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normal line of their promotion, and even possibly on promotion to higher classes or grades of their own branches of the service, should be placed on the new salary scales. consider it of the greatest importance that a pronouncement of your views on the general question of the applicability of any revised salaries to officers now in the service should be made as soon as possible.
20. I am assuming that there can be no question whatever of applying any new salary scales wholesale to officers now in the service. The suggestion is not likely to be made, and if made is so very unlikely to commend itself to you that I need not discuss it at any length. I believe I am right in saying that it is a principle recognized throughout the Colonial Empire that when a revision of salaries is made the new scheme shall not apply to officers already in the service unless they consent to it. The public services were given every reason, when the new Constitution was introduced, and still have every right to expect that they will not be forced to accept fundamentally altered conditions of service. To force them to do so now would be nothing short of a breach of faith.
21. These arguments would apply primarily, of course, to a proposal to impose new and reduced scales of salaries immediately upon all officers now in the service, But I think they apply with equal force to the proposal, which is likely to be made, that the reduced scales should be applied to such officers on promotion to higher classes or grades of their own branches of the service or on promotion to posts which are within their normal line of promotion, though not necessarily on their own salary scales, as, for example, the promotion of a Superintendent of Surveys to the post of Assistant Surveyor-General, or of a Provincial Engineer to the post of Deputy Director of Public Works. These are closed lines of promotion, available only to officer every officers in particular branches of the service; they are promotions which in those particular branches has a chance to achieve and a right to hope for. I can see no moral difference between applying new salary scales to officers who receive promotions of this kind and applying them wholesale to all officers now in the service, whether promoted or not. It can be equally well said of either act that it involves a fundamental change in conditions of service.
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22. As opposed to promotions of the kind I have just described, there are promo- tions to posts outside the ordinary line of an officer's promotion which, I think, need not be protected. If an officer seeks promotion or transfer to a post which in the normal course of his service he has no particular reason to expect to attain, it would be quite reasonable to make it a condition precedent to his promotion that he should accept promotion on the revised salary of the post. If he felt unable to accept that condition and declined the promotion, the normal course of his service would not be in any way affected, and although he would be entitled to feel some disappointment that the way to extraordinary promotion was barred to him he would certainly not be in a position to charge the Government with having fundamentally altered his normal conditions of service. The promotions which I have in mind are those in which an officer would be required to compete for selection with officers in totally different branches of the public service, or even with candidates not in the public service at all. 23. Between the two extremes which I have described in the two preceding paragraphs there will arise cases in which it will be a matter of considerable difficulty to decide whether the promotion can be regarded as being in an officer's ordinary line of promotion or not. No general rule will cover such cases, and the only possible course will be to treat each individually on its merits.
24. Even should you decide that you cannot agree at this juncture to a complete revision of the salary scales for future entrants to the service on the lines recommended by the Commissioners, I think it is very desirable that I should be given an indication of views on the general question how far if at all revised salary scales, if adopted
your for future entrants, ought to be permitted to affect officers already in the service. The appointment and subsequent activities of this Commission, which have received a great deal of attention from the Press and the public. have been very anxiously watched by the public services. It is, I believe, common knowledge among them that the Commission's final report will contain the recommendation that the new Salary scales should in some fashion apply to officers now in the service. Their salaries and con- ditions of service have been the subject of bitter controversy ever since the introduction of the new Constitution. and they are perfectly well aware that the question whether officers now in the service are to have their prospects affected by the introduction of new salary scales will have to come to a head sooner or later. As soon as this Interim Report is published, and perhaps even before, my approval under Article 87 (1) of the Order in Council is likely to be sought for the introduction of motions arising out of the report and affecting officers now in the service. To enable me to deal with such applications, and also to allay the very natural fears of the public services, a pronounce-
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ment of your views in this vexed question would be invaluable. I have indicated in paragraphs 20 and 23 of this despatch the form which I would recommend that pronouncement should take.
