Hong Kong's government pay system ain't broke, so don't fix it

PUBLISHED : Saturday, 25 May, 2013, 12:00am
UPDATED : Saturday, 25 May, 2013, 5:27am

When a government pay-adjustment mechanism is in use for a long time, it either suggests wide recognition or inertia. In the case of civil service salaries, it appears to be both. For decades, employees have had their salaries adjusted according to a survey of private sector wage changes during the year. Not only is the mechanism seen as fair and objective, it ensures that public sector wages will not, at least in theory, outstrip those in the private sector. However, surveys can be misleading sometimes. From time to time the sample in the annual survey has been criticised as biased towards big corporations and highly profitable industries. It was not a few years ago that the mechanism was overhauled. Since then, the survey is supposed to cover a good balance of companies and reflect the state of the economy faithfully.

Civil servants are already envied for their fringe benefits and job security. They can, therefore, expect little support when they ask for more than what the latest survey suggests. Some staff unionists refused to endorse the findings, which suggest pay rises in the range of 2.44 to 3.92 per cent, which is short of the 4.4 per cent inflation rate. They wanted rises to be at least on a par with inflation. Some further warned that mass protests might follow to put pressure on the Executive Council ahead of a final decision on the adjustments.

Whether the government will yield to the demand remains to be seen. While the staff side is understandably disappointed by the prospect of a below-inflation adjustment, there are good reasons for the government to adhere to the figures. For years, the government has religiously dovetailed the findings to minimise disputes, even though it can take other factors into consideration, such as the cost of living, staff morale and the public finances. High inflation is not a problem that affects only civil servants. The modest rises for the 170,000 staff only mirror the unfavourable adjustments in the private sector over the past year. If the government breaks away from the tradition to top up the increases this time, it effectively links adjustments to inflation rather than pay trends in the private sector. This will further deviate from the policy of keeping public sector pay broadly comparable to private sector pay. Until there is a consensus for further changes, playing by the rules is the right way forward. As long as the survey is an accurate reflection of reality, there is no reason to deviate from it.