Three-year pay freeze a calculated ploy

Editorial | Mary Ma 27 May 2020

Rarely have civil servants called for a pay freeze - let alone a freeze lasting three years. But that is the incredible response of the Chinese Civil Servants' Association to a pay survey that showed civil servants should receive a salary increase.

How strange! Whatever can lie behind such an unbelievable call?

In the stock market, it's common to lock in profits or cut losses when downside risks loom.

The HKCSSA did exactly this when its president, Li Kwai-yin, said they were prepared to give up an immediate petty pay rise of 1.68 to 1.98 percent - as recommended by the recently released pay trend survey results - in favor of a pay freeze for this and the next two years.

But if Li's proposal is accepted, taxpayers will actually end up paying more than they should.

It's a simple equation. Civil servants are bound to face deep pay cuts next year following the next pay survey to reflect the wage trend of the private sector this year - bearing in mind a number of companies have already slashed wages by 15 to 25 percent to survive the recession.

Were the pay survey to take into account no-pay leave being taken by many workers while officially remaining on the payroll, the gap would be even bigger.

Li's public relations skill was impressive, making what would be bad for taxpayers sound good to them. Maybe she could do better in the financial world than in the government.

For civil servants who are due to retire in the next few years, a drastic cut in their final salaries would also have a significant impact on their pensions.

No matter what ulterior motives the HKCSSA harbored when announcing the counter proposal, the controversial suggestion did offer food for thought: instead of freezing pay for a year, why make it three years instead?

Civil unrest and the coronavirus pandemic have knocked the SAR's economy backward by many years and Financial Secretary Paul Chan Mo-po is unable to assure anyone that the economic crisis will be over any time soon.

Hong Kong is less lucky this time. Even though the mainland readily bailed the city out of the last major recession in 2003 with a travel scheme tailor-made to allow tens of thousands of mainlanders to go shopping in the SAR, it is highly unlikely that Beijing will repeat the trick when the country is in dire need of hard currency.

Li and her HKCSSA colleagues are betting that the recession will last for at least two years as the pay survey due in 2022 that Li has proposed to be shelved would reflect 2021's pay trend.

Hers was not a wild guess. Although countries are emerging from lockdowns, a second wave of pandemic is anticipated over the winter and economic activities will not recover 100 percent until a vaccine or cure is found.

HKCSSA's timeline is well founded. Yet what the association didn't say offers up parallel food for thought.

With government revenues sinking amid the recession due to declines in salary tax, company profits and land sales, should the financial secretary begin planning for spending cuts to control the deficits?

It's time to start thinking about it.

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