify the registration in writing, via the issue of a certificate of registration to the applicant.
The Registrar is also vested with the power to cancel a union's registration. Again, this power is very restricted, applicable either in response to the voluntary request of the union, where the union has been found to cease to exist, or as a measure of censure. Cancellation of union registration as a sanction can be invoked only where:
(i)
registration has been found to have been obtained by fraud or mistake;
(ii)
the registration is void because any of its purposes is unlawful;
(iii) the union has been used for any unlawful purpose or for any purpose inconsistent with its objects and rules;
(iv)
the Trade Unions Ordinance has been contravened;
(v)
the funds have been expended on an unlawful or unauthorised purpose (for example, a political purpose) or in an unlawful manner;
(vi)
the accounts have not been properly kept.
Upon dissolution of a union due to cancellation, the Registrar may appoint a liquidator to take possession of all the union's property and to wind up its affairs, since by then the union ceases to exist as a corporate body and to enjoy the privileges of a registered trade union.
The Registrar's administrative prerogative is not supreme or ultimate. Any union can appeal against his decision, on either cancellation or refusal of registration, to the Supreme Court, normally within a period of 28 days after the serving of the relevant notice.
II.2.2 Amalgamation
The Registrar's consent is required for an amalgamation of registered trade unions to come into effect. It may be sought after a majority of the executives of the unions involved has first voted in favour of making an application for such consent from the Registrar. As in the case of initial union registration, the Registrar may refuse to give his consent if the name of the amalgamated union is not distinctive, if any of its purposes are unlawful, or if there has been a failure to comply with the relevant legal provisions. The vote on the amalgamation proposals must be conducted by each union concerned by secret ballot. It is not effective unless at least 50 per cent of the union's voting members vote. Whether there will be an amalgamation or not depends upon whether the votes cast in favour exceed those cast against the motion by a margin of at least 20 per cent. Basically, this voting principle is adopted from the British Trade Unions (Amalgamation) Act, 1917, but in 1964 the comparable requirement was amended in Great Britain so that amalgamation in that country can now be supported by a simple majority without any stipulation concerning the relative size of the poll.
Before 1961, unions seeking to amalgamate had to be within the same trade or industry, but the law was then amended to remove this restriction. In the event of a union seeking to amalgamate with a trade union or other organisation established outside Hong Kong, the prior consent of the Governor must be obtained. In the history of Hong Kong, there have been up to the present only four cases of amalgamation under the trade union law which resulted respectively in the formation of the Hong Kong and Kowloon Eating Shop Workers General Union in 1950; the Amalgamated Union of Seafarers, Hong Kong, in 1964; the Census and Statistics Department Field Officers and Statistics Supervisors Amalgamated Association; and the Amalgamated Association of Housing Assistants -the last two mergers both occurring in the civil service in 1979.
II.2.3 Federation
The freedom for registered trade unions to federate is by comparison more circumscribed than in the case of amalgamation. Unions in Hong Kong are allowed to form a trade union federation in so far as the members are engaged in the same trade, industry or occupation. It is partly for this reason that the present two major trade union centres, the FTU and TUC, have to be registered outside the Trade Unions Ordinance. Instead, at present they operate under the Societies Ordinance. Similar to the case of amalgamations, the support of the membership of the component unions is necessary for a federation to take place, to be determined also by secret ballot. However, there is no legal stipulation as regards the size of the voting base, and a simple majority of the vote by each union in favour is presumed sufficient. The registration procedure for the proposed union federation is more or less equivalent, save for minor modifications, to that for union registration -as if the constituent unions comprising the federation were the individual members. Since federation was first allowed under the trade union law of Hong Kong, only one trade union federation has been successfully formed and registered. This is the Federation of Hong Kong Printing Trade Workers' Unions, which was established in 1975 out of the Hong Kong Lithographic Workers' Union, the Hong Kong and Kowloon Printing Trade Workmen's Union, the Hong Kong Commercial Press Workers' Union, and the Hong Kong Chung Hua Book Co. Workers' Industrial Union.
