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Public money must not be squandered on pay rises

By James Tien

During the recent recession, many companies in Hong Kong were forced to cut employees' pay and reduce the number of staff on their payroll. Although the economy is now showing signs of recovery, I know many companies, especially the small and medium enterprises, are still struggling. Statistics show that only a small proportion of employees this year received a pay rise, which averaged 2 per cent. Civil service pay rises, by contrast, are far higher than the average rate, and this will further widen discrepancies in salaries and cause a sharp rise in public expenditure.

Civil service pay rises unacceptable

Data derived from the Pay Trend Survey, therefore, are not representative enough. We have to acknowledge SMEs face more difficulties than larger firms. Some of their employees got only a modest pay rise this year, while others' wages may still be frozen.

Government selectively picks survey results

More dissatisfying is that even if we accept the credibility of such surveys, it seems that the government selectively picks survey results. In the past two years, when surveys revealed wages in the private sector were cut by an average of 2 per cent, civil servants' wages remained unchanged. But when survey results showed just a slight increase, civil servants got a substantial rise. This indicates the government selects survey results.

In recent years, the government has regularly expressed its concern over future deficits and insists that it is necessary to raise some fees regardless of market conditions. It urged Legco to pass increasing taxes on six items proposed in the Budget, which will only add HK$0.6 billion to its revenue. But the government's recent 'generous' wage offers to civil servants will cost HK$4 billion a year.

I really find this unacceptable. I fear that after the wage increase, the government will raise taxes on the grounds of 'recovering costs,' and, of course, the financial burden will be passed onto the general public and businesses to pay.

More infrastructure and HR investments needed

Public money is Hong Kong citizens' money. The government must ensure it is used appropriately. It should not offer big pay rises to civil servants at the expense of taxpayers. I think the government has to invest more in infrastructure and human resources which are conducive to Hong Kong's long-term development. I recently called on the Chief Executive and the Financial Secretary to put forward my opinions.

I recommended that in the coming Budget, provisions for establishing an 'SME Fund' be allocated to complement the HK$2 billion 'SME Finance Scheme.' This money would be used to help SMEs enhance their productivity. And the government should also adopt some measures to accelerate economic integration with the Pearl River Delta to increase funding for technological development - in light of the expected growth of the knowledge economy and to improve tourist infrastructure and English and Mandarin standards of citizens, etc.

As Financial Secretary Anthony Leung pointed out, the government should reduce its 'expenses' and boost its 'investment.' The large civil service wage increases without doubt contradict the objective of reducing 'expenses.' The government must give this issue due consideration to ensure public money is being properly spent.