File Ref: CSB CR/PG/4-085-001/2/99

BRIEF FOR THE LEGISLATIVE COUNCIL
THE STARTING SALARIES REVIEW

INTRODUCTION

At the meeting of the Executive Council on 20 July 1999, the Council ADVISED and the Acting Chief Executive ORDERED that -

  1. the findings and recommendations of the Standing Commission on the Starting Salaries Review (the Report), copy at Annex A, should be accepted in principle;

  2. the proposed pay package for recruits to the civil service should be accepted in principle;

  3. the Report should be released for consultation with the Staff Sides and department and grade management;

  4. the Report should be passed to the Standing Committee on Disciplined Services Salaries and Conditions of Service to advise whether, and if so how the results should be further applied to starting salaries in the disciplined services grades;

  5. the Report should be passed to the Judiciary Administrator to consider inviting the Standing Committee on Judicial Salaries and Conditions of Services to advise on the appropriateness of adjusting the salaries of Judges and Judicial Officers in line with civil service starting salaries; and

  6. the Administration*s initial recommendations on follow-up reviews should be noted.
BACKGROUND AND ARGUMENT

A. PAY POLICY

2. Our 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 both by civil servants and by the public which they serve and should be broadly comparable with private sector practices.

B. STARTING SALARIES REVIEW

I. BACKGROUND

3. In view of public concern that the starting salaries for certain civil service jobs might be out of line with that of the private sector, the Standing Commission was invited to undertake an independent review of the existing civil service starting salaries -

  1. to ascertain if entry pay remains comparable with pay in the private sector for similar qualifications; and

  2. in the light of the findings, to recommend -

    1. whether adjustments to the qualification benchmarks or entry pay levels are called for; and

    2. ways and means to ensure the continuing broad comparability between civil service entry pay and pay in the private sector for similar qualifications.
II. METHODOLOGY

4. The Standing Commission has carried out a pay comparison survey, details at Annex B, to find out how the starting pay for jobs in the private sector at the entry level relates to the starting salaries for various entry ranks in the civil service on the basis of similar entry qualification. At present, there are 16 such qualification groups (QG) in the civil service, a list of which, with examples of grades, is at Annex C.

III. NEW BENCHMARK

5. The Standing Commission's recommendations on the new benchmarks for the 13 QGs are set out in Annex C. In summary, except for QG 8 (Technical, Supervisory and Related Grades Group I), the benchmark for all the other QGs will be lowered from one to at most six points. The hardest hit groups are QG 10 (Matriculation Grades), QG 13 (Degree and Related Grades) and QG 11/12 (Professional and Related Grades Groups I & II). We accept in principle the new benchmarks.

IV. NEW STARTING SALARIES

6. The starting salaries of majority of the civil service grades are pitched variously at one to six points above their respective benchmarks. The additional pay points were awarded in recognition of special job factors pertaining to some grades. Under this exercise, these factors are taken as given assumptions. Therefore, starting salaries of these grades will be set having regard to the new benchmarks. The new starting salaries for individual grades, under the respective QGs, are set out in Annex D.

7. The recommendations from the Standing Commission are confined to starting salaries in the civilian grades only. There will be no change to the maximum points of the ranks or grades. Take EO II as an example. The new starting salary for an EO II will be dragged down from MPS 17 to MPS 12 but the maximum point will still remain at MPS 27 as it is now. That is, an EO II will take a longer time to progress to the maximum point of the scale.

V. EDUCATION GRADES

8. There are both non-graduate and graduate grades in QG 15 (Education Grades) but no external analogues are available for useful comparison. The Standing Commission's recommended approach of adjusting the pay scales for this Group by reference to internal relativity, i.e. graduate officers will have their existing benchmark lowered having regard to the magnitude of decrease in QG 13 (Degree and Related Grades) and non-graduate officers to that of QG 4 (Higher Diploma I) will result in the situation where the starting salaries for two graduate [Assistant Education Officers and Assistant Primary School Master (graduate)] and one non-graduate [Certificated Master (non-graduate)] education grades will be the same, at MPS 12. That said, the previous three-point lead of graduate teachers over the non-graduate teachers to distinguish their qualifications and status in the profession will disappear. We accept in principle the above revision because -

  1. the Starting Salaries Review is confined to the civil service qualification benchmarks and it is not possible for the Standing Commission to conduct a thorough review of the job factors of each and every grade;

  2. it is the established practice to set the starting pay of the education grades having regard to their relativity with the Higher Diploma and Degree grades;

  3. the promotion prospect for the Assistant Primary School Master (graduate) and the Assistant Education Officer grades are much better than that for the Certificated Master; and

  4. there is no supervisory relationship between the three education grades.
VI. IMPLICATIONS ON SERVING STAFF

Serving Staff

9. As the Review is confined to starting salaries only, serving staff will not be affected by the Starting Salaries Review.