II.2.4 Legal limits on the application of union funds
The anxiety of the Government, historically rooted, to eradicate and neutralise the possible mobilisation of union resources for triads and other criminal activities or in support of political espionage is mirrored in the relative stringency with which the Trade Unions Ordinance seeks to circumscribe the manner in which unions may spend and dispose of their funds. Thus, the legislation specifically prohibits the application of union funds, direct or indirect, for any political purpose whether within or outside Hong Kong, and declares that welfare funds may be collected and expended only for the welfare benefits as specified in the union's rules, and cannot be used for any other purposes. In fact, the following objectives are singled out by the Ordinance as items on which expenditure of union funds is permissible:
(i)
the payment of salaries, allowances and expenses to officers and paid staff of the trade union;
(
ii) expenses of administration, prosecution or defence in legal proceedings for securing or protecting the rights of the union or of any
member in his dealings with his employer or employee;
(iii) the conduct of trade disputes and compensation of members for loss arising out of trade disputes;
(iv)
purchases of land, securities or property;
(v)
payments to other lawful organisations established in Hong Kong;
(vi)
the promotion of entertainment and, subject to the approval of the Governor, contributions or donations to similar organisations established outside Hong Kong;
(vii) the payment of fines imposed on the trade union for any offence on which it is convicted;
(viii) the provision and maintenance of a welfare fund.
11.2.5 Legal criteria for membership and safeguards vis-a-vis the union administration
Membership in a particular union is restricted, under the present trade union law, to those persons who are ordinarily resident in Hong Kong and are engaged or employed in the trade, industry or occupation with which the trade union is directly concerned. Members who have retired from the trade on account of age or ill health may retain their union membership, though they cease to be voting members. In addition, those under 21 can be minor members but cannot be union officials, whilst those under 16 cannot be full "voting" members. The rank-and-file members are guaranteed certain legal rights by the trade union law: access to the rules of the trade union, the union's account book and register of members; power to inspect at the Registry of Trade Unions any document which the union is required by law to file with the Registrar; power to take legal proceedings so as to restrain a trade union officer from holding office or controlling union funds, or to order the return of union funds, property, etc., wrongfully withheld or misapplied. Moreover, union members are also entitled to receive a free copy of the union's annual statement of account which the union submits to the Registrar.
Furthermore, it is mandatory under the Trade Unions Ordinance for a union to regularise its structure and machinery of internal government with a well-defined union
constitution, to be registered with the Registrar of Trade Unions. Normally, it is necessary for such a constitution to specify the following conditions of association in its contents:
(a)
the name of the trade union and the address of its registered office;
(b)
the union's principal objects, including distinct provisions for regulating the relations between employees and employers, or between employees and employees, or between employers and employers, etc.;
(c)
the conditions under which persons ,may enjoy voting membership and non-voting membership, and prov1s1on for the keeping of a register of the union's members;
(d)
the maintenance of discipline within the trade union, including provision for appeal to the voting members
at a general meeting of the union against any decision of the executive;
(e)
the method of convening and conducting annual general meetings and extraordinary general meetings, and the matters to be presented to the members of the trade union at such meetings. These matters must include,
in the case of annual general meetings, the presentation of audited accounts;
(f)
the appointment and replacement of officers of the trade union. Every voting member of the trade union must have a reasonable opportunity for voting;
(g)
the amount and manner of payment of subscriptions, fees
and contributions payable by members of the trade union and the purposes to which the union's funds may be applied;
(h)
the creation, administration, protection, disbursement and disposal of welfare funds and the conditions under which .any union member or his family may become
entitled to any assured benefit;
(i)
the custody and investment of the trade union's funds, the designation of the officer or officers responsible for them and the keeping and auditing of accounts;
(j)
the commencement and termination of the union's financial year;
(k)
the inspection by members of the trade union of the union rules, its account books and the register of the names of its members;
(1)
the making, altering, amending and rescinding of the union's rules;
(m)
the method of dissolution of the trade union and the manner in which its funds shall be disposed of upon dissolution;
(n)
the safe custody of the common seal of the trade union.
II.2.6 Other trade union immunities, legal rights and obligations
(a) The union's legal capacity
One of the chief effects of union registration is to legalise any association or combination whose principal objects are the regulating of relations between employees and employees, or between employers and employers. In the absence of registration, a trade union or union federation is then liable to be deemed an unlawful combination by reason of one or more of its purposes being in restraint of trade. As such, any person who acts as an officer or participates in the administration of an unregistered union is punishable by penal sanet ions up to a maximum of HK$1,000 fine and six months' imprisonment on summary conviction. In another respect, registration under the Trade Unions Ordinance also removes such a combination from the exigencies of the Societies Ordinance, 1949, which declares any club, company, partnership or association of persons to be unlawful unless it has been registered either with the Registrar of Societies under the ordinance or is specifically exempted from registration (as in the case of companies registered under the Companies Ordinance or religious, charitable or recreational societies). The Societies Ordinance nevertheless specifically states that it does not apply to unions or their federations, provided they are registered under the Trade Unions Ordinance. It
follows that an unregistered trade union will not enjoy this right of exemption, and will hence come under the rigours of the Societies Ordinance.
