$Unique_ID{COW02797} $Pretitle{294Q} $Title{Papua New Guinea Chapter 3. Postindependence} $Subtitle{} $Author{Mark Easton} $Affiliation{HQ, Department of the Army} $Subject{new percent government party papua guinea national coalition population schools} $Date{1984} $Log{Inside Spirit Houses*0279701.scf Outside Spirit Houses*0279702.scf } Country: Papua New Guinea Book: Oceania, An Area Study: Papua New Guinea Author: Mark Easton Affiliation: HQ, Department of the Army Date: 1984 Chapter 3. Postindependence Perhaps the most significant development during the first year of independence was the settlement of the Bougainville crisis. Bougainville's leaders had set September 1, 1975-two weeks before Papua New Guinea's planned independence-as the date on which Bougainville would secede as the independent state of the North Solomons Republic. They sent Father Momis to present their case to the UN, but he received no encouragement there. In response, just after independence, the Papua New Guinea government abolished the Bougainville provincial government, freezing its assets and trying to isolate its leaders. In late 1975 and early 1976 the Bougainvilleans moved toward violence, and Somare was put under intense pressure to respond in kind with the armed forces. In August 1976, however, Somare and a few trusted advisers flew to Rabaul, where they were able to avoid a final violent confrontation and work out a satisfactory agreement with the Bougainville representatives. This amounted to giving a newly established provincial government local taxing power sufficient to provide for community schools and recreation and local and village government and courts. In addition, the provincial government received a say in the management of major resources. Bougainville, or North Solomons, as was its preferred name, was given a grant of K5 million (for value of the kina-see Glossary) to establish the provincial government, to which Alexis Sarei was elected premier. This led to high expectations in other provinces that they too could establish local administrative bodies, and the August 1976 budget-the first after independence-included provisions for a number of individual grants to the provinces, at K50,000 each, to initiate planning for their respective provincial governments. An additional K100,000 was provided to each to pay for rural development projects, and in January 1977 the budget allotted to all provinces 1.25 percent of the value of their exports. Father Momis was given the portfolio for decentralization after the 1977 elections to the legislature-renamed the National Parliament at independence. Organic laws and the necessary amendments to the Constitution to allow for provincial government were passed shortly thereafter. By late 1977 nine of the 20 provinces had interim or fully elected provincial governments in operation, and the Somare government fully supported decentralization. At the same time, Father Momis, who had done so much to promote provincial government, became concerned about allegations of financial mismanagement in certain provinces and prepared legislation giving the National Parliament the right to suspend provincial governments. The Pangu Party organization had weakened somewhat by the 1977 elections, but Somare himself retained sufficient power to help selected Pangu Party candidates, and he campaigned widely. Of the 82 candidates the party endorsed, 38 won seats in the National Parliament. People's Progress Party leader Julius Chan was able to capitalize on his role in keeping the national currency - retaining its value even after Australian devaluation. His party increased its representation in parliament to 20. Guise resigned as governor general to campaign and was succeeded by another Papuan, Tore Lokoloko. The United Party sought an alliance with Guise as its leader, giving rise to rumors of an anti-Somare coalition. Somare prevailed, however, assembling a coalition with the People's Progress Party, nine independents, and two members of a regional party in the Gazelle for a total of 69 supporters. The contradictions within the opposition were significant. The opposition consisted of secessionists from the Papua Besena Party, regionalists such as John Kaputin, and members of the United Party, which continued to be staunchly committed to national unity. The opposition was also split between radicals and conservatives, and certain of its members had strong personal animosities. Similar divisions also were apparent to a lesser degree in the ruling coalition. The Pangu Party was more radical than its partner, the People's Progress Party, and within the Pangu Party itself there was a strong division between radical and moderate wings. Lacking the cement of a cohesive ideology, portfolios were again divided by party; the cabinet was then expanded to 22 ministries to allow for the broadest regional basis. In 1978 tensions within the ruling coalition were heightened when Father Momis and some of the more "radical" members of the Pangu Party convinced Somare to propose restrictions on the financial activities of ministers, senior public servants, and other officials in order to control apparent conflicts of interest. Somare's coalition partner, Chan, criticized the measures as being too severe, and the new opposition