That the government will freeze the salaries of all officeholders and reduce the establishment of the civil service as part of the measures to restore fiscal balance is a welcome development. Still, the government should adopt more bold initiatives to review the high salaries and structure of the incumbent civil service, with the objective of reducing the government’s staggering expenditure on civil servants’ salaries while still ensuring high-quality public services.
The government should also speed up the development of the Northern Metropolis and leverage local innovative and technology industries to bolster economic growth. Hong Kong should also deepen its economic cooperation with emerging markets to woo enterprises and capital from all over the world.
Under the latest fiscal consolidation measures in the budget, the cumulative reduction of the government’s recurrent expenditure will reach 7 percent from fiscal year 2024-25 to 2027-28. About 10,000 civil service posts are expected to be slashed by 2027.
It is estimated that Hong Kong will have a deficit of HK$87.2 billion ($11.2 billion) in 2024-25 and HK$67 billion in 2025-26, and fiscal reserves will fall from HK$647.3 billion in 2024-25 to HK$580.3 billion in 2025-26. Despite the civil servants’ pay freeze, the government still incurs a staggering amount of expenditure on their salaries.
The government may need to squeeze expenditures in outsourcing public services to contractors, such as security, facility maintenance and management in some public venues as well as initiating tenders for mounting professional consultancy services, such as architecture and engineering in public works projects.
Based on the Civil Service Bureau statistics, the government’s expenditure on salaries of the 173,000-strong civil service increased by 4.7 percent from HK$149.1 billion in 2022-23 to HK$156.2 billion in 2023-24, accounting for around 25.9 percent of the government’s operating expenditure.
It is vital for the government to embrace bold measures to review the high salaries and structure of the civil service, amid prevalent social calls for pay reduction among civil servants. Currently, the monthly entry salary of Administrative Officers (AO) under the government’s master pay scale is much higher than that of management trainees in multinational companies.
The monthly entry salary of AOs reaches HK$61,865 under the master pay scale at pay point 27, as compared with the salaries of management trainees in the private sector, such as those in banking, at around HK$40,000. At the same time, civil servants are remunerated based on pay points under the master pay scale of their respective positions. They normally get salary increments on higher pay points each year — until they reach the maximum pay points of the pay scale of their positions.
AOs can receive a monthly salary of HK$119,650 when they reach the maximum pay point (point 44) of the pay scale, before getting promotion. As such, the government should review the high salaries among some senior civil servants’ posts. It should also review the mechanism on salary increments based on pay points under the master pay scale.
Only those who have exceptional work performance should get salary increments. The government can further consider recruiting civil servants in top positions, such as directorate officers in government bureaus, from the private sector. All these moves can ensure that public fiscal resources are used to sustain a high-performing and efficient civil service force.
Also, it is not desirable for young university graduates to apply for low-skilled yet high-paying civil servants’ positions. In recent few years, more graduates with degrees have flocked to apply for low-skilled civil service posts, such as clerical officers — even though they are overqualified in their academic achievement for these positions.
The minimum requirements for candidates to apply for the position of assistant clerical officer (ACO) are not a university degree but Level 2 in five subjects in the Hong Kong Diploma of Secondary Education Examination and a Chinese word processing speed of 20 words per minute.
The monthly entry salary of ACOs reaches HK$17,200 at pay point 3 and stands at a maximum of HK$35,080. The monthly entry salary of clerical officers reaches HK$36,850 at pay point 16. As such, more university graduates have competed for low-skilled civil servants’ jobs for high salaries, letting their talent and professional knowledge and expertise go to waste. So young people with low academic achievements have little chance of landing a low-skilled civil servant job.
Furthermore, the SAR government should speed up the development of the Northern Metropolis, including the Hong Kong Park of the Hetao Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone, to scale up local innovative and technology industries, creating new momentum and vitality for the city’s economic development.
In the latest budget, the government earmarked HK$3.7 billion to expedite the provision of infrastructure and public facilities of Phase 1 development of the Hong Kong Park in the Cooperation Zone in Hetao.
Chinese mainland high-technology companies have achieved remarkable growth in diverse sectors, including artificial intelligence and humanoid robots, in recent years; the SAR government can attract these enterprises to set up offices and laboratories in the Hong Kong Park.
Local universities can leverage their world-renowned innovative research and development capacity, and collaborate with local and mainland high-tech companies, launching their products and services in markets in the Guangdong-Hong Kong-Macao Greater Bay Area, thereby bolstering high-quality development in the region.
During his inspection tour to the Hong Kong Park earlier this month, Xia Baolong, director of the Hong Kong and Macao Affairs Office, emphasized that Hong Kong should boldly pursue reform to break new ground in socioeconomic development.
Based on the SAR government’s statistics, the Office for Attracting Strategic Enterprises has attracted 66 strategic enterprises to Hong Kong, each of which has a market valuation of over HK$10 billion. Upon completion of the whole Hong Kong Park in Hetao, its annual contribution to Hong Kong’s economy is expected to reach HK$52 billion, and about 52,000 jobs will be created.
In addition, Hong Kong should step up cementing its unparalleled connectivity between the mainland and the rest of the world, and deepening economic and trading cooperation with emerging markets.
In the budget, the government highlighted that it will continue to utilize Hong Kong’s role as a platform for the Belt and Road Initiative, and explore the Association of Southeast Asian Nations and Middle East markets. To expand Hong Kong’s trade network, the government should closely liaise with the governments of Malaysia and Saudi Arabia on the establishment of economic and trade offices in these countries.
At the same time, Hong Kong can woo more mainland and overseas enterprises to list here, and support them by offering financing, accounting and other professional services. It should also attract more global enterprises and capital to Hong Kong, stimulating local stock trading and accelerating economic development. Based on Hong Kong Stock Exchange and Clearing Ltd’s latest statistics, there were 71 new listings in the city in 2024, raising a total of HK$87 billion.
Hong Kong should also organize more sports events and concerts to attract global travelers after the opening of the Kai Tak Sports Park in March. In the budget, the government proposed introducing more sports events that can bring significant economic benefits. It will also turn Hung Hom into a new harborfront landmark with a yacht club. All these initiatives will lure more high-end global tourists and boost local retail, dining and hotel sectors. Based on the Hong Kong Tourism Board’s statistics, the number of tourists visiting the city surged by 24 percent to 4.74 million in January.
Above all, it is good news that the government announced measures to relieve taxpayers and businesses’ financial burden amid the constraints imposed by fiscal deficit. These include reductions in salaries tax capped at HK$1,500. It will also ease the burden on buyers of residential and nonresidential properties with the government’s move to raise the maximum value of properties chargeable to a stamp duty of only HK$100 from HK$3 million to HK$4 million.
To conclude, the SAR government needs to uphold prudent fiscal management and resolve fiscal deficit at the earliest. Aside from implementing a pay freeze and downsizing the civil service establishment, the government should review the high salaries and structure of the civil service in a bid to reduce the staggering expenditure on civil servants’ salaries in the long term.
Hong Kong also needs to accelerate the development of the Northern Metropolis, particularly in the Hetao area, striving to attain new economic growth driven by innovative and technology industries and contributing to high-quality development in the Greater Bay Area.
The author is a member of the Beijing Municipal Committee of the Chinese People’s Political Consultative Conference, and founder and chairman of the One Country Two Systems Youth Forum.
The views do not necessarily reflect those of China Daily.