In Hong Kong, it is quite a coiTUilon phenomenon for a group of workers involved in a specific industrial dispute to combine temporarily into an ad hoc problem-specific committee. It may assume the de facto functions of a union such as carrying out collective bargaining, yet without satisfying any of the formalities for union registration. Strictly speaking, some observers have argued that such informal combinations of workers engaged in industrial conflict could be interpreted as being in violation of the foregoing legislative measures. However, in practice, no official censure has so far ever been invoked curbing any such spontaneous worker combinations in furtherance of their trade disputes on the shop-floor.
(b) The union as a corporate body
A trade union is incorporated by virtue of its registration under the Trade Unions Ordinance. As a corporate body for all purposes, the union is entitled to hold property without further formality and without the expense of trust deeds. This also implies the capacity of the union to enter into contracts, and to sue and be sued in suits and other legal proceedings. Unions can conclude with each other collective agreements, whether they are employees' or employers' associations. Nevertheless, as in the British tradition, the general presumption is that these collective agreements are not legally enforceable in court. In fact, the Trade Unions Ordinance expressly rules out any legal proceedings which are to enforce the following types of agreements:
(a)
any agreement between members of a trade union as such concerning the conditions on which any current members of such a trade union shall or shall not sell their goods, transact business, employ or be employed;
(b)
any agreement for the payment by any person of any subscription or penalty to a trade union;
(c)
any agreement for the application of the funds of a trade union:
(i)
to provide benefits for members; or
(ii)
to furnish contributions to any employer or employee not a member of such a trade union, in consideration of such an employer or employee acting in conformity with the rules or resolutions of the trade union; or
(iii) to discharge any fine imposed on any person by sentence of a court of justice;
(d)
any agreement made between one trade union and another;
(e)
any bond to secure the performance of any of the above-mentioned agreements.
(c)
Other union immunities and obligations
Besides its lawful and corporate status, a registered union is vested by the Trade Unions Ordinance with certain rights of union protection and freedom which are largely adapted from the British heritage. These include immunity from either civil actions or criminal liability for conspiracy where the purposes of the union are in restraint of trade as well as exemption from actions in respect of torts for any acts done in contemplation of furtherance of a trade dispute. Moreover, the liberty of peaceful picketing at or near a place where a person works or carries out business is also safeguarded under the same legislation, although violence, intimidation and "watching and besetting" are prohibited.
Reciprocally, there are certain obligations incumbent upon a registered union relating essentially to its registration and the control of its internal administration. In the main, the union is required to register with the Registrar of Trade Unions and to register its constitution, which has to be drafted properly to incorporate a series of provisions which ensure the protection of the members' rights and the running of the union in a constitutional manner. The contents of the constitution and any subsequent amendments to it have to be submitted to the scrutiny of the Registrar, who shall not register them until he has satisfied himself that the rules comply with and are consistent with the legally prescribed standards and that they are not mutually contradictory, imprecise or incomprehensible. In addition, it is obligatory for registered unions to submit to the examination of the Registrar every year their annual
returns of membership, as well as their audited accounts,
after the closing of the union's financial year. The registered union is also required to notify the Registrar should there be any change in its name in order to gain his consent for registration. Notification is also mandatory on the establishment of every branch and any subsequent change of its address, as well as the union's various business, charitable, cultural, educational and medical undertakings.