leader, Iambakey Okuk, asserted that the measures were contrary to Highlander views of leadership, which required that "big men" (traditional leaders) be wealthy and involved in business. Somare eventually withdrew the proposal but thereafter consulted less with the People's Progress Party and later even downgraded its portfolios. In November 1978 Chan withdrew his party from the coalition. Somare then moved to co-opt part of the United Party, offering to give the faction five portfolios if it would enter the coalition. Once again he was able to defeat a vote of no confidence, although at the price of losing some of his most talented ministers, who were members of the People's Progress Party. Somare at times had indicated his desire to give up the ceaseless and exhausting task of trying to keep the governing coalition together and to run the country. A number of cabinet ministers habitually defied directives, and politicians from the various parties engaged in continuous scheming to form a new government. His problems grew severe in 1979 and early 1980. The left wing of the Pangu Party sought to see one of its members replace him, and the opposition strove to recruit parliamentarians to form a new coalition while mounting a systematic attack against alleged government inefficiency, corruption, and waste. A breakdown in law and order in the Highlands in 1979 resulted in the government's promulgating emergency decrees that were interpreted as anti-opposition because the opposition had strong Highlander support. In another incident the justice minister, who had challenged the authority of the Supreme Court, was sentenced to eight months in jail for contempt, only to be released by Somare-upon which four of the seven Supreme Court justices resigned. In January 1980 Somare again reshuffled the coalition, dropping one minister and changing the portfolios of Father Momis and Kaputin. As a result, a majority of United Party members as well as Father Momis and Kaputin left the government, the latter two forming a new party called the Melanesian Alliance. Composed of seven members from North Solomons and East New Britain provinces, the Melanesian Alliance then began negotiations with the opposition to form a new government. On March 11, 1980, Chan took over as prime minister, defeating Somare by a vote of 57 to 49 in the National Parliament. Okuk became deputy prime minister. The new coalition was largely drawn from groups having regional bases (the Melanesian Alliance, the Papua Besena Party, and the National Party) plus a number of dissidents from the former coalition, including the People's Progress Party and part of the United Party. No attempt was made to designate a minister from each province, but the coalition achieved good regional balance. Party discipline, however, remained weak. International economic decline undermined the hopes of the new government, which became associated in the public mind with low copper, copra, and cacao prices and slightly declining Australian grants. Chan was unable to control his unruly deputy prime minister, Okuk. The purchase of a ministerial jet for K6 million was a highly unpopular move in the increasingly difficult economic situation. Chan, however, was viewed effective as a consensus leader and was praised as well for fiscal responsibility under pressure. The Chan coalition did badly in the 1982 elections, all coalition partners except the Melanesian Alliance losing strength. A new party, the Papua New Guinea Independent Group, was founded and led by former defense minister Ted Diro. The campaign revolved around Somare, whose better organized and financed Pangu Party won 50 seats. The Melanesian Alliance won eight seats, but two members later defected to the Pangu Party in the postelection coalition-building process. The Papua Party won three seats; the Papua Besena Party disappeared. The People's Progress Party held 14 seats, the National Party 13, and the Diro-led independent group seven. On August 2, 1982, Somare was elected prime minister, defeating by a vote of 66 to 40 the outgoing coalition's nominee, Father Momis. The new government was composed of the Pangu Party, independents or independent-Pangu members, and the United Party. The opposition was led by Diro and was composed of Diro's independents and members of the National Party, the Melanesian Alliance, the Papua Party, and the People's Progress Party-the last maintaining an independent position from the formal opposition. The new government received the first unambiguous mandate from the people of Papua New Guinea in a decade-perhaps the first true mandate ever. The Social System The 1980 census enumerated a total population of 3,006,799. The rate of increase was estimated at 2.8 percent per year over the 1980-85 period. Although complete population data were not available as of mid-1984, it was estimated that approximately 45 percent of the population was under the age of 15. Over 98 percent of the population were indigenous Melanesians, the remainder being made up of expatriates-mainly from Australia, Britain, and New Zealand-and small communities of Asians, Polynesians, and Micronesians. The Australian influence was noticeable, especially in urban areas where social clubs and sports teams-rugby and Australian rules