Our Ref. : BP 6/25
13 June 2013
2013-14 Civil Service Pay Adjustment
At its meeting held on 11 June 2013, the Acting Chief Executive (CE)-in-Council decided that, with retrospective effect from 1 April 2013, civil service pay should be adjusted as follows –
(a) pay for civil servants in the lower salary band should be increased by 3.92%;
(b) pay for civil servants in the middle salary band should be increased by 3.92%; and
(c) pay for civil servants in the upper salary band and the directorate should be increased by 2.55%.
Understanding that colleagues are disappointed and dissatisfied with this year’s pay adjustment, I am writing this letter to explain to you the decision of the Acting CE-in-Council.
Considerations of the Acting CE-in-Council
The annual civil service pay adjustment is made in the light of the objectives of the Government’s civil service pay policy, which are: to offer sufficient remuneration to attract, retain and motivate staff of suitable calibre to provide the public with an effective and efficient service; to maintain a broad comparability between civil service and private sector pay through three regular pay surveys; and to ensure that the remuneration for civil service is regarded as fair by both civil servants and by the public they serve.
In considering the pay adjustment each year, the CE-in-Council would take into full account the following six factors –
(a) the net pay trend indicators (PTIs) derived from the pay trend survey (PTS);
(b) the state of Hong Kong’s economy;
(c) changes in the cost of living;
(d) the Government’s fiscal position;
(e) the pay claims of the staff sides; and
(f) civil service morale.
Some colleagues may have the following questions in mind: Must the annual pay adjustment follow the net PTIs mechanically? Have the Administration and Executive Council lost sight of the other five relevant factors?
The answer to the above questions is a simple “no”. Under the policy objective of “maintaining broad comparability between the civil service pay and private sector pay”, while the net PTIs are an important factor in the consideration of the civil service pay adjustment, the CE-in-Council also takes into full account the other five relevant factors and would not mechanically follow the net PTIs. As a matter of fact, while the Executive Council has, after considering all six relevant factors, decided to adjust the civil service pay in accordance with the net PTIs most of the time since 1989-90, it has also decided to deviate from them on some occasions. For instance, in 2009-10, although the net PTIs for both the middle and lower salary bands were negative, the Administration decided to freeze the pay of civil servants in the two salary bands after considering factors such as civil service morale, staff sides’ pay claims and changes in the cost of living. Moreover, the Administration has also invoked the arrangement of bringing up the pay adjustment of the lower salary band to the net PTI of the middle salary band where justified after considering changes in the cost of living and staff morale, etc.
Concerning the 2013-14 civil service pay adjustment, the Acting CE-in-Council has, in line with the long-established practice, taken into full account all the six relevant factors when it made its decision. Let me elaborate on the major considerations in the ensuing paragraphs.
The net PTIs
The PTS is widely recognised as a credible and objective pay survey with active and ample staff participation. As in the past, the 2013 PTS was conducted in accordance with the established mechanism and methodology agreed by the PTS Committee. It has objectively reflected the year-on-year pay adjustments of the surveyed organisations (109 in number).
State of Hong Kong’s economy
The Hong Kong’s economy recorded a sub-par growth of 1.5% in real terms in 2012 as a whole. It then went on to grow moderately by 2.8% year-on-year in the first quarter of 2013. For the rest of 2013, the economic outlook remains clouded by uncertainties on the external front. Given the sub-par growth in 2012 and the uncertainties ahead, it is unjustifiable to award additional pay rise on top of the net PTIs on the ground of outstanding economic performance at present.
Changes in the cost of living
I understand that civil servant colleagues are very concerned about one question, viz., whether the pay adjustment can catch up with inflation. I would like to take this opportunity to clarify that since neither the PTS nor the annual civil service pay adjustment aims at tracking inflation, the annual pay adjustment may not be the same as inflation every year. In fact, since 1989-90, there have been 13 occasions on which the annual civil service pay adjustments for all salary bands were higher than the Composite Consumer Price Index (CPI) and eight occasions with the opposite situation (i.e. the pay adjustment for all salary bands were lower than the Composite CPI).
For this year, the Administration notes that, for comparison sake, the net PTIs for the middle and lower salary bands (3.92%) are comparable to the changes in the 2012-13 headline Composite CPI (3.7%). The Administration has not overlooked the fact that the pay adjustment of the upper salary band (2.55%) is lower than the relevant CPI figure. That said, noting that the “bring-up” arrangement which aims at caring junior staff is only applicable to the lower salary band, the Administration has decided to maintain the pay adjustment for the upper salary band as stated above.
