PUBLISHED : Thursday, 26 April, 2007, 12:00am
UPDATED : Thursday, 26 April, 2007, 12:00am

'The gap between the pay of civil servants and private sector workers is not big enough to warrant adjusting civil service salaries, the Executive Council ruled yesterday after a government-commissioned survey found the pay differential was less than 5 per cent.'

SCMP, April 25

Call me a soothsayer, a prophet, a fortune teller. I can look into the future and tell you what it holds. I have consistently done it over the past three years, told you time and again that this big government pay review would conclude that there was no significant difference at all with private sector pay.

And I think it quite a feat to have predicted this correctly when the findings are so starkly at odds with the facts. The trick was in knowing what government wanted to hear and ignoring the facts.

Here are the facts. Five years ago the Hong Kong General Chamber of Commerce commissioned Watson Wyatt Worldwide, an eminent pay consultant, to conduct an exhaustive comparison between government and private sector pay and in early 2003 the chamber published the results of this survey.

They showed that on a like-for-like basis and including all cash and non-cash benefits, civil servants were on average paid 229 per cent more than their private sector counterparts.

Even the chamber drew back a little from embarrassing the government with evidence of such a horrendously skewed pay scale. The chamber exists in part to represent its members to the government and in this case it chose instead to emphasise a figure of 17 per cent differential from the private sector.

But it had to fudge things to get this result. It had to ignore all perks and benefits, whether in cash or in kind, and it is in perks and benefits where government pay really stands out from the private sector.

It also had to pretend that the mid-range of any civil service job should be paid at the upper quartile of the equivalent private sector job. I stick my oar in here. It should be the other way round. Civil service job security should be met with proportionately lower, not higher, pay.

But now we have our government telling us that the excess of government over private sector pay is not 229 per cent, not even 17 per cent, but less than 5 per cent. Mighty convenient, isn't it, that 5 per cent just happens to be the Executive Council's benchmark for taking no action at all.

How to explain this? Well, mostly through sneaky tricks. To start with, the government appointed the same pay consultant that the Chamber of Commerce had used, Watson Wyatt Worldwide. That shut Watson Wyatt up. I don't say that Watson Wyatt lied in this latest pay survey. All I say is that, having accepted a government paymaster, it wasn't hugely tempted to draw attention to terms of reference that deliberately ignored the biggest differences between government and private sector pay.

The most obvious of these is in perks and benefits, of course. Only those non-salary items paid in cash were included in the comparison. Direct provision of housing, travel, medical, holiday and retirement benefits were not included and it is in such areas that civil servants really collect.

These benefits would be dealt with separately, the government said, which in practice meant saying that it would shave a little off them here and there and then saying the matter was settled, even before the shave.

The new findings also featured the trick of saying that any half of a government employee is worth three quarters of a private sector one. I would love to see this put to the test.

We cannot even be sure that the final figures on pay difference were Watson Wyatt ones. They have gone through a government filtration system for more than three months since Watson Wyatt delivered its findings.

But what we do have is Secretary for the Civil Service Denise Yue Chung-yee telling us that this latest survey shows a smaller margin of excess payment over the private sector because private sector salaries have rebounded strongly since 2002.

I refer you, madam, to the table below. Official government figures, the sort you are so eager to support, show that, across all industries, median monthly earnings including bonus have not moved at all since the end of 2002 although in some industries there have been notable declines, not increases.

Let me be plain. This government pay survey is bogus. I think the Executive Council concocted its conclusions before any survey work began and even then made sure that the survey was mammothly distorted. The truth is that civil servants are hugely overpaid.