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25. As I stated above in paragraph 6, time has not permitted of the preparation of an analysis of the complete set of salary scales recommended by the Commissioners. I would invite your attention, however, to the five tables attached to this despatch, which give a comparison between the present and proposed salaries of the Civil Service, the Clerical Service, the Engineering Scale," and senior heads of departments who are not on the Civil Service scale. These tables are intended only to be generally indicative of the extent and nature of the reduction of salaries which the Commissioners have proposed should be made throughout the services. In the tables showing the Civil Service, Heads of Departments, and Engineering Scale," the columns, from left to right, show (1) the present salary, (2) rent allowance at present carried, (3) total present salary plus rent allowance, (4) the proposed new salary (without rent allow- in view of the recommended abolition of that allowance), (5) the proposed over- seas allowance calculated under paragraph 13 of the report, (6) (for Europeans) (a) the total of the new salary plus overseas allowance, (b) the difference between the present salary plus rent allowance and the proposed salary plus overseas allowance, (c) the percentage of total decrease of emoluments, and (7) (for Ceylonese) (a) the difference between the present salary plus rent allowance and the new salary, and (b) the percentage of total decrease. The arrangement of columns in the fourth and fifth tables is similar, except that there are naturally no columns for Europeans or for overseas allowance. Perhaps I should explain that in all tables the rent allowance given is that drawn by officers stationed in Colombo, Kandy, and Nuwara Eliya, subject to maxima and minima (Financial Regulation 976). Had the other stations" rent allowances been selected for purposes of comparison the percentage, of reduction of emoluments shown would have been slightly less. In the Civil Service and Clerical Service (Classes I and II) tables the rent allowance shown against the first six years of service, and against the first eleven years of service in the Clerical Service (Class III) table is that of a bachelor. All other allowances shown in the tables are those drawn by married officers. The reason. of course, is that the age at which an officer in any of the services dealt with might normally be expected to marry has been taken into account. The comparison in the case of the Civil Service does not take into account the possibility of stagnation in the various grades proposed which, if it were to occur, would of course increase the percentage of reduction of salary quite appreciably. The Commission evidently intend that it shall occur.
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propose to examine the new salaries in these five tables from three points of view (1) Are they adequate for European future entrants? (2) Are they adequate for Ceylonese future entrants? and (3) Is there any justification for the view that salaries for future entrants throughout the services should suffer reduction on the drastic scale which the tables reveal?
27. The Civil Service and ** Engineering Scale tables show that, for Europeans, the average difference between the present salaries, with the rent allowances they carry, and the new salaries plus the non-pensionable overseas allowance, is 25 per cent. in the Civil Service and 26 per cent. for the Engineers. Approximately the same average reduction appears in the table devoted to heads of departments, though here there are some considerable divergences from the average, the difference between the old and the new emoluments ranging from an actual increase of 7 per cent. (in a post now held by a Ceylonese, as it happens) to a reduction of 43 per cent. Very generally speaking, then, the tables show a reduction of 25 per cent. in the emoluments of European officers. To this must be added the fact that of these new emoluments a fraction varying from about 15 per cent. to about 25 per cent. consists of an overseas allowance which is non-pensionable. Finally, European future entrants are not to be provided with passages (paragraph 13).
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28. In my Confidential despatch of the 14th [? 24th August, 1931, on the subject of the passage vote I expressed the definite opinion that the salaries at present paid to European officers in Ceylon are barely adequate to their needs, and that the average European officer, maintaining a very moderate standard of living, can effect no savings out of his salary. That opinion I still hold. I am personally aware that the present levy, representing a reduction of 10 per cent. only on their salaries, has placed many married European officers in positions of great difficulty, particularly those who have children to educate in England. To agree to the Commissioners' proposal that
* No. 34 in Eastern No. 154.
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Europeans entering the services in future should accept appointment on three-fourths of the emoluments at present paid to Europeans, approximately one-fifth of these new emoluments being non-pensionable, and no passages being provided, would be tanta- mount to a complete suspension of recruitment from Europe.