football-were common. The estimated rate of urban growth has ranged from 6 to 10 percent annually since the mid-1970s. Many migrants could not find employment, and shantytowns have grown up around all major urban centers. Services were being extended slowly to these settlements, but urban development has been held up by the refusal of landowners to sell land to the government. Increasing urban crime rates have been blamed on urban overcrowding. For the most advantaged level of society, however, the towns continued to offer the best living conditions, services, and educational facilities. Under these circumstances educated Papua New Guineans were increasingly drawn to them and were fast forming a new urban elite. Traditional Society Most scholars believe that the Melanesian population can be divided into two linguistic groups. The first comprises descendants of the original Australoid migration who speak one of a number of languages-grouped into a catchall category called Papuan-that have become so diversified that no relationships to any other past or present-day language can be distinguished. The second group is formed by descendants of later migrants who speak languages belonging to the Austronesian language family. Generally, most Papuan speakers are found in the New Guinea Highlands and most Austronesian speakers in the coastal areas and the islands, but exceptions to this pattern are common. There has been considerable mixing of the groups, and the divisions are often not clear-cut and by no means coincide with clearly defined cultural distinctions. In the minds of most of the nation's residents, the most significant question in dividing the population is not what language one speaks but whether one is a Highlander or a coastal dweller. Customs and traditions vary from region to region and often from village to village, making it impossible to make generalizations that hold true everywhere. Within the wide variety of traditions, however, repetitive patterns do exist. A vast majority of the population have a tradition of living in settled rather than nomadic communities. In the traditional society most are grouped into small, discrete political units that display little in the way of complex or permanent organization. Although trade, intermarriage, and warfare have created relationships between residents of different communities, most persons feel a common bond only with fellow residents of their own villages, who are usually connected by ties of kinship, language, and right to use settlement land. Suspicion of those outside the community of birth has historically been great and has presented an obstacle to developing a sense of national unity. Traditional societies tend to be male-dominated and polygamous, women holding low status and often being viewed as a kind of property. Among urban elites, especially in Port Moresby, patterns of male dominance were slowly retiring, however, in the mid-1980s. Several female members of parliament have wielded considerable political influence, and although they were still few in number, women were beginning to enter the professions and middle-management levels of government. The country had an active national council of women, which had functioning chapters in a few of the provinces. The Young Women's Christian Association has been active in Port Moresby and a few other cities. Among a few groups, matrilineages have exercised considerable power, especially over the disposition and use of clan land. Except for a few very rare exceptions, achievement rather than birth is recognized within the traditional society as the primary qualification for political leadership. Villages and clans are usually dominated by a "big man" or a group of big men, who are sometimes hereditary chiefs but more often individuals who have attained power and influence through ownership of property. Big man status could also be achieved by the traditional clergy or cult leaders and by those having leadership positions in such institutions as agricultural cooperatives, trade unions, local councils, the police, the army, and the public service. Although in practice most societal groupings decide important matters by consensus, big men have usually played a major role in shaping the outcome. Structures such as these have tended to be hidden in Port Moresby and other urban areas but nevertheless exist and are elements of the social order. An important element of traditional culture that continues to permeate the modern sector is the wantok system. Wantok (meaning one-talk or common speech) by extension refers to a clansman, relative, or friend. The wantok system involves people in an intricate network of rights and obligations extending well beyond the family. For a person who has progressed materially, the wantok system creates an obligation to assist other members of the group with gifts, money, housing, or jobs. The system is fundamental to the entire social system and provides individuals with important emotional, financial, and physical insurance. More than 700 languages are spoken in the nation. After World War I the Australians attempted to create a common language form by designating Motu-a Papuan language widely used in the Port Moresby area-as the official language of the Territory of Papua. Usage fell