The Chief Executive in Council has decided, among others, that the dollar value of all civil service pay points below D3 or equivalent will be restored to the levels as at 30 June 1997 in cash terms by two adjustments of broadly equal amount to be implemented on 1 January 2004 and 1 January 2005 respectively; and that the dollar value of all civil service pay points at D3 and above or equivalent will be restored to the levels as at 30 June 1997 in cash terms from 1 January 2004.

The pay reduction decision has taken careful account of the relevant factors under the prevailing civil service pay adjustment mechanism. It will contribute towards our efforts in controlling government expenditure, and in turn help resolve the fiscal deficit. At the same time, it recognises the need for maintaining a stable civil service.

The Administration will introduce draft legislation into the Legislative Council as soon as possible to implement the pay reduction decision. We shall consider the form and content of the draft legislation for this purpose in consultation with staff.

I wish to take this opportunity to reassure colleagues that an officer's pension benefits which have accrued immediately before the proposed civil service pay reduction takes effect will not be affected by the reduction.

The Chief Executive in Council has also decided that the Administration will develop an improved civil service pay adjustment mechanism on the basis of the existing mechanism. The improved mechanism will comprise the conduct of periodic pay level surveys to compare civil service pay levels with those in the private sector, the conduct of annual pay trend surveys based on an improved methodology and an effective means for implementing both upward and downward adjustments. This exercise will proceed as a separate exercise from the impending pay adjustment. The aim is to complete the exercise, including the conduct of a pay level survey, within 2004.

The above decisions reflect the consensus proposal which I had recently reached with the staff representatives. Further details of the decisions are set out in the Brief for Legislative Council, which has been uploaded onto the CSB homepage for colleagues' easy reference.

To enhance the impartiality of the conduct of the pay level survey and the review of the pay trend survey methodology, the Administration will set up a steering committee under my chairmanship and comprising members from outside the civil service to oversee the conduct of the pay level survey and the review of the pay trend survey methodology. In addition, the Administration will set up a consultative group comprising staff representatives to gauge their views during the review process and to provide input to the deliberations of the steering committee.

While the civil service pay adjustment will help reduce government expenditure, I hope you could all assist the Government to achieve further savings proactively under our Staff Suggestions Scheme. This scheme encourages civil servants to make suggestions on achieving financial savings/revenue gains as well as enhancing efficiency and effectiveness of the civil service. To tie in with Government's economy drive, we shall launch a focused publicity campaign for the Staff Suggestions Scheme with a central theme on 3'R'1'M', i.e. re-engineering operations, re-prioritising businesses and reorganising set-up as well as making greater use of the market in service delivery, from next week onwards. I sincerely hope that colleagues would take part in this meaningful campaign when launched next week.

I look to you all to rise to the challenge in this time of difficulty. I am confident that I can count on your unstinting efforts in helping your bureaux and departments to control expenditure and enhance efficiency and in continuing to serve the community with dedication and professionalism.

Yours sincerely,

(Joseph W P Wong)
Secretary for the Civil Service