Serving Staff on Transfer

10. Apart from those officers on advancement to a higher rank who will receive a salary no less than their existing salaries as under the existing arrangement, serving staff on in-service transfer will be subject to the new starting salaries. In addition to the practical difficulty to retain the old pay scale solely for serving staff on transfer, there is no reason why we should apply a higher than market price for entry rank.

VII. IMPLICATIONS FOR THE DISCIPLINED SERVICES

11. The Standing Commission's Starting Salaries Review does not cover the starting salaries level for disciplined services grades. The Standing Committee on Disciplined Services Salaries and Conditions of Service (SCDS) was represented on the Steering Group formed under Standing Commission to oversee the review. We recognise that there are differences between the disciplined services and the rest of the civil service. These must be considered carefully and the management and the Staff Sides consulted on how the salaries of the disciplined services should be adjusted in line with the rest of the civil service. We have formally passed the Standing Commission*s recommendations to SCDS and request them to consider whether, and if so, how starting salaries for the disciplined services grades should be modified. Upon receipt of SCDS's recommendations, if they are in line with the Standing Commission's recommendations in respect of the civilian grades, we will then seek the views of the disciplined services management and staff. We will submit SCDS's recommendations on the disciplined sides, together with the results of our staff consultation, to the Executive Council for final approval.

VIII. IMPLICATIONS ON THE JUDICIARY STARTING SALARIES

12. Given the independent status of the Judiciary, we have invited the Judiciary Administrator, who has already been briefly informed about the Review to consider inviting the Standing Committee on Judicial Salaries and Conditions of Services, responsible for the pay scale of the Judiciary, to advise on the appropriateness of adjusting the salaries of Judges and Judicial Officers in line with civil service starting salaries.

IX. IMPLICATIONS ON NON-CIVIL SERVICE SALARIES

13. We have since January this year provided Heads of Departments/Grades with the flexibility to make non-civil service appointments to meet their short-term service and operational needs. The guiding principle of the employment package to be offered is that the terms and conditions must be no less favourable than those provided for under the Employment Ordnance and Employees' Compensation Ordinance but it should not be more favourable than civil servants in comparable service ranks. In determining the level of pay, the departments may also take into account the employment market and recruitment situation of the particular grade. The implementation of the new starting salaries should provide a reference for departments to set the pay package for newly recruited non-civil service contract staff.

X. IMPLICATIONS ON SUBVENTED SECTOR SALARIES

14. Government subventions account for $75 billion or 40% of Government recurrent expenditure in 1999-2000. With a few exceptions, salaries of staff in Government-subvented sector follow the civil service pay scales. Moreover, the present subvention policy requires that remuneration in the subvented sector should be no superior than comparable ranks in the civil service. Any changes to the civil service entry pay will therefore apply to recruits in the subvented sector. In situations where the funding arrangement takes the form of outputs such as student unit cost in the case of UGC-funded institutions or bed unit cost in the case of the Hospital Authority, we will need to commence negotiations with the relevant bodies on how such entry pay savings should be reflected in the level of funding. Appointments in the subvented sector are matters between the respective subvented bodies as employers and their employees. However, given serving staff in the civil service would not be affected by the Starting Salaries Review, we will need to provide some reassurance that sufficient funding would be provided to the subvented agencies for meeting obligations to their serving staff.

XI. RECOMMENDATION ON REVIEW OF STARTING SALARIES MECHANISM

15. To ensure the continuing broad comparability between civil service pay and pay in the private sector for similar qualifications, the Standing Commission has recommended in the Starting Salaries Review the delinking of the benchmark/entry pay from the annual pay trend survey. In other words, the benchmark/entry pay will be placed outside the ambit of the annual pay trend survey. To ensure the benchmark is in line with the private sector pay in future, a full benchmark review would be conducted every three to four years with annual updating carried out in the interim.