off with the advent of World War II. An earlier attempt in German New Guinea to create a common medium of communication proved more successful. It involved the introduction of pidgin, which is an artificial medium composed of a mixture of English, German, and Malay words using indigenous syntax. Pidgin has tended to supplant Motu in recent years; an estimated 500,000 people used this simplified speech in the early 1980s. English is spoken by the relatively small but growing group of educated Papua New Guineans. Religion Before Western contact, villagers inhabited a universe in which they formed an integral part of the natural environment and did not distinguish between what Westerners would call objective reality and illusion or imagination. Feeling themselves subject to forces they could not control, they sought to use the traditional power of magic to ease their way. In many groups each natural element was seen to have its own creator, and only with the help of the proper deity would crops grow, enemies be avoided or destroyed, or trading expeditions succeed. To tap this power one had to use the correct rituals taught by the deities in ages past. The spirits of ancestors continued to live side by side with the living, bound to the ancestral lands and guiding the affairs of the current generation. Even the proper rituals could be thwarted, however, by others' use of sorcery. Should any harm come to a villager or his kin by sorcery or other means, a "payback" response to either the perpetrator or his kin would be called for to avenge all injuries. This sometimes resulted in a chain of retribution and counter-retribution that could last for generations until a settlement, marked by a ceremonial gift exchange, could be reached. Conversion to Christianity-over 95 percent of the population was estimated to be made up of professing Christians as of 1980-has had a profound impact on the nation. This was evident not only in religious affairs but also in secular matters. Missionaries-both Catholic and Protestant-were the single most powerful force bringing Western ideas and culture to local inhabitants. In many areas mission schools, clinics, hospitals, and social welfare organizations were the only institutions available well into the 1960s. Christianity. The London Missionary Society began work in the southern half of the main island in the 1870s, eventually establishing a training school at the mouth of the Fly River. By 1890 Methodist missionaries were active on New Britain, New Ireland, and the main island. Methodists entered the Highlands as they were opened up in the 1930s. Lutheran missionaries began work in German New Guinea in 1886. The initial German effort was later augmented by Lutheran missions from the United States and Australia. A mission of the Missouri Synod Lutheran Church established the Wabag (Good News) Lutheran Church in the Highlands among the Enga peoples in 1948. During the early 1980s Lutherans made up the largest Protestant denomination in the nation. They were followed by the adherents of the United Church of Papua New Guinea and the Solomon Islands, which was formed in 1968 as a union of Presbyterian, Methodist, and other groups. Numerous other denominations and interdenominational faith missions were also present, including the Anglican church and the Seventh-Day Adventists. Protestants accounted for about 56 percent of all professing Christians. [See Inside Spirit Houses: Sepik River area provide a glimpse at the vividness of indigenous religion. Courtesy Government of Papua New Guinea.] [See Outside Spirit Houses: Sepik River area provide a glimpse at the vividness of indigenous religion. Courtesy Government of Papua New Guinea.] Roman Catholic missionaries first arrived in the Bismarck Archipelago in 1847 but made few inroads until the arrival of the Sacred Heart missionaries in 1881. In 1889 they established the vicarite of British New Guinea. By 1980 there were three archdioceses and 11 dioceses as well as an additional diocese on Bougainville that also served parts of the Solomon Islands. Indigenous vocations were still weak; the first indigenous priest was not ordained until 1937, and he later became the first indigenous bishop. In 1970, the latest date for which figures could be located, there were only 15 indigenous priests but 475 expatriate priests. Catholics accounted for about 32 percent of professing Christians in 1980. A major event for the Roman Catholic population was a papal visit in early 1984. Cargo Cults. A long series of movements that combine traditional religio-magic elements with Christian and Western secular themes have been collectively refered to as cargo cults because their adherents believed in the imminent arrival of some tangible goods or "cargo." Such movements were first observed in the late nineteenth century in areas experiencing a serious disruption of traditional life, usually caused by the impact of Western culture. They were especially prolific in areas where military campaigns occurred during World War II. More than 115 distinct cults had been identified by the mid-1970s. Cargo-thinking has continued to be endemic in many areas of the nation and promises to remain so until economic development, education, and improved communications expose the villagers