Cutting pay of Hong Kong’s civil servants could trigger exodus, economists and political analysts warn
- In his budget last week, Financial Secretary Paul Chan decided against trimming pay of government workers, opting instead for zero growth in headcount
- City’s need to retain civil servants makes it difficult for deficit-hit government to slash their pay and save taxpayers HK$40 billion
Hong Kong’s need to retain civil servants and its reliance on them to implement a series of economy-boosting projects have made it difficult for the deficit-hit government to slash their pay and save taxpayers HK$40 billion (US$5.11 billion), economists and political analysts have said.
Calls to adjust the salaries of government workers mounted ahead of last week’s budget, which put the deficit for 2023-24 at HK$101.6 billion. But Financial Secretary Paul Chan Mo-po has cautioned against the move.
“We estimate the economy will improve in the coming years, during which employees in the private sector might expect a salary rise,” Chan told a radio programme on Monday. “We don’t want our conduct, like cutting pay, to have any negative impact on the market.”
Instead, Chan’s budget proposed zero growth in the civil service and cutting recurrent government expenditure by 1 per cent for three consecutive years, which altogether could save up to HK$11.7 billion in 2026-27.
Civil Service salary adjustments are done annually with consideration being given to the net pay trend indicators derived from the annual pay trend survey, the state of the economy, changes in the cost of living, the government’s fiscal position, the staff sides’ pay claims and morale.
According to the Civil Service Bureau, remuneration and other expenditure on civil servants reached HK$149.1 billion in 2022-23, or about 22 per cent of all government spending. The proportion went down by about 3.3 percentage points from that recorded in 2021-22.
Economist Simon Lee Siu-po, an honorary fellow at the Asia-Pacific Institute of Business at the Chinese University of Hong Kong, argued the government should slash civil servants’ pay since it amounted to the biggest part of government expenditure.
“We should focus on the area that can help the most,” Lee said, noting a 10 per cent pay cut would save about HK$40 billion compared with the less than HK$10 billion saved through a pay freeze.