16. Under the proposed system, benchmark pay points will not be adjusted by the pay trend, but will move in accordance with the annual survey -

  • if the survey shows that entry level pay in the private sector is lower than that in the civil service, the benchmark pay will be adjusted downward to the nearest pay point. Recruits will be remunerated at the new benchmark pay point on appointment to the civil service. Serving officers who entered at a higher benchmark will not have their pay adjusted downward;

  • if the survey shows that private sector pay outstrips that in the civil service, the benchmark pay for recruits will be increased to the nearest pay point. In order to retain serving officers whose pay are below the new benchmark, we will allow those who perform up to standard to jump up to the new benchmark level; and

  • if the survey shows that private sector pay has not moved at all, neither will the civil service entry pay.
17.Though there will be an annual updating on the benchmark pay, a full review will only be conducted every three or four years. As we do not envisage the increase in benchmark pay will consistently outstrip that of the pay trend adjustment, under normal circumstances, we would not expect the benchmark pay will rise or drop substantially in between years. Thus, actual benchmark adjustment may only be made after the full triennial review.

C. PROPOSED PAY PACKAGE FOR RECRUITS

18. Having regard to the new starting salaries, we have worked out a pay model for recruits at entry rank (including serving staff on transfer). Under our proposed pay package, the current incremental pay scale system should be retained for all recruits. Officers will enter at the minimum point on the respective pay scale and the entry pay for recruits in the non-disciplined services grades would be based on the new lower benchmarks. Like the current system, they will be subject to the annual pay adjustment in accordance with the pay trend of the respective pay bands. All officers will be subject to a one-point jump annually on 1 April but subject to conditions in CSR 451 . (Unlike the existing system whereby incremental jump is granted in accordance with date of appointment, recruits whose service is more than half a year, i.e. those who join before 1 October the previous year, will be eligible for one-point incremental jump in the next year on 1 April. Those who join after 1 October will not be eligible for the jump until 1 April of the year after next).

19. At Annex E is a comparison table on the existing civil service pay model and the proposed pay package for recruits.

D. RECOMMENDATIONS ON FURTHER REVIEWS

20. The Standing Commission has identified a number of issues for the Administration to follow up.

I. REVIEW OF SALARIES OF SERVING STAFF

21. Given there may continue to be concerns about the salary levels of the civil service beyond entry level, the Standing Commission has recommended that consideration should be given to whether and how this question may be addressed.

22. The present review is confined to starting salaries as we believe these can be directly compared on the basis of educational qualifications. Comparison of salaries beyond the entry level is very complex and time consuming in view of the very different nature of private sector and civil service jobs and the very different career structure and progression in the two sectors. We noted the Standing Commission's recommendation on review of salary beyond the entry level and will consider the way forward after taking into account the Staff Sides' views.

II. REVIEW OF THE QGS

23. Since 1979, grades with similar educational qualification requirements for civil service appointment have been grouped under different QGs. The Standing Commission has recommended that a review on the present QGs should be conducted with a view to simplifying the present groupings and doing away with those that consistently have no comparisons with the private sector.

24. We concur with the Standing Commission that the QG classification is crucial to ensure the continuing broad comparability in starting salaries between the civil service and the private sector. We will liaise with the Standing Commission on how to take forward such a review. Given the proposed benchmark review mechanism, the review should preferably be done in time for the next updating exercise for benchmarks in the latter half of 2000.

III. REVIEW OF SPECIAL JOB FACTORS

25. Following recommendations by the Standing Commission during the 1989 Overall Grade Structure Review, the starting salaries of some 110 civil service grades are pitched variously at one to six incremental points above their respective benchmarks. The additional pay points were awarded in recognition of special job factors pertaining to individual grades and/or serious recruitment and retention problem. Though some of these special job factors, in particular recruitment and retention problems, may no longer be valid, we have advised the Standing Commission to treat these factors as given assumptions for the purpose of this review, which deals only with starting salaries.

26. There are 14 grades in the civil service whose starting salaries are set above the benchmark because of previous recruitment and retention difficulties. The Standing Commission has recommended that the Administration should conduct further reviews to see whether recruitment and retention are still problems for these grades. We agree with the Standing Commission that the recruitment and retention factors seem rather out of place in the present circumstances. However, given the current civil service recruitment freeze, we will re-visit the issue after the freeze is lifted.

IV. REVIEW OF PRIVATE SECTOR PAY LEVEL

27. The Standing Commission has also recommended that the Administration should re-examine whether private sector pay data at the third quartile level should continue to be used a reference in setting civil service benchmarks. Given the need to set civil service remuneration at sufficiently attractive levels in order to attract officers of good calibre, we consider that it is appropriate to compare civil service pay with the third quartile pay level of the larger and more established companies in the private sector.

