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1324.
WHETHER HKG COULD NOT TAKE ACTION IN A WAY WHICH, THOUGH ALSO BENEFITING OTHER OFFICERS, WOULD ENCOURAGE MORE MEMBERS OF THIS GROUP TO STAY ON CONTRACT TERMS, IE IT WOULD ACT AS A DISINCENTIVE TO THEIR APPLYING FOR PENSIONABLE TERMS AND TO ENROL IN HMOCS. WE EXPLAIN OUR THINKING AT PARA 8 BELOW.
5.
IN THE LIGHT OF PARA 4 OF TUR WE SEE MORE CLEARLY THE DIFFICULTIES ABOUT HMG'S INTRODUCING SPECIAL ARRANGEMENTS FOR THIS GROUP, WHETHER AS COMPENSATION FOR LOSS OF THE RIGHT TO APPLY TO JOIN HMOCS OR AS A WAY OF DISCOURAGING THEM FROM EXERCISING THAT OPTION. WE COULD NOT OPENLY ADMIT THE LATTER OBJECTIVE, SO ANY HMG CONTRIBUTION WOULD HAVE TO EXTEND ALSO TO SOME OF THE OTHER CONTRACT OFFICERS. EVEN IN THE CASE OF ACTION LINKED TO LOSS OF THE RIGHT TO APPLY TO JOIN HMOCS IT WOULD BE DIFFICULT TO HOLD THE LINE.
6.
HOWEVER IT WOULD HELP US WITH THE TREASURY IF WE COULD ADDUCE SOME FINANCIAL ARGUMENTS TO BOLSTER THESE ESSENTIALLY POLITICAL ONES. WE WOULD BE GRATEFUL THEREFORE FOR YOUR ROUGH ASSESSMENT OF WHAT LEVEL OF HMG SUPPLEMENT TO THE GRATUITY WHICH HKG PAY THESE CONTRACT OFFICERS ON TERMINATION OF CONTRACT MIGHT BE NECESSARY IN ORDER TO INCREASE SIGNIFICANTLY THE PROBABILITY THAT MOST OF THEM WILL STAY ON CONTRACT TERMS. IF WE COULD SAY THAT HMG WOULD HAVE TO ADD ANOTHER 10 PER CENT OF BASIC SALARY EARNED OVER THE TWO AND A HALF YEAR CONTRACT PERIOD TO THE 25 PER CENT WHICH YOU ALREADY PAY, THE FINANCIAL IMPLICATIONS WOULD BE UNATTRACTIVE. IN EFFECT HMG WOULD HAVE TO PAY 30 PER CENT (IE 2.5 TIMES 12 PER CENT) OF ANNUAL SALARY TO THE OFFICERS AT THE EXPIRY OF THEIR FIRST CONTRACT STRADDLING 1997, IE IN 1998 OR 1999 OR 2000, AND ANOTHER 30 PER CENT EVERY TWO AND A HALF YEARS THEREAFTER UNTIL THE SCHEME CAME TO A END. THIS COULD PROVE MORE GENEROUS AND EXPENSIVE THAN THE MAIN SCHEME FOR HMOCS OFFICERS, GIVEN THE PROTRACTED PHASING PERIOD AND LOW ELEMENT OF FRONT-LOADING WHICH THAT IS LIKELY TO INCORPORATE.
7. WE SHOULD ALSO BE GRATEFUL FOR FURTHER INFORMATION ABOUT YOUR OWN APPROACH TO RETAINING THE OFFICERS NEEDED IN HONG KONG. SUCCESSIVE GOVERNMENTS HAVE OF COURSE RECOGNISED SPECIAL OBLIGATIONS TOWARDS HMOCS OFFICERS. HOWEVER A MAJOR CONSIDERATION IN BRINGING MINISTERS TO AGREE TO MAKE APPROPRIATE ARRANGEMENTS IN THE HONG KONG CASE SO FAR AHEAD OF 1997 HAS BEEN THE PERCEIVED NEED TO PROVIDE AN INDUCEMENT TO THEM TO CONTINUE TO SERVE AND THUS TO CONTRIBUTE TO HONG KONG'S CONTINUING STABLILITY AND PROSPERITY. WE NOW WANT TO AVOID ANY UNRAVELING
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