Annex C

Annex CIMPLICATIONS OF THE PROPOSAL(i)Basic Law Implications1. The decision on the conduct of a pay level survey in 2005 and thesuspension of the conduct of the annual pay trend survey for 2004-05 are inconformity with the Basic Law, including the provision concerning humanrights.(ii) Financial Implications2. The Government will engage an outside consultant to carry out thefield work of the survey. The Civil Service Bureau will absorb the cost for theconsultancy service from within its global allocation.3. The financial implications arising from the results of the pay levelsurvey can only be assessed after the results of the pay level survey areknown and a decision is made on how the results will be applied to the civilservice.4. Under the existing arrangement, the pay of NCSC staff is capped atthe mid-point salaries of comparable civil service ranks or ranks ofcomparable level of responsibilities. Any adjustment to the civil service payscales following the pay level survey will therefore have implications on thepay offered to NCSC staff. Any such adjustment will also have a knock-oneffect on the subvented sector. An assessment of the financial implicationsin the above regards can only be made after the results of the pay level surveyare known and a decision is made on how the results will be applied to thecivil service.

(iii) Economic Implications5. The conduct of pay level survey is an important component of theimproved civil service pay adjustment mechanism, which is being developedto ensure that civil service pay is broadly comparable to private sector pay.This would be commensurate with the need to attract personnel of the rightcalibre for the respective civil service posts on the one hand, yet not to anexcessive degree as to breed wastage in financial resources on the other.6. Currently, the civil service makes up about 5% of the total workforceand civil service emoluments account for about 10% of the overallemployment remuneration in the economy. Taking account of thesubvented sector, the civil service and employees in subvented organisationstogether account for about 20% of the overall employment remuneration inthe economy. A well-constituted civil service pay system compatible with thefunctioning of the labour market as a whole, whilst recognising thecharacteristics of specific civil service appointment, is conducive to a robustand efficient civil service and sound deployment of manpower resources forthe economy at large.- 2 -