TIMETABLE

28. We will start consultation with staff and management in the non-disciplined services departments. We have also passed the Standing Commission*s report to SCDS and the Judiciary Administrator for them to consider whether and how the starting salaries of the disciplined services and the Judiciary should be adjusted in line with the civil service.

29. After the consultation, we will revert to the Executive Council on the revised starting salaries and our recommendations on further reviews for final approval. At the moment, we aim to implement the revision when the current freeze in civil service recruitment is lifted. However this will depend on the progress of our negotiations with Staff Sides.

FINANCIAL AND STAFFING IMPLICATIONS

30. Assuming the pattern of recruitment in the years 1996-97 to 1998-99 (an average of about 5500 recruits in civilian grades a year), we estimate that $160 million in savings per annum could be achieved from implementing the new starting pay in the civil service. Similar payroll savings would be achieved in the Government subvented sector. The quantum will depend on wastage and service expansion.

ECONOMIC IMPLICATIONS

31. Government, just like any other employer, has to compete for the manpower and expertise it needs, through offering appropriate salaries and other terms of employment. Civil service salaries should also be regarded as fair both by civil servants and by the public which they serve and should be broadly comparable with those in the private sector, and should also be regarded as fair both by civil servants and by the public which they serve. The results of the starting salaries survey show that the pay offered for recruits by employers in the private sector are generally lower than those offered in the civil service. Suitable downward adjustment to the civil service starting salaries will merely render closer parity with private sector entry pay. As such, it is a move to follow, not lead, the market. Besides, the review is focused only on starting pay for the basic ranks. Its actual significance on the overall labour market should not be taken out of proportion.

PUBLICITY

32. The Secretary for the Civil Service has held two briefings, one for the Head of Grades/Departments and another for the Staff Sides of the four central consultative councils and major staff associations in the afternoon of 20 July. A press conference will be held in the same afternoon. A spokesman will handle media enquiries. A core group of spokesmen will field current affairs and phone-in programmes as necessary.

SUBJECT OFFICER

33. Enquiries concerning this brief should be addressed to Cecilia Yen, Principal Assistant Secretary for the Civil Service (Special Duties) (Tel : 2810 3113).

Civil Service Bureau
20 July 1999

BRIEF FOR THE LEGISLATIVE COUNCIL
THE STARTING SALARIES REVIEW

ANNEXES

  1. Report on Civil Service Starting Salaries Review 1999

  2. Pay Comparison Survey

  3. Existing and Proposed Benchmarks under the Starting Salaries Review

  4. New Starting Salaries for Individual Grades

  5. Pay Package for Serving Officers and New Recruits

Annex B

Pay Comparison Survey

The pay comparison survey on starting salaries is conducted on the following premises -
    the size of the survey field is 133 companies, including 63 which were also involved in the 1998/99 Pay Trend Survey. These companies are considered to be good employers which are in direct competition with the civil service for the same manpower in staff recruitment;

    to ensure that the most up-to-date data are captured, the survey covers the period from 2 April 1998 to 1 April 1999;

    comparison is limited to the entry ranks of the existing 16 civil service QGs, as far as practicable;

    only 14 QGs are covered in the survey. The remaining two grades, namely "Education Grades" and "Other Grades" are excluded because of their unique job nature and/or their disparate entry requirements;

    only broad indicators of private sector remuneration is produced for comparison;

    in line with the Government's policy of keeping in step with remuneration practices of the larger and more established companies in the private sector, the third quartile level of private sector pay data is used as reference in determining the new benchmarks.

Annex C

Existing and Proposed Benchmarks under the Starting Salaries Review

QGQualification GroupsExamples of GradesExisting
Benchmark		Proposed
Benchmark		Reduction
1Grades not requiring a full School Certificate Bailiff's Assistant, Clerical Assistant, Data Processor, Postman, Telephone Operator, Typist, Water SamplerMPS 1
($8,625)		MPS 0
($8,125)		-1 point
(-5.8%)

School Certificate Grades
2Group ICalligraphist, Clerical Officer, Land Inspector, Personal Secretary, Supplies Supervisor, Welfare WorkerMPS 3
($9,785)		MPS 2
($9,180)		-1 point
(-6.2%)
3Group IIConfidential Assistant, Labour Inspector, Tax Inspector, Trade Controls OfficerN/AStarting salaries to be determined having regard to internal relativity with QG2 (School Certificate Grades Group I)

