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Chapter 1



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(This chapter explains the background leading to the formation of a Task Force to review the civil service pay policy and system)



1.1                   On 18 December 2001, the Secretary for the Civil Service (SCS) wrote to the Chairmen of the Standing Commission on Civil Service Salaries and Conditions of Service (Standing Commission), the Standing Committee on Disciplined Services Salaries and Conditions of Service (SCDS) and the Standing Committee on Directorate Salaries and Conditions of Service (Directorate Committee) inviting the three advisory bodies to conduct a comprehensive review of the pay policy and system for the civil service.



1.2                   The need for a comprehensive review has been highlighted in recent public discussion on civil service pay.  There are concerns in some quarters that other than the starting salary levels (which were reviewed in 1999), the Administration has not reviewed the salary levels beyond the entry ranks for over a decade.  As a result, the pay for certain grades and ranks in the civil service may no longer be broadly comparable to the pay levels in the private sector.  Concerns have also been raised as to whether the current annual pay adjustment mechanism continues to serve the purpose it was intended, vis-à-vis changes in pay practices in the private sector.  The central issue arising from the recent discussion is the extent to which Hong Kong��s current civil service pay policy and system are still in keeping with today��s circumstances.  Against this background, it was proposed that the existing pay policy/system be reviewed, as a two-phase study, with a view to modernising it and bringing it more in line with the best practices elsewhere and amongst major employers in Hong Kong, making it simpler and easier to administer, and building in more flexibility to facilitate matching of jobs, talents and pay.


The Task Force

1.3                   A joint meeting of the three advisory bodies was held on 4 January 2002 in which it was agreed that the SCS��s invitation should be accepted and that a Task Force should be set up to carry out the assignment.  After consultation with the respective Chairmen of the three advisory bodies, the Task Force with us as members was established in early January.  (A list of members of the Task Force is at Appendix I.)


1.4                   We held our first meeting on 10 January and discussed the terms of reference (a copy is at Appendix II), house rules and dates of future meetings.  It was also decided that an outside consultant should be engaged to provide input on civil service pay structure and reform in a few developed countries.  As far as the Hong Kong civil service is concerned, we would rely on our knowledge and experience to formulate our own views.


The Review

1.5                   The PricewaterhouseCoopers (PwC) Consulting Hong Kong Limited was selected after a competitive tendering process to undertake a four-month consultancy.  The consultant was asked to carry out an analytical study on the latest developments in civil service pay administration in five countries (namely, Australia, Canada, New Zealand, Singapore and the United Kingdom), which may be relevant to Hong Kong, having regard to the history and development of the civil service pay policy and system here.  The study was to cover the following areas �V

(a)      the pay policies, pay system and pay structure commonly adopted;

    the experience of replacing fixed pay scales with pay ranges;

c)     the pay adjustment system and mechanism;

d)     the experience of introducing performance-based rewards to better motivate staff; and

(e)      the experience on simplification and decentralisation of pay administration.

Interim Reporting

1.6                   We undertook to brief the three advisory bodies and consult all concerned parties, including civil service bodies, when the interim report on preliminary findings becomes available in late April 2002.  After evaluating the findings and taking account of the comments of the concerned parties, we would submit, via the three advisory bodies, to the Administration our report on the analytical study in July 2002.  In the second half of 2002, we would make recommendations on the scope, methodology, factors to be considered and the timeframe for carrying out the Phase Two Review, and the methodology and timing for a civil service/private sector pay comparison study.


1.7                   The preliminary findings and observations of the Task Force, underpinned by the work of the consultant, are now depicted in the ensuing chapters.