to the outside world and help them understand that there are no shortcuts to Western knowledge and possessions. Cargo cults have as their objective the betterment of traditional groups through the acquisition of Western technology, goods, and wealth through magic means. They are often messianic or millenarian in character, prophesying a future event that must be prepared for in advance. When that event does not take place, the cult usually subsides, sometimes to resurface under new circumstances. Cargo cults are characterized by ecstatic singing, dancing, communal meals, and spirit possession. Adherents may experience auditory and visual hallucinations. Although Western observers have often regarded cargo cults as a temporary aberration, they are in reality a manifestation of the fundamental sense of deprivation and inadequacy experienced in the face of the superiority of Western possessions. Cargo cults also reflect an incapacity to comprehend how such possessions-or cargo-were obtained or made. Under these circumstances cultists reach the conclusion that they have been deprived of such possessions through either some original sin, accident, a conspiracy by whites, or a combination of all three. Assuming that such gifts come from the deities, cultists conclude that cargo would be forthcoming if one knew and performed the proper rituals. These rituals have taken the form of singing together (in emulation of hymn singing), writing (making out invoices), and a variety of other devices. When these fail, frustration can be extreme, often resulting in violence. Education and Health Providing adequate educational opportunity has been a priority of the government since independence. The educational plan of 1976 set a goal of providing all children with six years of primary education and between four and six years of secondary education. The 1983 budget allocated 19 percent of total public expenditures to education-an amount equal to 5.4 percent of the gross national product and 50 percent higher than expenditures in 1979. The preindependence system, however, was a totally inadequate framework on which to build-many areas relied almost entirely on mission schools. Despite having made considerable progress, the government had been unable to meet its goals as of 1984. The school system was controlled by the government through the Department of Education and embraced government schools and those local and mission schools that met acceptable standards. The government provided salaries for all certified teachers, whether from missions or public schools. It also provided classroom supplies and subsidized approved building programs for high schools, technical colleges, and teachers colleges. In the early 1980s almost 11,500 teachers were employed by the government, including about 1,300 expatriates, most of whom taught in national high schools. Children began primary education at age seven. In 1982 total enrollment at this level was 319,000, but rates of attendance varied across the nation, averaging 64 percent in 1980. In major cities virtually all eligible children were enrolled in primary schools; in other areas enrollment varied from 7 percent in Eastern Highlands Province to 50 percent in East New Britain Province. Government plans called for 92 percent of seven-year-olds to be enrolled by 1985. Ideally, primary-school children passed into one of the nation's 94 provincial high schools, but as of 1982 only 13 percent of the eligible age-group attended such schools. Qualified students then attended one of the four national high schools (senior high schools) located at Sogeri, Passam, Aiyura, and Keravat. In 1982 about 1 percent of the eligible group did so. Tertiary education was available at the University of Papua New Guinea at Port Moresby, which opened in 1966, and at the University of Technology at Lae. The Vudal Agricultural College on New Britain offered a three-year course in which students spent one year at agricultural field stations. Nine teachers colleges, two run by the government and seven run by missions, trained primary-school teachers. Secondary teachers trained at the Goroka Secondary Teachers College-a part of the University of Papua New Guinea. There were also more than 140 technical, vocational, and other specialized training schools. Many Papua New Guineans went abroad to take advantage of advanced and specialized training-most to Australia but some to New Zealand, Fiji, the United States, and Western Europe. The government faced a major challenge in providing sufficient employment opportunities for the educated. The Ministry for Health administered government hospitals, clinics, and public health facilities. It also coordinated closely with church missions that provided health services and hospital care. Four major hospitals-at Lae, Port Moresby, Goroka, and Rabaul-provided specialized care facilities on a regional basis and also served as centers of routine care for their provinces. Each of the remaining 16 provinces had its own provincial hospital; many of these had been established since the early 1970s. A Lutheran mission hospital provided care for Enga Province, and the Bougainville copper mine established a hospital at Arawa that served North Solomons Province. Hospital charges were based on ability to