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18 December 2001
Dear Colleagues,
Review of Civil Service Pay Policy and System
Last time when I wrote to you in response to the recent public discussions on civil service pay, I undertook to examine whether our current civil service pay policy and system meet today's circumstances. After month-long consultation and careful consideration, we decided to take this opportunity to conduct a comprehensive review of our pay policy and system with a view to bringing about improvements; making the pay system simpler and easier to administer; and building in more flexibility to facilitate the matching of jobs, talents and pay.
We have invited the Standing Commission on Civil Service Salaries and Conditions of Service, in conjunction with the Standing Committee on Disciplined Services Salaries and Conditions of Service and the Standing Committee on Directorate Salaries and Conditions of Service, to conduct the review. This is a highly complex exercise with far-reaching implications. We consider it crucial that we take forward this exercise in a prudent manner and adopt a step-by-step approach. We therefore decided that the review should proceed in two phases.
Under the first phase of the review, there will be an analytical study on the latest developments and best practices in civil service pay administration in other governments. In carrying out this study, the advisory bodies will have due regard to the history and development of our civil service pay policy and system and will identify best practices that may be of particular relevance to Hong Kong. The results of the study will facilitate the conduct of a more detailed review in the second phase. This first-phase study is expected to complete in mid-2002. The findings will be presented to the staff sides and made public. These findings will not immediately lead to adjustments to civil service pay levels. During the study, the three advisory bodies will invite the views of departmental management and staff unions on whether there should be any fundamental changes to our civil service pay policy and system and will consider the scope of the second-phase review.
Based on the findings of the study under phase one and taking account of the views of the concerned parties, the three advisory bodies will make recommendations to the Administration in the second half of 2002 on the scope of the second-phase review, the factors which may need to be taken into account in conducting this exercise, the methodology to be adopted and the timeframe for completing the review. They will also advise us on the methodology and timing for conducting a comparability study between civil service pay and private sector pay, with due regard to the differences in job nature and in the measurement of output or performance. We shall, after considering the recommendations of the advisory bodies, decide on the conduct of the second-phase review as soon as possible.
While we would be in a better position to assess the time required for completing the second-phase review when the scope of the review has been confirmed, we envisage that the review will take more than a year to complete. As we proceed with the overall review, the existing mechanism for civil service pay adjustment based on the findings of the annual Pay Trend Survey and other usual considerations will continue to be adopted for the 2002 civil service pay adjustment exercise.
Our current civil service pay policy is to offer sufficient remuneration to attract, retain and motivate staff of a suitable calibre to provide the public with an effective and efficient service. Such remuneration should be regarded as fair by both civil servants and the public they serve. Therefore, not only must we provide colleagues with a reasonable and appropriate employment package, we must also be accountable to the public with respect to the proper use of public money. It is imperative that we address public concern with a review of our civil service pay policy and system. It has been over a decade since we last conducted an overall review of our pay policy and system, and the broad comparability of civil service pay with private sector pay for certain grades and ranks may have been eroded over time. The conduct of a pay level survey alone will not be able to address all the issues that have been raised. We consider it necessary to conduct a comprehensive review to keep abreast of the changes in pay levels and structures of the private sector and to draw on the experience of other governments on civil service pay administration so that we can determine civil service pay in a fair and effective manner.
This is a highly complex and controversial exercise. While we have an open mind on the detailed scope of the comprehensive study, we consider that the study will need to cover at least the following areas -
(a) a review of the fundamental principles underpinning our current civil service pay policy, especially the principle of broad comparability with private sector pay;
(b) the methodology for determining pay levels in the Civil Service (including the timing and frequency of conducting a full-scale private sector pay comparability study if it is decided that the principle of broad comparability with the private sector should be upheld);
(c) rationalisation of the grading and pay structure of some 400 grades and over 1 000 ranks in the Civil Service, and a review of the principle of internal pay relativity among grades with a view to building in greater flexibility in the civil service grading and pay structure;
(d) motivation of the Civil Service through an improved and more flexible pay system;
(e) the annual pay adjustment mechanism; and
(f) preservation of the integrity and stability of the civil service system while system changes take place.
I should emphasise that Hong Kong is blessed with a quality civil service, which has a high reputation internationally. We are now embarking on a review of our civil service pay policy and system in a spirit of striving for continuous improvement. Through this review, we aim to further enhance our civil service system so that we shall be able to provide even better service to the community.
We understand that colleagues are concerned that the comprehensive review may lead to possible changes to our current pay policy and system. I assure you that we shall adhere to two principles in the conduct of the review. First, the Administration and the community share a common objective - to foster a stable, clean and highly efficient civil service for Hong Kong. Throughout the review process, we shall maintain effective communication with the staff sides and all colleagues, and ensure that any changes to be made will be regarded as fair by the civil service as a whole.
Second, as a civil service of the people and for the people, it is imperative that the civil service system as a whole, including the pay system, has public support and acceptance. The Administration and every one of us should adopt an impartial and reasonable attitude in considering the various related issues. We should, having regards to facts and figures and taking account of the political and economic realities of the time, consider suggestions put forward by members of the public on how our current pay policy and system can be improved. Our final decision should serve the best interests of the whole community.
You are welcome to put forward your views on this review exercise to the Civil Service Bureau or the three advisory bodies on salaries and conditions of service, either in person or through your respective staff unions. We shall fully consider your views and keep you posted on the progress of the review.
Lastly, I wish you all a merry Christmas and a happy New Year.
Yours sincerely,
(Joseph W P Wong)
Secretary for the Civil Service
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