Dear Colleagues,

Development of an improved pay adjustment mechanism for the civil service

In March this year, I informed you of the setting up of a steering committee comprising members drawn from outside the civil service and a consultative group, involving representatives from the staff sides of the central consultative councils and the major service-wide staff unions, to take forward the development of an improved civil service pay adjustment mechanism.  I am writing to update you on the latest developments of the exercise.

During the period from April to November 2003, the Steering Committee and the Consultative Group held eight and six meetings respectively to deliberate on various issues pertinent to the exercise.  Taking account of the deliberations in the Steering Committee and the Consultative Group, the Civil Service Bureau (CSB) has worked out a broad framework of the improved civil service pay adjustment mechanism.  To keep civil service colleagues informed of the progress we have made, we have issued today a progress report which can be viewed at the CSB's homepage at http://www.csb.gov.hk.  You may also refer to the summary of the progress report attached to this letter.

Based on the proposal outlined in the progress report, we shall continue our discussion in the Steering Committee and the Consultative Group on the implementation details of the three constituent components of the improved civil service pay adjustment mechanism, i.e. the conduct of periodic pay level surveys, the conduct of annual pay trend surveys based on an improved methodology and an effective means for implementing both upward and downward pay adjustments.

The conduct of pay level surveys involves a lot of technical considerations.  To ensure that the pay level survey will be carried out in a credible and professional manner, we shall develop the survey methodology and carry out the actual survey work and data analysis with professional assistance from outside consultants in two stages.  For the first-stage consultancy, we have appointed a consultant in accordance with the established procedures to provide technical assistance in developing a feasible and detailed survey methodology.  Information about the consultancy, including the scope of work, has been uploaded onto CSB's webpage at http://www.csb.gov.hk.

This is a highly complex exercise which, understandably, is of much concern to staff.  We appreciate that adequate time should be allowed for thorough examination of the many complicated issues involved, in particular the detailed methodology of the pay level survey and how the outcome of the survey should be applied to the civil service.  We also consider it desirable to conduct extensive consultation within the civil service and inform the public of progress from time to time so that different sectors of the community will have an opportunity to express their views.  We now aim to present proposals on the pay level survey methodology and improvements to the pay trend survey methodology as well as general ideas on the application of the survey findings in the second quarter of 2004 for consultation before the survey field work commences.  Our plan is to proceed with the field work of the pay level survey in the fourth quarter of 2004.  The whole exercise, including presentation of detailed proposals on the application of the pay level survey results and introduction of any necessary legislation for implementing both upward and downward pay adjustments, is expected to be completed in the second quarter of 2005.

The current exercise forms part of our on-going efforts to modernise the management of the civil service.  While it is conducted amidst general public concern about the Government's fiscal position, I would like to emphasise that it would not be appropriate to view this exercise as offering a quick solution in reducing the Government's operating expenditure. Our vision is to put in place an improved pay adjustment mechanism for long-term adoption in the civil service.  In taking a decision on the matter, particularly with regard to the application of the pay level survey results, we shall follow the principles of lawfulness, fairness and reasonableness.  We shall also take due account of the views of staff as well as the overall interests of the community as a whole.

I shall keep you informed of further developments of this exercise.

Yours sincerely,

(Joseph W P Wong)
Secretary for the Civil Service