After the pay cuts and lay-offs that those in the private sector have had to bear over the past two years, it would have been unacceptable if the Government had announced a salary increase for civil servants this year. That is something four civil service unions accepted as inevitable, knowing the pay differential between government staff and private sector workers has widened since the financial crisis. In reality, the pay trend survey showed that private sector pay has fallen slightly. But a corresponding cut in civil service salaries would have had all kinds of repercussions on morale and stability at a time when the SAR is making the slow climb out of recession. The Executive Council's decision to continue with the freeze is the best one in present circumstances. It is, however, only a short-term solution. Once the economy is back on track, a more delicate operation will have to be undertaken to reduce the gap between the two wage levels. Pay and conditions should always remain at a premium in government service to ensure that officials maintain a clean, corruption-free record, but salary scales must reflect the general trend in the rest of Hong Kong. This is a market-driven economy, where supply and demand dictates the value of labour. The recession has taught some tough lessons about the importance of Hong Kong staying competitive in a region where living standards and labour costs are a fraction of those in the territory. Falling property values and deflation are bringing about the adjustment which has to be made if the SAR is to stay ahead in the race. Not even civil servants are immune from that, although their contracts protect them from the pay cuts and redundancies which have been widespread elsewhere. The best indicator of salary scales in the private sector is the Government's pay level survey. But the last one was published in 1986. Another next year would point the way forward in deciding how to handle civil service pay levels in the years ahead.
