Civil service merits pay rise, in return for reform

PUBLISHED : Thursday, 24 May, 2007, 12:00am
UPDATED : Thursday, 24 May, 2007, 12:00am

If you asked the public whether they would prefer smaller class sizes in schools, better health care or fatter pay packets for civil servants, our government workers would inevitably be the losers. But in these days of surpluses and with an economy that is humming along, it isn't necessarily an either/or situation.

The results of a government-commissioned survey made public this week, which suggests its 155,000-strong workforce is due a pay rise of 4 to 5 per cent, has been met with quiet acceptance by most political parties. The first pay rise since 2001, it is subject to approval by the Executive Council and Legislative Council.

The rise would be based on the government's annual pay trend survey, which this year found better-than-expected increases in the private sector. On balance, while the pay rise looks a little on the high side, a rise is justified after the pay freezes and pay cuts of recent years - with some important caveats attached.

A rise should not be used to divert attention or energy away from the continued need to create a leaner civil service. Greater use needs to be made of technology and outsourcing and considerable reform of what is a bloated organisation is still needed.

The establishment is well down on the 198,000 civil servants the government employed in 2000, and the remuneration bill has fallen; spending has dropped 5 percentage points in the past five years, to 31 per cent of total government spending. Still, the proportion is more than twice that spent by wealthy countries.

While pay rises may be granted, pay cuts must also be accepted. Raising civil servants' pay will add billions of dollars to recurrent expenditure; that is hard to manage when revenue drops in a downturn. Granting pay rises adds to inflationary pressures because the recipients have more disposable income, and risks a widening of the rich-poor gap.

Three pay cuts between 2002 and 2004 sparked unprecedented tensions between the government and civil servants, triggering protests and court cases. Five judges of the Court of Final Appeal - Hong Kong's top court - eventually ruled the reductions lawful. If pay needs cutting in future, more efforts need to be made to ensure cuts are implemented smoothly.

A government committee uses three means to review the way pay scales are adjusted, and is now fine-tuning the system. That is a welcome move. The government uses a pay-level survey - which compares the pay of civil servants with different groups of private sector employees - and the annual pay trends survey. Every three years, it reviews the salaries the private sector pays university graduates in entry-level positions. The government has commissioned only two pay-level surveys in 21 years. The first, in 1986, found that the salaries of civil servants far exceeded those in the private sector. But the findings were contested by the unions. The second, carried out by a consultant last year, found most civil servants' salaries were within 5 per cent of those of private sector counterparts and the government decided no change was needed.

Close attention is needed to the methodology of the pay-level survey, but conducting it every six years, as the government committee plans, is sensible. It should be remembered, too, that civil servants enjoy benefits open to few in the private sector. Colonial-era perks are being phased out, but they still enjoy job security and stable hours, which many in private employment can only dream of.

While a budget surplus makes a rise affordable, surpluses should produce better administration, not just better-paid administrators.