III. WORKERS' ORGANISATIONS IN HONG KONG
III.l Recent changes in union membership
The trade union movement in Hong Kong was traditionally split along ideological lines, dominated on the left by the pro-communist Hong Kong Federation of Trade Unions (FTU)
and its allies and, on the right, by the pro-nationalist Hong Kong and Kowloon Trades Union Council (TUC) and its associates. Such a pattern of polarisation was sustained until the late 1960s, when this uneasy equilibrium was disturbed by the eruption of the 1967 internal civil disturbances in Hong Kong, interpreted popularly a
as spill-over from the Cultural Revolution in mainland China. One of the consequences of this domestic crisis was to cast a general political stigma over the whole labour movement. Union membership in 1967 therefore suffered a sharp drop, especially among the FTU bloc. In 1967, the number of
aggregate unionised workers shrank from 171,620 to 165,579 and that of the FTU from 96,735 to 95,408 in terms of declared strength. This phenomenon was nevertheless only
temporary, since by the turn of the decade most of the major unions, in particular the left-wing ones, began to recoup their membership again.
The upturn, as indicated in table III.l, coincided with the changing international posture of China after the Cultural Revolution. With the opening of a new political relationship with the Western countries, there was increasing moderation in China's global image that helped to neutralise the widespread distrust against local unionism bred by the 1967 disturbances. Moreover, China's improving international status induced many of the local workers to identify with the mainland and to join unions in expressing solidarity in their patriotic attachment.
Table III.l Trade union membership,
Year
(at 31 Dec.)
1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984
Note:
Source:
1968-84
Employed labour force
1 254 000 1 283 000 1 263 000 1 273 976 1 350 000 1 397 000 1 443 000 1 513 000 1 540 518 1 698 481 1 767 166 1 929 290 2 054 569 2 131 933 2 140 604 2 191 900 2 220 500
Declared union membership (aggregate)
169 676 175 245 196 299 221 619 251 729 295 735 317 045 361 458 388 077 404 325 399 995 184 282 384 282 345 156 351 525 352 306 357 764 Union membership as a percentage of (employed) labour force
13.5 13.7 15.5 17.0 18.5 20.7 22.0 23.9 25.2 23.8 22.6 20.7 18.7 16.2 16.4 16.1 16.1
"Employed labour force" refers to salaried employees and wage earners, and includes all persons aged 15 and above who are either permanent workers, or casual or seasonal workers and apprentices, trainees or learners. It does not include the self-employed, outworkers, employers, unpaid family workers, etc. If all such economically active persons had been included, the 1976 total would have reached 1.91 million.
Registrar of Trade Unions, Annual reports, 1967/68-1981/82. Figures for 1971 and 1976 salaried employees and wage earners are based on the 1971 Population Census and the 1976 Population
By-Census, and those for the projected figures, rounded off thousand. The figures in the force" column are supplied by Statistics Department.
other years are to the nearest "Employed labour the Census and
Another factor contributing to the rise of aggregate union membership was the impact of bureaucratisation which stimulated the growth in the number of white-collar "service" workers and their unionisation, especially among such occupations as teachers, nurses, social workers, technicians and even office clerks in the civil service and public sector. As a result, the independent group of unions, among which the civil service organisations predominate, has since the mid-1970s overtaken the right-wing unions' bloc as the second largest sector of the labour movement. At the turn of the decade, unions affiliated to or close to the left-wing FTU accounted for about 67 per cent of the total union population; the independent or politically non-affiliated unions together organised about 23 per cent of unionised workers; whereas right-wing unions (i.e. those affiliated to or close to the TUC) amounted tq a mere 10 per cent of aggregate union membership.
Nevertheless, the rather significant growth of the economy's union density in the mid-1970s began to subside towards the turn of the decade. Indeed, there has occurred since 1978 a sustained decline in the size of the unionised sector in both absolute and relative terms. The explanation and implications of this receding trend of trade union membership will be examined in Chapter VIII, as one of the contemporary issues of labour relations in this territory.
By the end of 1984, there were 383 unions and one federation of trade unions registered with the Registrar of Trade Unions under the Trade Unions Ordinance. Together they accounted for a unionised population of 357,764 in the labour force. Three broad groupings are identifiable, as analysed by membership strength (table III.2).
