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Question: Governor, my question deals with an area of the economy where the Government does have direct control. Although the Government's pay trend survey of private sector wage increases may be accurate, the pay formula by which the Civil Service salaries are set seems to be flawed. Since you've been Governor, Civil Service non-directorate grade salaries have increased by one-third, which is five or six per cent faster than CPIA inflation and slightly faster than CPI Hang Seng inflation. Moreover, that one-third increase does not include increases due to annual increments or promotions. The private sector obviously comes under pressure to match these awards which lifts the entire cost base and fuels inflation which affects the profitability of many businesses. When is the Government going to tackle this problem? It will always be difficult, politically, to do so but it's one problem which the Government can directly solve.
Governor: I think that you said in your introduction, or implied in your introduction which was indeed the case, that each year the Government has followed the survey findings. We've been involved in a dialogue with, I think, some business organisations about whether those survey findings are based on the right methodology but I don't think that anybody has convinced us, so far, that they are not. In at least the first two years, we were criticised by the unions for not going further than the survey findings. For not, for example, making up the shortfall which they claimed was a hangover from previous years. But I think the community, by and large, and the Legislative Council, have thought it right for us in these years to stick firmly to the survey findings. And speaking for myself, I think that it's exceptionally important that we have the maximum goodwill in our Civil Service before and after 1997, because I think not to have that would hardly be conducive to the smooth transition that everybody wants to see.
There are quite a lot of anxieties from time to time in the Civil Service about the transition and I wouldn't want to exacerbate any of those. So we are prepared to look at the methodology behind the survey, but so long as nobody convinces us that it is right to junk that methodology, I think we're absolutely right to follow the outcome of the survey every year. And I merely refer back, not in any provocative spirit, to what I said about it the last time I was asked this question.
Thank you all very much indeed.
End/Thursday, October 19, 1995