Most would agree that in Hong Kong you would find an efficient and a relatively clean civil service. For such a good service how much should society pay? The Liberal Party feels that since civil servants are permanent jobs -- an "iron rice bowl" -- their pay and benefits should only be reasonable, somewhat higher than those in the private sector. But the fact now is we are paying civil servants much higher than the market rate, not counting their generous and numerous fringe benefits.

A Liberal Party wage survey, released in February, shows that a junior government clerk with a Form 4 education earns $12,073 but his private sector counterpart only $8,194 a month, a difference of 47%. A government computer operator with a Form 5 education earns $16,955 versus a private sector counterpart $12,231. A government engineer earns $60,948 but a private sector peer only $33,392. Most evidently, a new university graduate is currently offered $10,000 in the private sector but the government offers the same position at $16,000.

Tally all this up and we have a very expensive civil service, one we cannot afford as we struggle with a budget deficit that was $63 billion for the past fiscal year, a point I raised at the May 26th Sunday public forum in which no one challenged. This past year some $160 billion of $220 billion in recurrent expenditure go for civil servants and subvented organizations' staff salaries and benefits.

Financial Secretary Antony Leung in his March Budget promised to balance the books within five years, not by raising taxes except as a last resort but with a civil service pay cut of 4.75% for an annual saving of $6 billion as a start. His modest plan fell apart when a subsequent Pay Trend Survey did not justify an across the board 4.75% pay cut. The government decided, based on the latest findings, to set the pay cut at 1.58% for junior ranked civil servants, 1.64% for the middle ranked, and 4.42% for the senior ranked for an annual saving of around $2 billion. The Executive Council then last week reaffirmed their consent for the government to draft legislation for the cut.

The Liberal Party considers the latest Pay Trend Survey, like previous ones, distorts and misleads in the civil servants' favor. The survey, done with 91 companies employing a hundred or more employees each, asked workers how much they made compared with last year, which should not be the only assessment. The surveyors did not consider how many workers those companies had dismissed in that time, how much more work was done by fewer hands, and how many high paid workers had been replaced by less costly ones. A more comprehensive and objective survey would have confirmed the anecdotal evidence of a very bleak employment landscape with people being paid less, or laid off, and doing more.

Civil service unions, however, refuse to accept even the mild EXCO decision based on Pay Trend Survey findings. They threaten to go to court for an injunction against any law that legislators might pass that would require them to surrender just a fraction of their grossly inflated wages.

Some legislators last Monday, after a futile session with the more militant unions, had concluded that we had no choice but to proceed with legislation. Other legislators, however, have remained hesitant and have even spoken up for the unions.

Unions quote Basic Law Article 103 that "Hong Kong's previous system of recruitment, employment, assessment, discipline, training and management for the public service, including ... pay and conditions of service shall be maintained..." They also quote the second half of Article 160 that "documents, certificates, contracts, and rights and obligations ... previously in force in Hong Kong shall continue to be valid..."

They conveniently ignore Basic Law's crucial Article 107, which stipulates that Hong Kong shall "strive to achieve a fiscal balance ... and keep the budget commensurate with the growth rate". To leave untouched civil service pay, which accounts for 70% of expenditure and the bulk of the deficit, will certainly violate this Law.

The Liberal Party also believes that the government has an obligation to the Basic Law and the public to use legislation to reduce the budget deficit and civil service pay, should negotiations fail. We hope that the law on salary adjustments will be permanent rather than for one year and state specifically that civil service pay can increase or decrease, like any other government in the world.

The Liberal Party's interpretation of these two Articles -- 103 and 160 -- is that they pertain only to the transition, which concluded in July 1997. Specifically we hold that civil servants' rights, salaries and benefits should not be less in July 1997 than before it.

But certainly the government's decision to reduce their salaries by 1.58% to 4.42% is well below the roughly 10% salary increase they have had since July 1997 and, therefore, complies with the Basic Law.

Last week Financial Secretary Mr. Leung stressed once again the urgent need to reduce government spending from 23% to under 20% GDP. He warned: "...if we cannot reduce government expenditure, then we have no choice but to do other things because we know that an uncontrolled fiscal situation will lead to a situation like Argentina and ... I can't allow this to happen." His colleague, Secretary for the Civil Service Joseph Wong, was equally blunt when he said that to balance the budget the alternatives were either a salary reduction or various tax increases, for which everybody will have to pay heavily.

If you travel to Singapore, a city with which we often compare Hong Kong to, you will find that its economy is rebounding and confidence is returning. Last year, in the throes of recession and high unemployment, Singapore's officials volunteered for a 10% pay cut to demonstrate solidarity with their people and send the message that they cared. Since then the Singapore government has won more support in its latest parliamentary elections and has also reduced taxes to attract foreign investors, not raised them, as Hong Kong may have to do to ease the deficit.

Whereas Singapore's civil servants have the welfare of their people on their minds, our civil service union leaders appear to think only of their own short-term good. A time has come for Hong Kong's civil servants to make their choice of being with the community or against it. We, legislators, too should know where we stand on the issue by voting for a civil service pay cut for the overall interest of all the Hong Kong people.

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