III.2 Docility of the labour movement
Trade unions in Hong Kong have so far been very limited in their efforts to secure a stable form of industrial partnership or joint "jurisprudence" with managements of enterprises. Their feebleness contrasts with the labour movement in most Western industrial societies, where the practices of union recognition and collective bargaining are widely institutionalised. Collective bargaining activities in Hong Kong, for instance, are conspicuous for their rudimentary character -
Table III.2 Trade unions by affiliation, 1984
No. of Declared trade unions membership (1984) (1984)
Affiliated to the Hong Kong 73 166 461 Federation of Trade Unions
Friendly to the Hong Kong 17 20 565 Federation of Trade Unions
Affiliated to the Hong Kong and 71 35 535 Kowloon Trades Union Council
Friendly to the Hong Kong and 7 798 Kowloon Trades Union Council
Independent 216 134 405
384 357 764
Source: Registrar of Trade Unions, Annual departmental report, 1984.
let alone the fact that only 5 per cent of the employed labour force was estimated to come under the regulatory ambit of privately negotiated collective agreements.3 These agreements are mostly crude in content, as they seldom go beyond the stipulation of general m1n1mum standards and rates; they are also dubious in efficacy, since they are regarded as "gentlemen's agreements" rather than as legal contracts unequivocally enforceable in court. Given the weak norm of collective bargaining, most workplaces lack any joint union-management procedures for processing employee grievances. Such a dearth of workplace arrangements in turn places an onus upon the official administration to provide the principal channel of redress under the auspices of the Labour Relations Service and the Labour Tribunal. Added to these deficiencies is the overall reluctance of the labour movement to pose an effective challenge to management in the arena of industrial conflicts. During the last decade, unions apart from those in the civil service -have been generally
unwilling to call and organise official strikes or other forms of industrial action as a weapon to bring pressure to bear upon employers. Instead, there has been a notable trend for strikes and trade disputes to erupt more or less spontaneously upon the initiatives of the affected workers themselves. Unions either abstain from these "wild-cat" actions or intervene after shop-floor agitations have already started -in which event, it has been observed, there is still the typical union preference to restrict its presence to that of an advisory role in the background.
Therefore, almost every discussion of industrial relations in Hong Kong departs little from the corrunonplace assumption about the weakness of the local union movement; and various accounts have been put forth as an explanation. Some would interpret it within a framework of developing economics under a colonial middle-class elite caught in the contradictions between a socialist hinterland and a capitalist domestic economy.4 Others ascribe it to historical development, emphasising in particular the part played by the Chinese civil war in causing the politicisation of the Hong Kong union movement (and hence its polarised schism between the left and right) and a "cash-minded" refugee labour force with few altruistic tendencies for self-organisation.5 However, the absence of a strong grass-roots movement or union consciousness has also found its explanation in cultural specificities -it is said that the Chinese have a distaste for "confrontation" situations, such as might be implied by normal trade union activity, and share instead a preference for reconciliation of employment differences by indirect methods, informal avoidance or arrangement of potential disputes through "trusted intermediaries".6 There are still others who suggest that the low profile of the labour movement results from the conscious choice of union strategy of the major labour organisations which, as political unions entrenched in their own ideological stances, may not subscribe to the Western model of trade union objectives, methods and policies. Evidently, each set of these factors can offer at best a partial explanation for the intricate state of labour organisations in Hong Kong. What has emerged today is probably the result of mutual interactions arising from a combination of these various attributes.
Nevertheless, this notion of so-called "union weakness" in the Hong Kong context warrants a few cautionary remarks. For one thing, such a feeble image is a generalisation based largely upon the experience of the private sector, especially among the traditional manual working class engaged in industrial production. In the second instance, the present union population of almost 400,000, quite naturally, is unevenly spread, with a substantial degree of variations in density between different industries and trades. But it has been tempting to construe the low union participation of the entire labour force from certain sectoral phenomena -for example, by reference to the conspicuously weak unionisation in the manufacturing sector, where just 9.76 per cent of the workforce are organised.7 Another popular method of illustrating the general weakness of trade unionism in Hong Kong has been to cite "the fact that, although one-third of Hong Kong's labour force and, particularly, about one-half of all industrial workers are women and girls, only some 90,000 are organised in trade unions".8 This yielded, in the late 1970s, a female unionisation rate of less than 15 per cent, compared with the level of 21 per cent for the general labour force at large. In fact, outside the manufacturing industries, union membership levels are not exceptionally depressed and union activities not exceptionally feeble. Evidence for this is sought, for instance, in the rise of white-collar unions and their industrial actions, which have become increasingly vociferous since the beginning of the 1970s, notably inside the civil service. The apparent militancy with which these various white-collar groups, such as teachers, nurses, health inspectors, survey technicians, social workers and government clerks, pursue their sectional claims for pay and structural improvements vis-a-vis other grades or occupations seemingly signifies their newly discovered work-based consciousness and organisational resources, attributes upon which Western economic trade unionism is founded. Indeed, as early as 1975 England and Rear had already seen in this sector the tendencies towards "the emergence of a strongly organised, well-educated,
'non-political', bargaining-conscious group of trade unions".9
III.3 Inter-sectoral comparison of union density
Therefore, the unionisation of the labour force is not evenly spread but varies in density according to different economic sectors. Transport and communication workers are by far the most organised (achieving a density of almost 58 per cent in 1979, as illustrated by table III.3), followed in the second place by the public utilities.