Higher Diploma, Diploma and Related Grades
4Group IDental Therapist, Health Inspector, Occupational Therapist, Radiographer, Registered NurseMPS 13
($18,140)		MPS 11
($16,095)		-2 points
(-11.3%)
5Group IIAeronautical Communications Officer, Audiology Technician, Dispenser, Explosives Officer, Laboratory Technician, Printing Officer, Social Work Assistant, Statistical Officer MPS 10
($15,160)		MPS 6
($11,820)		-4 points
(-22.0%)
6Group IIIComputer Operator, Dental Hygienist, Enrolled Nurse, MidwifeMPS 7
($12,595)		MPS 3
($9,785)		-4 points
(-22.3%)
7Technical Inspectorate and Related GradesAir-Conditioning Inspector, Building Supervisor, Clerk of Works, Electronics Inspector, Force Armourer, Marine Controller, Motor Vehicle ExaminerMPS 13
($18,140)		MPS 11
($16,095)		-2 points
(-11.3%)

Technician, Supervisory and Related Grades
8Group IAmenities Assistant, Armourer, Butcher, Foreman, Launch Master, Mortuary Technician, Printing Technician, Sailor MPS 6
($11,820)		MPS 6
($11,820)		--
9Group IIArtisan, Cook, Darkroom Technician, Domestic Servant, Leading Sewerman, Motor Driver MPS 6
($11,820)		MPS 5
($11,115)		-1 point
(-6.0%)
10Matriculation GradesAmenities Officer, Assistant Registrar, Court Prosecutor, Housing Manager, Judicial Clerk, Land Executive, Liaison Officer, Social Security Officer MPS 10
($15,160)		MPS 4
($10,420)		-6 points
(-31.3%)

Professional and Related Grades
11Group IArchitect, Assessor, Auditor, Building Surveyor, Government Counsel, Dental Officer, Electrical Engineer, Insurance Officer, Medical and Health Officer, SolicitorMPS 27
($35,285)		MPS 22
($28,075)		-5 points
(-20.4%)
12Group IIAdministrative Officer, Agricultural Officer, Cartographer, Chemist, Economist, Forestry Officer, Pharmacist, PhysicistMPS 27
($35,285)		MPS 22
($28,075)		-5 points
(-20.4%)
13Degree and Related Grades Accounting Officer, Chinese Language Officer, Executive Officer, Hospital Administrator, Labour Officer, Librarian, Social Work Officer, Trade OfficerMPS 16
($21,010)		MPS 11
($16,095)		-5 points
(-23.4%)
14Model Scale 1 GradesWorkman II, Car Park Attendant II, Ganger, Lift Operator, Ward AttendantMOD1
($9,785)		MOD0
($8,615)		-1 point
(-12.0%)
15Education GradesCertificated Master/Mistress, Education Officer, Inspector (Graduate), Primary School Master/MistressN/AStarting salaries to be determined having regard to established relativity with QG 4 and QG 13N/A
16Other GradesAir Traffic Control Officer, Chauffeur, Chef, Driving Examiner, Domestic Staff, Legal Aid Assistant, Photographer, Proof Reader, Protocol Officer, Traffic Warden N/AStarting salaries to be determined by reference to (a) traditional relativities with other QGs and (b) where such relativities are not available, the relevant educational attainment stipulated in the appointment requirementsN/A

Annex E

Pay Package for Serving Officers and Recruits


Serving OfficersRecruits
Pay
  • incremental pay scale system;

  • pay trend adjustment based on the Net Pay Trend Indicators;

  • automatic incremental jump CSRs 451 and 452 (now rarely exercised) in accordance with his/her date of appointment;

  • e.g. Executive Officer II now remunerated at MPS 17
  • incremental pay scale system;

  • pay trend adjustment based on the Net Pay Trend Indicators;

  • all officers will receive one increment each year (except for poor performers as provided under CSRs 451 and 452); only those who join before 1 October will be eligible for incremental jump on 1 April in the next year;

  • the delinking of entry pay from the pay trend mechanism;

  • when the benchmark pay point moves up or down, recruits will be remunerated at the new benchmark; serving officers with pay below the new benchmark will jump to the new benchmark level;

  • new lower entry pay based on recommendations in the Starting Salaries Review, e.g. Executive Officer II will be remunerated at MPS 12