pay; most persons were treated for free or a nominal fee. The government has instituted a major malaria eradication program, which entailed the establishment of malaria-free areas and reached approximately 60 percent of the population in the early 1980s. Malaria remained a serious national health problem, however. Other prevalent diseases included tropical ulcers, tuberculosis, and leprosy, but the incidence of the latter two appeared to be dropping. It was estimated that during 1980 life expectancy averaged 50.6 years and that the 1983 infant mortality rate was 95 per 1,000 births. The Economy For centuries the people of Papua New Guinea were engaged almost exclusively in subsistence agriculture, fishing, hunting, food gathering, and the production of handicrafts. A few animals, such as pigs and dogs, were domesticated, and some small-scale trading for ornaments, specialized foods, canoes, and other traditional goods took place. In the mid-nineteenth century, Europeans were attracted to the islands for their tropical forest products, especially copra and cacao, and large plantations were developed. Village production was also encouraged to meet growing European needs. The next hundred years saw the development of a plantation economy dependent on copra, cacao, rubber, tea, and coffee. Minerals exploration was also inaugurated, and the country experienced gold rushes in the 1880s and 1930s that presaged the importance minerals were to have in the country's future. Much of the plantation economy was destroyed during World War II but was rebuilt during the 1950s and 1960s. Australia made increasingly large budgetary transfers to pay for the cost of a growing government administration, which was engaged in a major social, economic, and political transformation of the islands in preparation for eventual independence. Small-scale manufacturing and commerce and massive enclave mining were added in the years prior to independence. These relatively recent developments, however, should not obscure the poor underlying economic base of Papua New Guinea. In 1966, for instance, some 940,000 people were still wholly dependent on subsistence activities for their livelihood. Some 790,000 had moved from total reliance on subsistence agriculture; to a mixture of cash cropping of tree crops and subsistence agriculture; 420,000 were entirely or mainly engaged in cash cropping. Fewer than 125,000 Papua New Guineans were in the "wage" work force. Nearly two-thirds of Papua New Guinea's economic activity at the time was sustained by Australian government spending and grants-in-aid that totaled almost $A100 million annually. Most aspects of the modern sector were under expatriate control. In 1968 the Australian administration published a five-year plan that called for maximizing the economic development of Papua New Guinea. The emphasis on rapid economic development per se was criticized by several Australian economists as a policy that would inevitably minimize the role of Papua New Guineans and maximize expatriate control over the economy. The policy's critics estimated that at the end of the plan some 52 percent of all commercial agriculture, 90 percent of all commerce and industry, and practically 95 percent of business profits would remain in the hands of foreigners and that by 1980 the situation would not be changed greatly. Australia, however, was faced with the practical problem of establishing the economic foundation for an independent Papua New Guinea, and time was running short. Consequently, the Australian administration entered into an agreement in 1967 for the establishment of a massive expatriate-managed copper project (Bougainville Copper). Although causing political difficulties, the mine produced considerable income. By 1978 some 20 to 25 percent of GDP came from this one copper mine, an indication of the project's commercial success. From 1972 to 1976 the first "national government" formed by Somare, with the aid of Australian advisers, established strong economic institutions and policies. These included a planning office, a budget priorities committee, budget controls, the Central Bank in Port Moresby, international accounts, a new national currency, a clear reserve position, exchange regulations, and policies and institutions devoted to development and foreign investment. All this progressed simultaneously with the localization of the public service. The country was fortunate to receive generally high international prices for its major export commodities from 1975 to 1978. The Australian government agreed as well to provide the equivalent of about US$250 million annually in aid. Decisions taken to keep the currency hard in order to combat inflation, to maintain government expenditures at sustainable levels, and to establish commodity stabilization funds when prices were high later minimized the impact of the worldwide economic recession of the early 1980s. The recession caused worldwide commodity prices to plummet; copper prices dropped to their lowest levels in 30 years. In the late 1970s copper sales had accounted for about 15 percent of GDP but by 1982 represented only 6.5 percent. Between 1981 and 1982 the revenue to the government from the Bougainville mine fell by K42 million. Meanwhile, the prices of agricultural