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CONFIDENTIAL

SIR Y K PAO'S CHEVENING WEEKEND

V. HONG KONG CIVIL SERVICE PAY

Background

-

15-16 MARCH 1986

1.

Service

Unions

have

been

pay

Since late last year Hong Kong

negotiating

levels by up to 6%. This

Kong Government and main Civil

over

latter's

pay

claim

to

increase non-directorate

result of a

of a Government pay award to the directorate late last year of between 6% and 13%, linked to private sector pay trends.

claim was

a

2.

Hong Kong

have

offered

the unions

2.7%

increase,

as

an

sector

interim award pending further study of comparable private

a

pay levels this year. It

is not yet clear whether the Unions will

accept this.

3.

Government

echoed his

Sir YK Pao advocated concern.

the

vis

Sir Y K Pa o recently expressed concern to senior Hong Kong

officials about officials about this dispute. Chinese officials present

a compromise; but

likely basis of his,

his, and Chinese

and Chinese concern, i s that Hong Kong Civil

whous that their ewe may Servants may be becoming too highly paid, and be establishing a more powerful and aggressive position vis a their employer. The Chinese would then be concerned that they would

in 1997

unionised Civil large and militantly a absorbing a disproportionate share of Hong Kong's wealth. Chinese officials have not yet raised this with HMG or Hong Kong

take the

inherit

formal

way,

officials in

Sir Y K Pao any opportunity to fire an early warning shot.

may

Service

Although

present

CONFIDENTIAL

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