Table III.3 Trade union density by major economic sectors, 1981
Economic sector No. of No. of Union employees declared density union members (%)
Transport and 148 800 85 700 58.00* communications
Public utilities 10 562 3 621 34.28
Conununity services 361 400 116 259 32.16
Conunerce, wholesale 638 589 66 364 10.39 and retail trade, hotels and catering
Construction 88 877 15 089 16.98
Manufacturing 847 194 63 615 7.15
* 1979 figures.
Source: Census and Statistics Department, Hong Kong monthly digest of statistics, June 1983, tables 3-1, pp. 5-6 (fourth quarter, 1981); Registrar of Trade Unions, Annual departmental report, 1981-82, table 3; David Lethbridge and Ng Sek-hong, "The business environment and employment", in David Lethbridge (ed.), The business environment in Hong Kong, Hong Kong: Oxford University Press, 2nd edition, 1984, table 3.9, p. 87.
These two sectors employ predominantly blue-collar workers, supply strategic services and largely comprise established large-scale enterprises. They have perforce been one of the key bases for the domestic labour movement, even during the heyday of the 1920s. The transport workers apparently represent the vanguard of the movement among the semi-skilled work'ers. For example, two of the largest employees' unions in Hong Kong, the Hong Kong Seamen's Union (with a declared membership of 19,605 in December 1984) and the Motor Transport Workers' Union (with a comparable membership of 26,533), are both left-wing unions which organise the two major groups of transport workers, the maritime seamen and motor transport workers. Among the public utilities, on the other hand, it is more common for the unions to be organised at the enterprise level and to bear the hallmark of the corporation rather than being based upon broader occupational or industrial boundaries. The high concentration of skilled craftsmen in the utilities (such as fitters, electricians and mechanics) helps to explain the relatively high ratio of union participation in this sector, since the craftsmen in their guild tradition were very active during the earlier phase of the local union movement.
By contrast, the manufacturing sector is far less organised. Industry in Hong Kong, despite its rapid growth to become the largest employing sector, is still relatively young, with an established history of just about three decades. Inter-industry variations in union density, as shown in table III.4, exemplify to a certain extent the impact of such factors as the history of the trade and its composition in terms of attributes such as sex and skill level. Union densities are, by comparison, high in the old industries pre-dating the Second World War: as in shipbuilding and repairs, transport equipment, tobacco, medicine, furniture, woodwork and printing. Most of these trades depend upon male skilled or semi-skilled workers. Conversely, those new modern industries which employ a high percentage of young, female, semi-skilled labour, such as electronics and garment-making, have remained poorly organised.
IV. EMPLOYERS' ORGANISATIONS AND PROFESSIONAL INSTITUTES
IV.l Employers' organisations
The collective power of employers in Hong Kong is almost as loose as that of the workers, since both are weakly organised. The ineffectiveness of the labour movement implies the relative absence of any formidable pressure on the Hong Kong employers to organise to meet the concerted challenge from the (unionised) workers on such activities as collective bargaining. Thus, the number of employers' associations registered with the Registrar of Trade Unions has always been limited. In 1976, there were 44 associations representing 4,848 firms and, by the end of 1984, this strength had dropped to 33 associations claiming
Table III.4 Union membership by selected manufacturing industries, 1981
Industry
Food, beverages and tobacco
Textiles, garments, footwear and leather
Furniture and wooden products
Printing and paper products
Plastics, chemicals and petroleum products
Non-metallic mineral products
Basic metals
Fabricated metal products
Other manufactures
Total
No. of employees
22 366
383 985
17 698
40 229 101 863
4 855
4 682 287 147 33 072 905 899
Source: Registrar of Trade
No. of declared union members
2 382
26 577
3 978
6 316
6 928
101
1 232 15 336 750 63 615
Union density(%)
10.65
6.75
22.48 15.70 6.80
2.08
26.31 5.34 2.27 7.02
Unions, Annual departmental
report, 1981-82 and 1979-80, table 2.1, pp. 50-1; Census and Statistics Department, Hong Kong monthly digest of statistics, Apr. 1983, table 3.1, p. 4 (fourth quarter, 1981); David Lethbridge and Ng Sek-hong, "The business environment and employment", op. cit., table 3.10, p. 87.
a total membership of 3,080 -while the total number of business establishments rose during the same period from 105,213 to 157,629.