29. In actual fact, if not in intention, I believe we have already reached the stage at which, the recruitment of Europeans to the Ceylon services will be limited to experts" possessing special qualifications not possessed by any Ceylonese candi- dates. In practice it will always be necessary to secure the concurrence of the State Council before an expert can be appointed, in order to ensure the voting of his salary. The result, in practice, will be that no Europeans will in future be appointed to the Ceylon services except where the Council recognizes and desires that a European with special qualifications should be engaged, and in such cases it will be incumbent on the Council to agree to the provision of an adequate salary. A case in point is the appointment of Mr. Huxham as Commissioner of Income Tax, where the Council agreed to vote a special salary which should not be subject to the temporary levy. Since all special cases" it does future European appointments are likely to be in the nature of not seem to be a matter of great urgency to reach a decision as regards permanent salary scales for European future entrants. It has already been decided, as you are aware, to suspend the recruitment of Europeans to the Civil Service for the next few years, and although no such specific decision has been reached as regards the technical departments it is fairly certain that, for the present at least, all normal recruitment of Europeans to those departments will remain suspended. I venture to suggest, there- fore, that your pronouncement on the question of salaries for European future entrants should be to the effect that it would be quite impossible for you to approve the salary scales proposed for them, since they are manifestly inadequate, but that the whole question of the future recruitment of Europeans to the Ceylon services will have to be considered as a separate problem, and that you are therefore unable at present to make any pronouncement as regards the salary scales that you consider should be made applicable to them. It is because the salaries proposed are so clearly inadequate for Europeans, and because some such decision as the above seems inevitable, that I have not made any separate examination of the overseas allowances suggested by the Commissioners. It is useless to consider them if they are to be allied to a scheme of salaries which obviously cannot be applied to Europeans.
30. The next question to be considered is whether the new salary scales are suit- able for future Ceylonese entrants. To take first officers of Civil List status, you will observe that the application of the new salary scales to the Civil and Clerical Services would result in an average reduction of the emoluments of Ceylonese officers of approxi- mately 38 per cent. in the Civil Service and 30 per cent. in the Clerical Service. It has quite frequently been suggested that the salaries of Ceylonese officers of Civil List status who are paid on the same sterling scales as their European colleagues are un- necessarily high, and that if those scales are adequate for Europeans with their necessarily greater expenses they must be more than adequate for Ceylonese. With that view I agree generally, but I am very doubtful whether the present salaries of Ceylonese officers of Civil List status are so excessive as to justify a reduction in the neighbourhood of 40 per cent. Even if the revision of salaries is to apply to future entrants only, I should in normal times expect a reduction so drastic to have the most serious effect on recruitment to the higher grades of the service and to bring about a fall in status which, particularly in the Civil Service, would be deplorable. Nevertheless I am prepared to admit that it is just within the bounds of possibility that, at a time of depression like the present, recruits of the same high standard as officers now in these superior grades might be prepared to enter the services on the salaries proposed by the Commissioners, for so long as the depression continues. The unemployment problem is so very acute that many young men are being compelled to accept posts on salaries which they would not have thought of accepting two or three years ago. shall return to this point later.
