CO129-601-1 Salaries Commission- currency basis of emolument 9-1-1948 - 5-6-1948 — Page 57

57

6

S. No. 10/4406/47c.

SECRET.

20.8.

53723/6/48

Government House,

Hong Kong.

6th February, 1948.

Awad (a)

Sir,

(1)

I have the honour to refer to

my telegram No.4 of 9th January, 1948, and to address you on the suoject or the exchange rate to be acopted for the payment outside iong Kong of pensions, gratuities and leave salaries now that revised salaries are to be on a Hong Kong dollar basis in accordance with the recommendation in paragraph 16 of the Salaries Commission's Report.

2. I attach for your information a copy of e confidential letter fated 20th January, 1948, which I have received from the Acting Chairmen of the Council of the European Civil Servants Associations in which the Council asks for a guarantee of the maintenance of the sterling value of the dollar remuneration of expatriate officers, a guaranteed minimum exchange rate of 1/3 to the Hong Kong dollar for pensions and Widows and Orphans pensions and a guarantee that gratuities payable on abolition of office shall be assessed in sterling.

It would clearly.be impossible to put into effect the policy outlined in Colonial White Paper No.197 of 1946 of fixing salaries at rates applicable to locally recruited staff if the basic salaries for local staff and for such staff as it is necessary to attract from overseas were not expressed in a common currency, since the common basis would be destroyed immediately any change occurred in the exchange value of the Hong Kong dollar if the basic salaries of local officers were expressed in Hong Kong dollars and the basic salaries of expatriate officers in sterling. It would of course be possible to distinguish between oasic salary payable in Hong Kong dollars and expatria tion pay payaole in sterling but since expatriation pay is only approximately 20% of an expatriation officer's pensionable emoluments such a solution would not meet the request put forward by the Council and would in practice lead to numerous accounting complications.

The exchange rate has been 1/3 to the Pollar since 1935 but it seems fair and reasonable that expatriate officers whose present salaries are on a sterling basis should know exactly what their position will be in the event of a change in the rate after they have elected to come on to the revised terms of service.

4.

The pre-war position which appears to be a relic of the time when the Hong Kong dollar was based on silver was that under General Order No.100 sterling salaries were convertible locally at the average of the daily opening demand rates of exchange on London published in the Colony by the Hongkong and Shanghai Banking Corporation during each period from the 16th of one month to the 15th

Клав THE RIGHT HONOURABLE

A. CREECH-JONES, M.P.

RECEIVED 13 FEB 1948

C. O. REGY