The majority of these registered employers' unions operate in the traditional industries such as wood/ivory carving, furniture-making and printing. Besides, many of them behave like "mutual aid" friendly societies, rather than collective organisations which specialise in labour-management matters. At best, these employers' unions, mostly based on a specific industry or trade, are involved in mutual exchange of information and policy co-ordination in respect of wage rates, product prices and other aspects of the markets where they operate in common.
Outside the framework of the Trade Unions Ordinance, there exist other organisations of private business interests which also perform industrial relations functions with varying degrees of vigour. Thus, a number of the major industries are organised by trade or manufacturers' associations which are registered either as societies or limited companies instead of under the Trade Unions Ordinance. Industrial relations, labour and employment matters merely constitute one dimension of their broad concern to promote members' common business and trade interests. Similar to the situation in the labour movement, these trade organisations proliferate along ethnic, dialect and industrial lines.
However, there are several major organisations of business and employers' interests which cut across different industries and trades in recruiting their membership. Amongst these are the Employers' Federation of Hong Kong, the General Chamber of Commerce, the Federation of Hong Kong Industries, the Chinese Manufacturers' Association, the Chinese General Chamber of Commerce and the American Chamber of Commerce. These leading employers' bodies all of which are registered outside the Trade Unions Ordinance, save the Employers' Federation have been known to be influential spokesmen for employers' interests. For this reason, they are consulted regularly by the Government on public policy relating to, for example, labour legislation and administration.
The upheaval of the 1967 civil disturbance led the Employers' Federation, the General Chamber of Commerce, the Chinese Manufacturers' Association and the Federation of Hong Kong Industries to form together in late 1967 a joint
inter-association consultative body specifically on labour relations matters, known as the Joint Associations Committee on Employer/Employee Relations. Its functions are to provide a common employer front, primarily in connection with labour legislation and other social issues related to labour, so as to protect the legitimate interests of both the employer and the employee. However, it is only a consultative body without any prerogative to represent any of the constituent organisations or their members in any collective bargaining activities or decision-making.
IV.2 Professional institutes
The growing specialisation and importance of human resources management in work organisations have fostered the development of professional bodies in the area of personnel management. Hong Kong witnessed a major impetus to the professionalisation of this occupational field in the previous decade -as a consequence of several forces that developed in the 1970s and thereafter. The first is the growing sophistication of �P the workforce. Hence, second-generation employees, less subject to the "refugee mentality", better educated and informed, and accordingly more articulate and more ambitious, have assumed an increasingly important position in the labour market, both quantitatively and qualitatively. Secondly, sustained labour shortages and the rise in wages owing to the rapid pace of economic and industrial development have also raised substantially the premium of manpower as a factor of production, so that it is ever more imperative for enterprises to rationalise the acquisition and use of human resources. Thirdly, the arrival of the American and other foreign multinationals, conspicuous since the late 1960s, has also created an external stimulus in bringing about these changes, given their role not only as overseas investors but also as practitioners of advanced technology that included modern managerial skills and organisational techniques. In the fourth instance, the development of labour administration and the expanding involvement of public policy in labour and social issues, noticeable in the relatively heavy programme of labour legislation, is also conducive to the higher p.:-iority most enterprises now place upon personnel management.
The movement to organise among personnel professionals has today resulted in the establishment of three bodies which are addressed to a more or less common potential membership basis, a divided situation which is probably reminiscent of the fragmentation typical of the trade unions and employers' association described earlier. The first is the Hong Kong Institute of Personnel Management, founded in �P 1977 largely on the model of its British counterpart (the United Kingdom Institute of Personnel Management), achieving by mid-1981 a membership of 418 plus a contingent of 112 student members. Its professed objectives are to develop and maintain professional standards of personnel management in Hong Kong, and to contribute to the promotion of good labour-management relations and to the productivity and profit of business enterprises. A second body of a broadly comparable nature is the Hong Kong Industrial Relations Association, formerly organising personnel managers working in one of Hong Kong's key industrial districts -Kwun Tong. This geographical reference was dropped in 1978, when the organisation took up its present name, although its membership today still bears significant vestiges of this district heritage. The third body, the Personnel Management Club, is an appendage to the Hong Kong Management Association, itself a statutory body created to promote the development of local managerial resources generically in all fields of management. The Club, with more than 100 members, has played a sponsoring role in the inception of the Hong Kong Institute of Personnel Management and, as such, still maintains close ties with the latter.
