Why the civil service should be halved

The civil service is too large and could be cut by up to half. This is a shocking situation for a government that has prided itself on a policy of relative non-interventionism and reliance on the market. Small government should have been Hong Kong's defining characteristic.

This situation came about, on one hand, through an uncritical acceptance of government involvement in more and more activities, many of which could have been carried out by the private sector or non-governmental organisations, and, on the other, by hiring new employees on inflexible and unsustainably generous terms of service. During the 1980s and 1990s boom years, the government apparently felt that the community could afford these arrangements. Time, however, has proved it wrong.

The administration could halve the civil service by turning most of its departments into executive agencies with their own personnel management autonomy. These departments would hire in the market, based on prevailing conditions. There are clear advantages to this. First, the compensation gap between the public and private sector would be minimised. Second, we would not have to commission costly and controversial pay-level surveys.

The government could have begun such an exercise with the trading fund departments, set up in 1993. The Companies Registry, Land Registry, Post Office, Electrical and Mechanical Services Department, and Office of the Telecommunications Authority - although for the most part monopolies - all sell services to the public. Their performance is measured largely in commercial terms. Moreover, their employees come from job groups that can also be found in the private sector. Yet, rather than going down this road, in many cases the government has continued to keep employees on civil service terms. In some cases, the numbers employed on such terms have risen. The government has relied on voluntary retirement and other schemes to cut its numbers. Through these means, some 20,000 staff have left. At the same time, more than 16,000 non-civil-service contract employees have been hired on more flexible terms. Much more, however, could be done.

There should be careful study to ascertain which groups of jobs should remain in a much reduced and revamped civil service. Among them might be administrative officers, employed, however, on contracts, thus encouraging those who are surplus to requirements to leave. The administrative officer grade should also be opened up to competition from outside, and a real effort made to recruit relatively large numbers from the private sector. Contract employment would make these jobs more attractive. The disciplinary services, which arguably does not have a private sector equivalent, might also be retained in the new paired down civil service. In any case, what is needed is a root and branch re-examination of, first, what government ought to do, and, second, which positions should remain in the civil service.

As the experience with executive agencies in countries like Britain and New Zealand demonstrates, most public sector positions do not need to be held by 'civil servants'.