Can Hong Kong afford to follow the path of Europe?

Harbour Times (P11, 2013.05.10)

 

“Labour Isn’t Working”, said Ms. Margaret Thatcher, leader of the Conservative Party in 1979.  She became the first female Prime Minister in UK that year beating  the Labour Party. Under her leadership, the British government loosened a broad range of regulations, reduced the power and influence of trade s, pushed for a freer market and eventually saw the economy take off.

The tenure of the Iron Lady proved that a controlling hand from the government and strong trade doesn’t secure jobs for the workers, but quite the opposite:  it leads them to the unemployment abyss.

In Hong Kong, trade s and politicians are advocating more regulations in the name of “protecting labour rights”. Yet all that we see is the enhancement of their own influence, with regard to their political bargaining powers and reputation. Legislation like minimum wage forced all workers, regardless of their own will, to enter the market with a less competitive and less attractive price tag.

Ever since the Industrial Revolution in 18th Century, developments in machinery have shown that machinery is often advanced and cheap enough to replace human labour. If workers are no longer comparatively productive and effective, then job loss is not an idle threat:  it is a tragic reality.  

Nevertheless, is it replacement of human labour with machine capital inevitable?  Will robots replace the work force?

Not necessarily. When making the comparison with machines, I believe that employers are far more willing to put invest in people. One advantage that human has that a cold machine cannot compete with: flexibility.

Take the classic Hong Kong tea lady for example. She alone can take care of all the company chores such as cleaning, coffee making or even photocopying. One can count on the improvement of performance with time and proper training. But how many robots would one need to replace all theses functions, and at what cost, in terms of time, money and energy?

However all the benefits can only be realized if s lack the strength to block the free flow of labour and the full exercise of the human flexibility. Some might argue, “Legislature and are there to protect the workers’ rights. What evidence do you have to say otherwise?”

Certainly there is no lack of evidence, especially in the most impaired EU nations. France, for instance. Statistics have shown that only 8% French workers actually belong to a , yet the power of the Labour Party is still insurmountable. Why?

Here are the reasons. First, the 8% dictate terms to the other 92%, stopping people from working even if they want to. Secondly, members are in charge of public facilities and services, such as education, transportation, and electricity. Therefore once the strike is in action, the damage can be fatal enough to paralyze the entire country.  This puts France onto the notorious champion seat for being the most destructive strike organizer in the world.

In fact, apart from numerous strikes, companies or industries controlled by the are also labeled as unproductive, lazy, and anti-competitive.

In 2008, the Sarkozy government seemed to be ambitious enough to address France’s low productivity.  They generated several proposals.  However none of them has been put into effect.

For example, the number of taxi licenses in Paris has not changed since 1924. Sarkozy, like any other reasonable man, suggested increasing the licenses.   Unsurprisingly though, the fearful taxi drivers went on strike. They managed to stop all transportation in Paris, and killed the proposal as well.

Another effort was made to put simple Over-The Counter (OTC) drugs, like headache pills or patulin,  in every retail shop so that the afflicted would  have easy access to the medication without a prescription from a pharmacist. Again, this simple and obvious proposal was stillborn under the pressure of the pharmacist .

Is the country possessed with a peculiar form of political insanity? No, they are not insane; that is the peculiar culture of the French. This aversion for  the sensible has greatly amused and outraged the business people from other countries.

One example happened at the beginning of this year when M. Arnaud Montebourg, Minister of Industrial Renewal, invited Maurice Taylor, CEO of Titan International, a tire and wheel manufacturing company to come visit a dying French tire company, hoping his US firm could act the white knight by buying the firm.

After visiting this company, Mr. Taylor replied with the following email:

”I have visited the factory a couple of times. The French workforce gets paid high wages but works only three hours. They get one hour for breaks and lunch, talk for three, and work for three. I told this to the French workers to their faces. They told me that’s the French way!” says an excerpt from the letter.

“How stupid do you think we are?Titan is the one with the money and the talent to produce tires. What does the crazy have? It has the French government. “

This email ended up spreading like wildfire on the Internet.  The French tire company ended up in bankruptcy.  All the workers lost their jobs.

Over the years, the French government has been giving in to s by adding more and more labour laws and welfare allowance, but we see no benefits to the economic side or to society as a whole. On the other hand, in 2005 big riots of French youth was triggered by the skyrocketing unemployment rate, which was at about 20% then and now up to 30% in 2012.

HK has been developing quite successfully in past decades thanks to its relatively flexible labour policies and moderate power. However with recent strikes and politicians promoting the French model, we have reason to be concerned.

It only took France 30 years to undermine their economy. Fortunately with the natural resources and leftover from the colonial time, the French workers can still live on the government welfare.  But living conditions deteriorate daily . Yet Hong Kong has only been rich for the last short 60 years. Without the heritage and natural resources to squander, the path of Europe, can we really afford it?

 

By Peter Wong, Executive Director of the Lion Rock Institute

Translated by Fay Cain