Notes
The Registrar can refuse registration only where:
(i)
there occurs non-compliance with the Ordinance;
(ii)
the purposes of the union are unlawful; or
(iii) the proposed name is the same as, or so similar to, that of another union as to be misleading.
See Trade Unions Ordinance, Ch. 332, section 7(1).
2
Up to the present, there have been no reports of breaches of these safeguards of union rights made to the Labour Department, which is administratively responsible for their enforcement. It must be conceded that it is exceedingly difficult to establish at law an unequivocal act of anti-union discrimination as defined, for a covert intent to discriminate can always be disguised under other
manifested causes, especially since there are absent from Hong Kong any statutory rules on "unfair dismissal". Nevertheless, the law has the effect of declaring a note of legal as well as moral disapproval of such discriminatory acts, thereby reinforcing the legitimacy of union membership and participation by the individual employee. Such legislative measures complement the actual strength of the trade unions themselves in upholding the efficacy of these positive individual union rights.
3 H.A. Turner et al., The last colony: But whose?, Cambridge: Cambridge University Press, 1980, p. 33.
4 ibid., pp. 150-151; pp. 158-162.
For such treatments, see Joe England, "Industrial relations in Hong Kong", in Keith Hopkins (ed.), Hong Kong:_ The industrial colony, Hong Kong: Oxford University Press, 1971, pp. 234-248; also Joe England and John Rear,
C~h~i~n=e=s~e~l=a~b~o~u=r~_u=n~d~e~r~~B~r~i~t~is~h--~r~u~l~e, Hong Kong: Oxford University Press, 1975, Ch. 4.
Turner et al., op. cit., pp. 13-14.
This compares with the overall 20.7 per cent unionisation for the entire labour force of the economy in 1979.
8 Turner et al., op. cit., p. 26; see alsop. 25.
England and Rear, op. cit., p. 320.
CHAPTER IV
COLLECTIVE BARGAINING AND INDUSTRIAL CONFLICT
I. LEGAL NORMS ON COLLECTIVE BARGAINING
In Hong Kong, there are no mandatory procedures laid down in the statute book requiring private sector employers to recognise employees' unions and to bargain with them in good faith. Neither are there any legal provisions on the mechanism whereby the bargaining unit and its bargaining agent may be determined by an electoral system. The introduction of such measures on a compulsory basis has been generally considered undesirable, inasmuch as they might trigger inter-union conflict between the left-wing and right-wing sectors. Moreover, given the low degree of union consciousness and organisation in the modern industries such as electronics and clothing, it is doubtful how supportive these bargaining arrangements, if legally prescribed, would be of voluntary labour-management joint negotiations.
Granted such a "voluntaristic" approach of the Government towards collective bargaining, it may be said that no specialised official agencies exist to advise employers and employees alike on their orderly conduct of joint negotiations over procedural and substantive norms relating to collective labour relations. Nevertheless, the Labour Department is known to have organised training courses on trade unionism and collective bargaining during the 1960s in an educational campaign to promote "responsible" labour organisations and their administration. Yet these endeavours have not continued, primarily because of an apathetic response from trade unionists and employees. The Department continues to provide, via its Labour Relations Service, a conciliation service to the parties to employment disputes and advice to
87
both employers and employees on the improvement of enterprise-specific industrial relations. In 1976, the Department published an advisory document, entitled the "Code of labour relations practice", which set out voluntary guide-lines to workers and management as regards the ways and principles whereby industrial relations can be harmonised.
Following the British tradition, a collective labour-management agreement resulting from voluntary bargaining is legally not enforceable in any court of law. As in the United Kingdom, any specific terms contained in the collective agreement can be enforced at law provided that they are incorporated, either expressly or by implication, into the individual contract of employment concerned.
II. THE PRACTICE OF COLLECTIVE BARGAINING IN HONG KONG
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