Pay-cut rethink

PUBLISHED : Wednesday, 23 September, 1998, 12:00am
UPDATED : Wednesday, 23 September, 1998, 12:00am

Hongkong Telecom's mishandled attempt to maximise profits by slashing staff salaries seems to have brought about a sea-change in community attitudes towards the sensitive issue of pay cuts.

Before this fiasco, these were often seen as an inevitable part of the painful process of economic adjustment and one employees were powerless to prevent. Staff at many companies had meekly accepted pay cuts, while those who refused to do so at Apple Shop were sacked and replaced with cheaper workers.

But Hongkong Telecom's greedy attempt to follow suit may have turned the tide. Not even union leaders could have anticipated the furious response that erupted from employees and the general public. Still more heartening was the speed with which other business leaders moved to disassociate themselves from this action.

Even some who had previously supported the principle of salary reductions recognised it was inexcusable for the company to try to impose them without consultation. Tung Chee-hwa's intervention, with his pointed reminder of the need to 'caring' towards employees, provided an encouraging, and rare, indication that his government cares about more than merely big business interests. All this created a climate in which Hongkong Telecom was left with no choice but to back down. Although last night's announcement was presented in the face-saving form of a 'suspension' of the pay cut, in practice there seems little prospect of this badly misjudged idea resurfacing.

Nor will other employers be in a hurry to make the same mistake. Instead the past few days have seen some large companies declare they have no intention of making pay cuts.

That does not mean an end to the process of economic adjustment. In the present climate, every business must seek to become more competitive.

Unions will have to work sincerely with Hongkong Telecom to come up with savings to compensate for those which would have been achieved through the pay cut. Other companies will also be looking at similar ways of keeping costs under control.

All these are better ways of improving efficiency than through enforced salary reductions. The events of the past few days have shown that and demonstrated an encouraging degree of unity within the community over how best to proceed in these difficult times.