CONFIDENTIAL
contract officers need to know what sort of compensation scheme will
be in place so that they can decide by 31 March 1991 whether to transfer to pensionable terms. Moreover all officers on pensionable terms have to decide by 1 July 1992 whether to join the new Hong
Kong Government pension scheme.
18. A better solution might be to announce that the level of
compensation would be based on today's salary levels of the relevant civil service grades, to be increased only in line with inflation.
Consulting the Chinese
19.
Since the scheme will entail payments made by HMG to civil
servants of the SAR Government, this is clearly an issue on which the Chinese could legitimately claim they should be properly consulted. They could also point to the precedent established by consultations over the limited compensation scheme, which was the subject of discussion at several Plenary meetings of the JLG. Against this background and our decision to step up the level of
consultation with the Chinese, it would not be advisable to think in terms of simply informing the Chinese or of merely going through the
motions of consultations.
20.
The Chinese may suspect that the scheme is yet another attempt by Britain to continue to exert her influence in Hong Kong after 1997. We will therefore need to take great care to try to allay Chinese suspicions before announcing the scheme. We could make the point that this is a UK scheme funded by HMG in recognition of our special obligations to members of HMOCS. These obligations were entered into 30 years ago and were not drawn up specifically with Hong Kong in mind. The whole reason for having a scheme which
involves payments after 1997 is to help to ensure that Hong Kong remains stable and prosperous both before and after 1997 by encouraging expatriates in the civil service to remain in place. normal compensation scheme which involved a substantial lump sum
payment in 1997 would encourage a big outflow of expatriates in
WEDABH/8
CONFIDENTIAL
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