Government’s fiscal position
The consolidated surplus for 2012-13 is $64.8 billion, equivalent to 3.2% of Gross Domestic Product (GDP). For 2013-14, however, a small fiscal deficit of $4.9 billion is projected, equivalent to 0.2% of GDP.
Pay claims of the staff sides
In accordance with the established civil service pay adjustment mechanism, the Administration invites the staff sides of the four central consultative councils (Note 1) to submit their pay claims before it makes the pay offers. The staff sides’ pay claims are one of the factors taken into account by the CE-in-Council in considering the annual civil service pay adjustment. The pay claims from the staff sides of the four central consultative councils and their responses to the Administration’s pay offers have also been fully reflected to the CE-in-Council and taken into account.
Civil service morale
The Administration attaches great importance to civil service morale and understands that the staff sides are disappointed with the pay adjustment this year. It has also noted the views of the staff sides and staff associations as revealed in their statements and letters. At the same time, the Administration has borne in mind that upholding the well-established practice and policy consistency are also conducive to the maintenance of staff morale and the recognition accorded by the public to civil servants. In any case, we would continue to work on other feasible and justifiable means to sustain staff morale, including the provision of additional manpower as appropriate so as to address the increasing work pressure on civil servants, etc.
The Acting CE-in-Council’s decision
Having considered all the six factors, the Acting CE-in-Council opines that this year’s civil service pay adjustment should follow the net PTIs, which on one hand is in line with the policy of maintaining broad comparability between civil service and private sector pay, thereby ensuring that civil service pay continues to be sufficient for attracting, retaining and motivating staff of suitable calibre; on the other hand, it also maintains the objectivity and consistency of the civil service pay adjustment mechanism, thereby ensuring that it will be recognised as fair by both civil servants and the general public.
While this year’s pay rise may fall short of colleagues’ expectation, I hope colleagues would appreciate that the decision was made in strict accordance with the established mechanism.
The Pay Trend Survey Committee
I believe that colleagues may have noted that some constituent associations of the staff side members have announced their withdrawal from the PTS Committee. I wish to take this opportunity to briefly introduce the operation of the PTS Committee to colleagues, and to appeal for colleagues’ support for its work.
The PTS Committee was set up in 1983 on the recommendations of the Standing Commission on Civil Service Salaries and Conditions of Service (Standing Commission). It is a tripartite committee comprising representatives from the staff sides of the four central consultative councils, the Administration and advisory bodies on civil service salaries and conditions of service. The PTS Committee is responsible for overseeing the conduct of the annual PTS, analysing survey findings and ensuring that the agreed criteria for interpreting the data collected are properly applied. Before the conduct of the annual PTS, the PTS Committee convenes several meetings to discuss the survey methodology, propose improvement measures and make recommendations to the Standing Commission.
Since the establishment of the PTS Committee, the active participation and collaboration of Members have contributed tremendously to the continuous improvements of the PTS methodology, such that its findings remain representative of the year-on-year pay movements of good and steady employers in the survey field and provide a sound basis for the annual civil service pay adjustment. For many years, the PTS has been playing a crucial role in ensuring the credibility and general acceptance of the overall civil service pay system.
I understand that some staff side representatives think that there are still areas for improvements in the PTS. I believe this presents a good opportunity for staff side representatives to make proposals for further improving the operation of the PTS on behalf of the colleagues they represent. The Administration therefore sincerely hopes that all staff side representatives would continue to support and actively participate in the PTS Committee. If staff side representatives withdraw from the PTS Committee, colleagues represented by them would lose the channel to have their views on the PTS expressed in the Committee.
Lastly, I would like to once again appeal for colleagues’ understanding of the decision and the factors taken into consideration in this year’s civil service pay adjustment. I would like to reiterate that the civil service has all along been an instrumental element of good governance in Hong Kong; and I would also like to express my sincere gratitude for the support colleagues have given to the Fourth Term Government of the Hong Kong Special Administrative Region in implementing its policies and programmes.
We have always attached great importance to the maintenance of civil service morale. The Civil Service Bureau will continue to uphold the cardinal principles and core values of the civil service and to sustain civil service morale through various means, including the provision of additional manpower as appropriate so as to address the increasing work pressure on civil servants, and further enhancing the communication channel between the management and staff, etc. Notwithstanding that we may occasionally have different opinions, I believe that it would not affect the mutual support we have within the Government family and our resolve to serve the people of Hong Kong.
Note 1: The four central consultative councils are the Senior Civil Service Council, the Model Scale 1 Staff Consultative Council, the Police Force Council and the Disciplined Services Consultative Council.
Secretary for the Civil Service