exports decreased by one-half from their levels of the late 1970s. In response to these adverse developments, the government announced in 1981 a number of incentives to stimulate agriculture, including investment incentives, the provision of management services to smallholders, and regulations to secure land tenure for foreign owners of plantations. The commodity stabilization funds provided a source for price subsidies. In the 1983 budget, expenditures were cut by 3 percent from the previous year, and new sources of revenue were developed. The country was able to limit a scheduled 5-percent reduction in Australian aid into 2 percent through 1985. The government also borrowed moderate sums from overseas and benefited from foreign investment in a major new upper mine at Ok Tedi in the Star Mountains. The economy thus survived the recession of the early 1980s with relative ease. The economy of Papua New Guinea may be divided into the subsistence sector; the primary sector (commercial agriculture, forestry, and fishing); the government sector; industry (including mining); and finance, commerce, and other services. The subsistence sector, which is extremely difficult to estimate in market terms, probably accounted for 15 percent of GDP in 1982, although it employed some 50 to 60 percent of the labor force. Part of the population, however, was involved in both the subsistence and the primary sectors. The latter accounted for perhaps 20 percent of GDP and about 25 percent of the labor force. The government or public sector amounted to some 25 percent of GDP; mining accounted for 17 percent. Investment at the new Ok Tedi mine alone contributed about 10 percent of GDP in 1982, and production from the mine was expected to add 12 percent of GDP by 1987. A variety of services produced the remainder of GDP. The real GDP increased at the impressive rate of over 8 percent per year during the 1968-74 period, stagnated until 1976, averaged 7.7 percent growth in the 1977-78 period, dropped sharply in 1979, and stagnated in the early 1980s. The government believed, however, that it could maintain an average growth rate of 6.3 percent through 1987, and already there was some improvement in the preliminary data for 1983. The country had a population of slightly over 3 million in 1982, and its per capita GDP was equivalent to US$820. This relatively high level of income was deceiving, however, because most of the people still lived at, or just above, the subsistence level. Income from expatriates and foreign-owned enterprises further distorted the picture. Estimates for 1976 suggested that one-half of the population in the subsistence sector had incomes of about US$150 per person. By 1982 the average may have reached US$275. In addition to large regional disparities, national income data suggested that there was little, if any, growth in the per capita income of Papua New Guineans during the 1970s, and the stagnation of the early 1980s may well have resulted in a real decline of 2 to 3 percent. Between 1972 and 1976 real minimum wages more than doubled because of several generous decisions by the Minimum Wages Board that gave the country the highest wage costs among the developing nations of the Pacific. Subsequently, the rise in public and private wages has been limited to increases in the consumer price index. Annual price levels rose an average of 7.5 percent per year during the 1977-82 period and 6.2 percent in 1982. The devaluation of the kina and the Australian dollar in March 1983 may have caused prices to jump 10 percent. Under the current wage agreement, however, only the first 5-percent change in the price was subject to compensation; real wages may therefore have fallen by 5 percent in 1983. Formal wage employment grew from about 180,000 people in 1976 to about 218,000 in 1980. Of these, about 53,000 people were employed in agriculture, forestry, and fishing activities; 30,000 in public services; 32,000 in community, business, and social services; 20,000 in commerce; 24,000 in manufacturing; 18,000 in construction; 12,000 in domestic services; 9,000 in transportation; 5,000 in mining; and the rest in other services. Formal employment grew by 1 percent during the 1972-76 period and by 5 percent per year through 1980. Since then, employment has fallen sharply in the primary sector and in construction. In the first nine months of 1982 overall employment fell by 9 percent. Papua New Guinea will be faced with significant employment problems in the future. It was estimated that no more than 10 percent of the 400,000 potential additions to the labor force in the 1980s could be expected to obtain formal sector employment. An increasing number of high school graduates would be unable to find formal employment, and it was unlikely that they would willingly return to the traditional subsistence economy. Furthermore, urban areas were becoming zones of critical unemployment as youth moved to the towns in hopes of bettering their lives. In 1980 census and other data indicated that the proportion of the urban population earning wages and salaries may have fallen from 54 to 28 percent from 1966 to 1980. If these tentative figures proved accurate, the impact on family life, health, and general living conditions in the cities would be devastating.