The Urban Renewal Authority yesterday defended its decision to slash pay by up to 40 per cent for about 60 staff, saying it would not affect morale. The move was part of a reform exercise, the authority said. It is understood that the staff, who received notice of their pay cut yesterday after the authority's board made the decision last Thursday, have yet to formally accept the cuts. An authority spokesman said staff would be given a month to accept, or face redundancy. But he denied an exodus of employees was on the way. The spokesman said the cut would have no impact on staff morale. 'Although no one is happy when their pay is cut, I am sure everyone understands. The exercise only seeks to evaluate the job in terms of the market rate, not to reflect their personal performance,' he said. About $6.6 million is expected to be saved each year under the proposal. Of the 270 staff, 60 with annual pay of between $1 million to $2 million were told to undertake cuts of between 1 and 40 per cent. The statutory body succeeded the now-defunct Lands Development Corporation to spearhead slum clearance. It is understood that most of the 60 were long-time employees of the body, who worked for the Lands Development Corporation before the transition. Legislator Lau Ping-cheung, a board member of the authority, said the pay cut was necessary to improve the authority's finances. He said the decision was made after a consultancy study found the pay of some staff was above the market level. Mr Lau said the pay cut would be enforced in phases if individual staff members accepted, and staff with family or financial difficulties would be given special attention. 'We are not expecting a lot of reaction from staff. The cut is long expected and will not affect morale,' Mr Lau said. Since the authority was founded in August 2001, a number of restructuring measures have been taken, including the sacking of 24 senior staff members last year, making a saving of $40 million per year. The government was also forced to inject $10 billion to the authority last year to improve its financial status. A series of cost-cutting measures such as a pay freeze and cuts in operating costs were implemented last year.