Record pay rise for civil servants can’t be justified as unemployment soars and the public suffers

Civil servants are in guaranteed employment while hundreds of thousands have lost jobs or income during the pandemic
The proposed pay rise, even if based on a tried-and-tested formula, was never going to be well received by a community struggling to get back on its feet

Mike Rowse

Published: 12:15pm, 5 Jun, 2022

Why you can trust SCMP

I will let you in on a little secret. More than 50 years ago, in the UK, I was a fully paid up member of the British Labour Party. And nearly 40 years ago, here in Hong Kong, I was vice-president of a civil service staff association which negotiated with the government on pay and related issues. I guess you could say I am by instinct something of a union man.

So it pains me to write these words. But I cannot see any way to justify the pay rise that our civil servants are now asking for.

Every year there is survey of pay trends in the private sector, and the outcome forms the basis for setting the civil service pay adjustment for the coming year.

This year, the Pay Trend Survey Committee, after reviewing returns from 111 companies, concluded that wages had risen by 2.04 per cent for those in the lower band (earning below HK$24,070 per month), 4.55 per cent for those in the middle band (HK$24,070-HK$73.775) and 7.26 per cent for those in the upper band (HK$73,776-HK$150,915). These findings will be submitted to the Executive Council soon, together with staff reactions and government proposals.

Reaction to the figures has been along fairly predictable lines. Civil servants generally want the numbers to be adopted and are looking forward to a substantial pay rise. Mindful of morale, civil service chief Patrick Nip Tak-kuen has been making supportive noises.

Private sector employers, on the other hand, are aghast at the implications for businesses. The Hong Kong General Chamber of Commerce has spoken out unusually strongly, saying the numbers are out of touch with reality and do not reflect the current economic situation. The stage is set for a confrontation.

In fairness, one union leader, Hong Kong Chinese Civil Servants Association president Li Kwai-yin, has recognised the danger and suggested a compromise of 5.3 per cent to match inflation over the past two years.

I want to make clear that I am in no way criticising the members of the Pay Trend Survey Committee. They have simply collected and collated the data in accordance with a formula set out by the Executive Council some 15 years ago. I am sure they have acted professionally in all respects.

The problem is that the formula is no longer fit for purpose. Given the radically changed circumstances, it certainly cannot be applied to the 2022 adjustment.

What are the factors that lead me to this view? First, although the committee’s report has not been (and will not be) published in full, around 160 companies are believed to have been approached as part of the survey, and the findings are based on returns from the 111 who replied. It does not take a great deal of imagination to work out why more than a quarter did not respond.

Civil servants return to work at the government headquarters in Tamar on May 18, following the relaxation of Covid-19 restrictions. Photo: Nora Tam

Many companies have closed down or sharply scaled back their Hong Kong operations. Fitness clubs, bars, hair salons, beauty parlours, restaurants, tourist agencies, airlines and travel companies have all been hard hit by the pandemic and the related government containment policies.

Our two major theme parks have been ordered to close for long periods. The Jumbo Floating Restaurant’s woes are a poignant symbol of the collapse of the tourism industry. The formula does not address the missing information. How could it?

The second issue is security of employment. The “iron rice bowl” enjoyed by the civil service has always been known about but the contrast with life in the private sector has never been sharper.

Over 200,000 employees there have lost their jobs, but civil servants have not been laid off. Our economy shrank by 4 per cent year on year in the first quarter. The unemployment rate has reached a 12-month high of 5.4 per cent and is expected to rise further in the coming months.

04:53

Jobless struggle to make ends meet in Hong Kong as city battles coronavirus and recession

Even these grim statistics do not convey the full picture. Many staff who kept their jobs were forced to take unpaid leave for part of each month. Others had their rostering arrangements reduced, with missing days being deducted from their leave balance.

But factors like these only apply to those in formal employment. There are thousands who work for themselves, or in informal employment or part-time, who only get paid when there is work to do. All these people have suffered substantial income losses, even if they are not technically unemployed. Losses have also been incurred by those who rely on rental income from property, or ownership of taxi licences.

Rethink big pay rises for civil servants to break inflation cycle

Against the backdrop of hundreds of thousands having lost their jobs, and potentially millions more having suffered a drop in income, it is difficult to see the community accepting with equanimity an increase of up to 7 per cent for those who are already among the highest paid and are in guaranteed employment.

Taking all the conflicting factors into account, it is clear there is no easy way forward for the government. One temptation for the outgoing administration might be to kick the can down the road until after July 1.

But I don’t think our incumbent chief executive is one to duck decisions. Carrie Lam Cheng Yuet-ngor may get them wrong, but she makes them. Perhaps 2 per cent across the board and take all the disappointment with her?

Mike Rowse is the CEO of Treloar Enterprises