TNAG-2101-FCO40-2990-HM-Overseas-Civil-Service-(HMOCS)-policy-matters-1990 — Page 183

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TO PRIORITY HONG KONG

TELNO 2000

OF 26161OZ OCTOBER 90

INFO PRIORITY PEKING, UKREP JLG HONG KONG

PERSONAL FOR GOVERNOR FROM PAUL, HKD

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OUR TELNO 114: GENERAL COMPENSATION SCHEME

1.

I OWE YOU AND OTHERS AN ACCOUNT OF WHERE AT AN INTERDEPARTMENTAL LEVEL IN WHITEHALL, MATTERS NOW STAND ON THIS SUBJECT. AS YOU KNOW, SINCE OUR LAST EXCHANGE OF TELEGRAMS, WE HAVE HELD A SERIES OF DETAILED DISCUSSIONS WITH THE ODA AND THE TREASURY, AND HAD A USEFUL SESSION WITH YOU AT THE END OF YOUR ANNUAL LEAVE IN AUGUST. AS A RESULT OF THESE DISCUSSIONS, WE HAVE REFINED OUR THINKING FURTHER. IN THE MEANTIME, THE PARTICULAR CONCERNS OF HMOCS OFFICERS, BOTH THOSE SERVING IN HONG KONG AND THOSE WHO HAVE RETIRED, HAVE MOVED INTO SHARPER FOCUS.

2. AS YOU KNOW, MINISTERS APPROVED IN 1988 A COMPENSATION/ INCENTIVE SCHEME TAILORED TO THE SPECIFIC CIRCUMSTANCES OF HONG KONG. IT SEEMS TO US, HOWEVER, THAT THE ANNOUNCEMENT OF SUCH A SCHEME NOW MAY NOT ACHIEVE THE OBJECTIVE OF PERSUADING HMOCS MEMBERS TO STAY ON IN HONG KONG IF THEIR CURRENT MAIN CONCERN IS THE POSSIBLE EROSION OF THE VALUE OF THEIR PENSION WHICH WOULD RESULT FROM ANY FALL IN THE VALUE OF HONG KONG DOLLAR. WE HAVE THEREFORE CONCLUDED THAT, RATHER THAN PROCEED WITH A COMPENSATION/INCENTIVE SCHEME IN ISOLATION, WE SHOULD LOOK AT THE VARIOUS FACTORS WHICH WILL AFFECT THE WILLINGNESS OF HMOCS MEMBERS TO REMAIN IN HONG KONG AND PUT TOGETHER A COHERENT PACKAGE OF PROPOSALS WHICH WILL ACHIEVE THE OBJECTIVE OF RETAINING HMOCS MOST COST EFFECTIVELY.

3.

IT SEEMS CLEAR THAT IF THE QUESTION OF A POSSIBLE STERLING SAFEGUARD FOR PENSIONS IS THE MAIN CONCERN, THEN WE MUST SEEK TO ADDRESS IT. THE COSTS OF ANY SUCH SAFEGUARD COULD IN THEORY BE MET EITHER BY THE BRITISH GOVERNMENT OR THE HONG KONG GOVERNMENT. I HAVE TO ADVISE YOU, HOWEVER, THAT THERE WOULD BE STRONG RESISTANCE HERE TO A STERLING SAFEGUARD SCHEME FINANCED BY HMG, NOT LEAST FOR ITS PUBLIC EXPENDITURE CONSEQUENCES.

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