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Response to Task Force on Review of Civil Service Pay Policy and System - Phase One Final Report

6 November 2002

Civil Service Bureau
10^th Floor
West Wing
Central Government Offices
Ice House Street
Central
Hong Kong

Dear Sirs,

The Hong Kong Democratic Foundation (HKDF) is pleased to present its response to the Phase One Final Report of the Task Force on the Review of Civil Service pay Policy and System.

We would like to congratulate the Task Force on its report, which presents a very clear and cogent set of recommendations on this most sensitive issue.

The HKDF fully supports the incremental approach adopted by the Task Force in implementing what is essentially a quite radical set of reform proposals. We strongly believe the need for radical reform of the Civil Service Pay Policy and System. However, we recognize that unless this is handled in a careful "step by step" way there will be a high risk of alienating the Civil Service, which would be counter-productive. Furthermore, because of their radical nature we believe it is essential to spend sufficient time testing and evaluating the various reforms in small-scale trials and make any necessary adjustments, before a comprehensive roll out is implemented.

The HKDF agrees with the prioritization of the proposals into short-term, medium-term and long-term actions. However, we would like to suggest that the Task Force set out a broad time scale for these three phases.

Before making specific comments on the recommendation, we would like to highlight two issues which do not strictly come within the Task Force’s terms of reference yet are pertinent to the cost and efficiency of the Civil Service.

Firstly, we recommend the Government more actively pursue the opportunities for outsourcing functions that can be more cost effectively carried out by the private sector, just as private sector companies are increasing their focus on their areas of core competence and outsourcing functions where they are less expert.

Secondly, we recommend the Government critically review the Administrative Officer system, which we believe frequently results in senior positions being filled by personnel that lack the relevant experience and skills, thus contributing to low productivity. The private sector has no equivalent system and puts great store in filling senior positions with personnel possessing relevant expertise and experience.

While we are in agreement with most of the recommendations, we have a few specific comments to make in the following paragraphs.

Our Vision
In our submission to the interim report, we indicated we would like to see the development of a culture of job interchangeability between the Civil Service and the private sector. We believe practical experience of private sector practices would enhance the performance of Civil Servants when they returned to Government employment and conversely, personnel from the private sector could contribute expertise to Government work if they were also to participate in periods of secondment.

We hope the Task Force might consider incorporating this concept of building a culture of job interchangeability between the Civil Service and the private sector into "Our Vision".

Pay Policies, Pay Systems and Pay Structure
Paragraph 4.23
We would contend that there is no longer broad comparability with the private sector and therefore it is now a case of renewing this concept, rather than maintaining it.

As mentioned in our submission to the interim report, we believe that the concept needs to be clearly established with the Civil Service that pay reviews can result in downward adjustments as well as upward adjustments, depending on the circumstances of the time.

Paragraph 4.62
Due to the very different nature of employment in the disciplined services, including the extensive need for shift work, we recommend serious thought is given to implementing a set of pay policies, systems and structures for them that is totally separate for that for the rest of the Civil Service.

Paragraph 4.65
We support the Task Force’s recommendation that management of the disciplined services should explore room for civilianising their support services. Furthermore, we would like to suggest that a high priority be given to this. Staff employed to carry out supporting services should be engaged on similar terms as the rest of the Civil Service to facilitate rotation with other departments.

Pay Adjustment System and Mechanism
Paragraphs 6.17-6.18
We would like to emphasize the HKDF’s support for the regular periodic evaluation of pay level comparisons with the private sector and concur that this should be the foundation of the pay determination mechanism. As remarked in our response to the interim report, we believe there are a number of job functions such as drivers, clerks, secretaries, accounts clerks, accountants etc., where direct comparability of function with the private sector is easy to identify, that enjoy remuneration levels materially above that being offered currently in the private sector. We also believe that entry-level salaries for university graduates are also materially above those being offered in the private sector.

We would also like to draw the Task Force’s attention to the need to take into consideration the very generous pension terms enjoyed by contract officers, when comparing Civil Service and private sector salaries, as also noted in our response to the interim report.

Paragraph 6.31
With regard to consideration to moving away from formula-based approaches in pay determination, we would recommend considerable caution, as once formula-based mechanisms are abandoned or diluted, there is increasing room for acrimonious dispute during pay negotiations.

Simplification and Decentralization of Pay Administration
Paragraphs 8.32-8.33
We believe a factor in the evolution of a relatively expansive grade system may well have been motivation to implant a mechanism for regular real pay increases for Civil Servants during the course of their careers.

Therefore the successful simplification of the grade structure may to some extent be dependent on the formulation of an effective and acceptable system of pay ranges.

Yours faithfully,

Hong Kong Democratic Foundation

George W H Cautherley
Vice Chairman