Sessional_Paper_1929 — Page 81

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port (1921) stated that "owing to the complexity of the factors involved and the lack of sufficiently comparable data...... it was beyond our power to arrive at a mathematically accurate index figure of increase". It is also difficult to differentiate between the pro- portion of that increase which may be regarded as permanent and that which is due to temporary causes.

11. But, after the most careful consideration that we can give to the subject, we think that the percentage increases already granted fairly represent the total additional expense which Government should be called upon to meet, if fair treatment is to be shown to officers on a sterling basis; and that a 15 per cent addition to the existing nominal sterling salaries may properly be regarded as representing a permanent increase in the cost of living in the Colony.

12. We recommend that the present system of allowing $12 to the pound, plus a varying percentage for the conversion of sterling into dollars, be abandoned and that in its place the following be substituted :-

All sterling salaries of employees of the Government should be increased by 15%, subject to the conditions laid down in paragraph 13, infra, and should be paid to them when on duty in Hong Kong on the last day of each month in dollars, Hong Kong Currency, at the average opening published demand rate of exchange on London of the Hongkong and Shanghai Banking Corporation, from the 15th of the preceding month to the 15th of the month for which payment is to be made, provided that such average demand rate of ex- change on London for the month is 2/-, or less than 2/-, but if the average demand rate of exchange be more than 2/- the salaries shall be paid in dollars Hong Kong Currency at exchange 2/-.

In addition to the above, we recommend that the Government, at its discretion, continue to pay a High Cost of Living Allowance to officers but not exceeding :-

15% of the nominal sterling salary of married officers and 71% of the nominal

sterling salary of unmarried officers.

Taking exchange at 2/-, for example, and applying the rule strictly, a married officer at present receiving a nominal salary of £1,000 per annum and actually $1,1 120 per mensem will receive £1,150 per annum plus a high cost of living allowance of 15% = £1,322.10.0d. per annum or approximately $1,102.10 per mensem.

Similarly, an unmarried officer at present receiving a nominal salary of £1,000 per annum and actually $1,060 per mensem will receive £1,150 per annum plus 7% = £1,236.5.0d. per annum or approximately $1,030.20 per mensem.

This would mean that the amount of the dollar salaries drawn in Hong Kong would be slightly reduced, but the leave and pensionable pay would be increased by 15% for both married and unmarried officers.

13. In fixing salaries on a sterling basis we have given effect generally to the con- siderations dealt with in the two last preceding paragraphs; but we have endeavoured to retain to an officer the number of dollars he is at present drawing, and this has made it necessary to depart frequently from the literal application of the rule laid down in para- graph 12 of this Report.

14. Other considerations obviously apply in the case of officers on dollar salaries. Here, as with sterling salaries, we have been faced with the difficulty of arriving at a fig- ure which would accurately represent the increase in the cost of living. A very large proportion of the witnesses have enlarged on this increase as a fact and have proved to us the difficulty they have in balancing their domestic budgets. We have given our most careful consideration to the question as a whole and we have come to the conclusion that a 20% increase on dollar salaries would be fair to this class of officer. We have kept this percentage in mind in making our recommendations but have not adhered to it literally in every case.

15. A matter emphasised by many witnesses was the difficulty, if not impossibility, that many married officers have in maintaining themselves, their families and dependents on existing scales of pay. We assume that Government is willing to give serious considera- tion to such representations but we think that it should be laid down as axiomatic that Government is not called upon, as from the first entry of any person into its service, to provide a salary which is sufficient, not only to keep himself in reasonable comfort, but also to maintain a wife and children, and possibly even parents.