Economic and social situation should guide Hong Kong civil service pay rises
- Annual survey findings calling for increases ranging from 4.01 to 5.47 per cent depending on grades may work in boom times, but perhaps not in the current climate
A generous civil service pay rise can be a hard sell, even more so when the government is grappling with a multibillion-dollar budget deficit. It becomes even more controversial when the long-standing mechanism of using private sector salaries as the basis for increases has again produced indicators that seem out of touch with the economic reality.
The adjustment must be handled carefully.
The public can be excused for feeling unconvinced after the official pay trend survey showed the upper, middle and lower ranking civil servants deserved pay rises of 4.01, 4.32 and 5.47 per cent, respectively. The annual survey findings, based on the data of some 134,000 employees in 113 companies, have long been the reference for government pay adjustments, along with other factors.
The levels this year are considerably higher than the range of 3.3 to 3.5 per cent in other market surveys.
The pay trend survey results were generally not much disputed in boom times. Civil servants, after all, also are entitled to share the fruits of economic success, and morale is important.
But the mechanism becomes a subject of contention whenever the findings do not seem to reflect the prevailing hardships facing the private sector. There is criticism that small and medium enterprises are under-represented in the official survey.
Taxpayers already forked out nearly HK$17 billion more in pay last year for employees of the government and subsidised bodies, after the Executive Council followed the pay trend indicators to award an increase of 2.87 per cent for upper and 4.65 per cent for middle and lower ranking staff amid a slower-than-expected economic recovery. Salaries and other expenditure for civil servants reached HK$149.1 billion in 2022-23, or about 22 per cent of government spending.
The Executive Council is to make a decision, taking into account the pay trend findings and factors such as the state of the economy, changes in the cost of living, the fiscal position of the government, staff needs as well as their morale. While the adjustments, by and large, have adhered to the pay trend findings over the years, the government occasionally deviated from figures to impose a freeze or reduced increases.
For instance, an across-the-board rise of 2.5 per cent was given in 2022, even though the survey suggested rises of 2.04, 4.55 and 7.26 per cent for the three bands.
It would seem that the prevailing economic and social situation provides a strong case for the government not to dovetail the pay rises with the trend survey figures this year. How to address public sentiment and the fiscal burden without depriving civil servants and employees in subvented bodies their due reward amid economic uncertainty remains a challenge.