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31. The scales proposed for the Clerical Services (tables 4 and 5) represent a I take this figure as reduction of emoluments in the neighbourhood of 30 per cent. being approximately representative of the reductions proposed, throughout the services, in the salaries of officers not of Civil List status and earning emoluments comparable with those of the Clerical Service. The reduction of 30 per cent. is considerably less severe than that imposed on Ceylonese officers of Civil List status, but there is also considerably less ground for supposing that the present salaries of Ceylonese not graded in the Civil List are excessive. There is, at any rate, no question of their enjoying salaries fixed to meet the special needs of European officers. The Select Committee on salaries, which reported in 1928 (Sessional Paper XLVIII of 1928), recommended
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increases, in some cases substantial, in pay throughout the services for officers not graded in the Civil List. As recently as February, 1930, the Legislative Council accepted that Select Committee's recommendations and agreed to the payment of the increased salaries as from 1st October, 1930. It was at that time generally admitted that the pay of the lower grades of the services was inadequate and ought to be increased. The decision that the new salaries should come into effect as from lat October, 1930, was, however, revoked in Select Committee on the Budget of 1930-31, and afterwards in Council, and the non-Civil List services remained on the salaries they had been drawing. In making this decision the Council did not contend that its previous decision was a mistaken one, that the salaries of the non-Civil List services were adequate, and that no increases should ever have been proposed. The sole justification for their reversal of the decision of February, 1930, was that the financial situation had deteriorated to such an extent that the country simply could not afford to pay the higher salaries proposed.
32. It might possibly be argued that the fall in the cost of living since 1930 has raised the value of the present salaries of these officers to the extent that they have now become adequate. I should not be prepared to dispute that statement, although (as the Commissioners themselves admit) there are no figures available to prove it. But I certainly do not believe that the fall in the cost of living has raised the value of their present salaries to an extent that would justify their being reduced by 30 per cent. Yet it is proposed to fix salaries 30 per cent. lower than these present salaries for future entrants. To the question whether these salaries would be adequate for future entrants I should give the answer I gave as regards the salaries of Ceylonese of Civil List status. Owing entirely to the present difficulty of finding employment, I believe even these drastically reduced scales would be sufficient to attract recruits of the right type for so long as the depression continues. With a lightening of the depression I believe they would at once be found inadequate.
33 I have not attempted to examine in detail even the five tables prepared as examples of the extent of the reductions proposed by the Commissioners, as I consider that the only decisions which can be taken now are decisions on the general questions I have raised. Of these I now come to the main question, namely, whether a wholesale revision of salaries for future entrants is justifiable in present circumstances, and if so, whether you would be prepared to consider reductions as drastic as those which the Commissioners propose.
34. I have already referred to the fact that as recently as February, 1930, the Legislative Council confirmed the opinion of the Select Committee that the salaries of officers not graded in the Civil List were, generally speaking, inadequate. The report of the same Committee on the salaries of Civil List officers, which was published later. recommended increases in the salaries of certain higher branches of the services; it contained no expression of opinion to the effect that the salaries of any branch were excessive. I mention these facts in order to emphasize that as recently as 1930 a Select Committee of the Legislative Council came to the definite conclusion that the salaries of the public services were either barely adequate or definitely inadequate. At that time there was no reason to suppose that the conclusion of the Select Committee was seriously challenged by general opinion, but now it is not too much to say that everywhere outside the public services the firm belief exists that the salaries of the services are excessive. I attribute this very remarkable change of the public view entirely to the fact that, ever since the depression began to make itself felt, the question of the salaries and conditions of service of officials has been inextricably bound up in every major political issue that has arisen. At the prospect of the introduction of income tax, for example, the cry was at once raised that before a new form of taxation was introduced the Government's salary bill must be reduced. The State Council, reluctant to incur the unpopularity of increasing taxation, immediately turned to the remedy that was certain of popular support, and the debate on the Budget of 1931-32 centered almost exclusively round the demand that the salaries and allowances of officials should be reduced. Proposals that public services should be curtailed as a measure of retrenchment were met with the protest that the convenience of the public was being sacrificed to maintain the high salaries of public servants. In every case anxiety to escape from loss, embarrassment, or inconvenience, the direct results of the depression, focussed the attention of the Council, the public, and the Press on the reduction of salaries as the most convenient palliative of all the country's difficulties, and the necessary justification that those salaries were excessive was inevitably adopted. /
35. Yet, if the situation be examined dispassionately it will be seen that the only changes that have occurred since February, 1930, when the suggestion that salaries were excessive had not yet been made, are the depression, a considerable deterioration