Our Ref. : BP 6/25
24 April 2007
Development of an Improved Civil Service Pay Adjustment Mechanism – Pay Level Survey
Further to my letter dated 13 March 2007, I write to inform you that the Chief Executive (CE)-in-Council has endorsed the regular conduct of pay level surveys at six-yearly intervals, the general framework for the conduct of these surveys, and the general framework for the application of survey findings to the civil service. The CE-in-Council has also endorsed that the civil service pay scales as at 1 April 2006 need not be changed as a result of the findings of the recently completed 2006 pay level survey.
These decisions are important milestones in the development of an improved civil service pay adjustment mechanism. They reflect the importance attached by the Government to reforming the management of the civil service on a gradual basis, while upholding the policy of offering sufficient remuneration to attract, retain and motivate staff of a suitable calibre to provide the public with an effective and efficient service and while continuing to remain as a good employer. The conduct of pay level surveys at regular intervals is consistent with our policy of ensuring that civil service remuneration is regarded as fair by civil servants and the public they serve.
The decision to conduct pay level surveys at six-yearly intervals has received broad support from the representatives of the staff sides. It has regard to our changing economy and labour market on the one hand, and the breadth and complexity of these surveys as well as the time and resource implications for participating private companies on the other.
The agreed framework for the conduct of pay level surveys is formulated with the assistance of a consultant and after extensive consultations with the representatives of the staff sides, amongst others. The framework was tested in the recently completed 2006 pay level survey and its efficacy has been generally established. The key features of the agreed framework include adopting a broadly defined job family and job level method, selecting and matching civil service benchmark jobs with comparators in private companies, selecting steady and good employers in the private sector to participate in the surveys, and collecting cash-based pay data.
The conduct of pay level surveys at regular intervals must be complemented by consistency in the application of the findings of successive pay level surveys. The agreed framework for the application of pay level survey findings to the civil service is generally supported by the representatives of the staff sides. The key features of the framework include adopting total cash compensation data and using the upper quartile (P75) of the private sector pay to derive the market pay indicator of a defined job level, and comparing the market pay indicator of a defined job level with the civil service notional mid-point salary plus actual average expenditure on fringe benefits paid in cash of that job level. In addition, a plus/minus 5% is defined as the acceptable range of difference between the civil service and private sector pay of a defined job level, in accordance with the spirit of broad comparability in pay between the two. Adjustment to the civil service pay of a defined job level would only take place if it is higher or lower than the comparable private sector pay indicator by more than 5%; and adjustment would be made to bring the civil service pay back to the lower or upper 5% limit.
We have recently completed a pay level survey, using 1 April 2006 as the reference date, with the assistance of a consultant. The consultant successfully collected pay data from 97 private companies; and matched private sector comparator jobs for 166 civil service benchmark ranks which were categorised into five job levels according to the level of responsibility. The survey findings have been shared and discussed with the representatives of the staff sides. The findings show that civil service pay in each of the five job levels, when compared with the counterpart private sector pay, falls within the plus/minus 5% acceptable range. In accordance with the agreed framework for application of survey findings, the Government has decided that there is no need to adjust the civil service pay scales as at 1 April 2006.
With the above decision, the prevailing civil service pay scales will be used as the basis for any adjustment to civil service pay in 2007-08. As advised in my earlier letter quoted above, the Pay Trend Survey Committee is overseeing the conduct the 2007 Pay Trend Survey (PTS) by the Joint Secretariat for the Advisory Bodies on Civil Service and Judicial Salaries and Conditions of Service. The findings of the PTS, when available, together with the pay claims from the staff sides and other relevant considerations, will be submitted to the CE-in-Council for advice on whether and – if so – the magnitude of pay adjustment for the civil service. In keeping with past practices, any adjustment will take retrospective effect from 1 April 2007. The financial implications of the pay adjustment (if any) will be submitted to the Finance Committee for approval.
For more detailed information on the pay level survey-related issues, colleagues are invited to refer to the Legislative Council Brief and the Consultant's Final Report on "Conduct of the 2006 Pay Level Survey for the Civil Service" issued today and accessible through the Internet at www.csb.gov.hk.
Thank you for your attention. I look forward to your continued support.
(Miss Denise YUE)
Secretary for the Civil Service