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SCMP Reporter

Hong Kong will not follow Singapore in adopting sweeping pay cuts to help beat the recession, Tung Chee-hwa promised yesterday.

 Wage levels should be determined by the market, he said.

 The Chief Executive was responding to proposals announced by the Committee on Singapore's Competitiveness yesterday that called for a 15 per cent cut in total wage costs, combined with tax reductions and other measures.

 Mr Tung said: 'Our wages are adjusted by market forces.

 'The Government has no intention whatsoever of issuing such instructions because Hong Kong is a free market.'  The pay rise for the 190,000-strong civil service would be determined in accordance with the existing mechanism, said Mr Tung.

 He was confident Hong Kong would be able to maintain its competitiveness without resorting to sweeping pay cuts.

 'Vision on this aspect has already been mapped out in my Policy Address.

 'We have been working on measures to maintain our competitiveness,' he said referring to the emphasis on high-technology and value-added industry.

 'Competition from Singapore is a good thing. The greater the competition, the harder Hong Kong will try and therefore the bigger improvement we will make,' he said.

 James Tien Pei-chun, representing the General Chamber of Commerce in Legco, echoed Mr Tung's view.

 'Hong Kong should not introduce an across-the-board pay cut, regardless of whether companies earn or lose money. I don't think it's feasible.'  Singapore had its own grounds for such a move, he said.

 'Our dollar is pegged to the US dollar but the currencies in Singapore and Taiwan are not,' he said.

 Cheung Man-kwong of the Democratic Party said he did not think Singapore's move would give employers a pretext to introduce pay cuts.

 'I believe a city's competitiveness should be boosted by enhancing its productivity. In fact, private organisations here are trying to devise ways to boost competitiveness every minute.' 



Competition welcomed but Singapore no model for free-market SAR