Legislative Council

LC Paper No. CB(1) 1735/98-99
(Paragraphs 32 to 35 of the minutes have been seen by the Administration)

Ref : CB1/PL/PS/1

Legislative Council
Panel on Public Service

Minutes of special meeting held on Thursday, 29 April 1999 at 10:45 am in the Chamber of the Legislative Council Building

Members present :

Hon Mrs Sophie LEUNG LAU Yau-fun, JP (Deputy Chairman)
Hon LEE Cheuk-yan
Hon LEE Kai-ming, JP
Hon CHEUNG Man-kwong
Hon CHAN Kwok-keung
Hon CHAN Wing-chan
Hon Andrew WONG Wang-fat, JP
Hon Howard YOUNG, JP
Hon Ambrose LAU Hon-chuen, JP

Members attending :

Hon James TO Kun-sun
Hon Emily LAU Wai-hing, JP

Member absent :

Hon TAM Yiu-chung, JP (Chairman)

Public officers attending:

Civil Service Bureau

Mr D W PESCOD

Deputy Secretary for the Civil Service 2

Mrs Philomena LEUNG

Principal Assistant Secretary for the Civil Service

Attendance by invitation:

Hong Kong Chinese Civil Servants' Association

Ms SO Chui-kuen, Cecilia

President

Mr WONG Hyo, Peter

Vice-President

Mr LI Ping-yu, Thomas

Vice-President

Mr LAM Hung-kwan

Vice-President

Ms LI Kwai-yin

Deputy Secretary General

Mr LI Wai-lun

Deputy Secretary General

Mr KWAN Yiu-wing

Executive Councillor

Mr LAU Siu-yin

Executive Councillor

Government Disciplined Services General Union

Mr CHAN Kwai-keung

Spokesman

Mr WONG Wai-hung

Chairman

Mr WONG Kwong-chung

Vice-Chairman

Senior Non-expatriate Officers Association

Dr LEUNG Chi-chiu

Chairman

Mr PANG Tat-choi

Vice-Chairman

Mr MA Siu-leung

Council Member

Hong Kong Civil Servants General Union

Mr CHEUNG Kwok-bui

Chairman

Mr ON Hing-bui

Vice-Chairman

Federation of Civil Service Unions

Mr LEUNG Chau-ting

Chairman

Mr LAU Kam-iu

1st Vice-Chairman

Mr LAM Pun-wing

General Secretary

Government Employees Association

Mr CHAN Che-kwong

Chairman

Mr CHUNG Shu-chun

Vice-Chairman

Clerical Grades Civil Servants General Union

Mr CHAN Wai-keung

1st Vice-President

Ms CHAN Suet-king

2nd Vice-President

Government Electrical & Mechanical Works Supervisors, Craftsmen & Workmen Association

Mr TUNG Sing-kan

Chairman

Mr FUNG Siu-ming

Vice-Chairman

Model Scale I Staff Consultative Council (Staff Side)

Mr CHAN Cheung-yee

Chairman

Mr CHAN Kui

Vice-Chairman

Hong Kong Confederation of Trade Unions

Mr MAN Yui-kwong

Vice-Chairman

Clerk in attendance :

Miss Salumi CHAN

Chief Assistant Secretary (1)5

Staff in attendance :

Mr Matthew LOO

Senior Assistant Secretary (1)7

I. Consultation Document on Civil Service Reform
("Consultation Document on Civil Service Reform" issued under LC Paper No. CB(2) 1436/98-99)

As the Chairman was not available to attend the meeting due to other commitment, the Deputy Chairman took the chair.

Purpose of the special meeting

2. The Deputy Chairman advised that the special meeting was held for the Panel to exchange views with the deputations on the "Consultation Document on Civil Service Reform". Representatives of nine civil servants unions and one labour union would attend the meeting. Nine of the unions had already provided the Panel with their written submissions.

Meeting with deputations (First session)

3. The Deputy Chairman welcomed the representatives of the Hong Kong Chinese Civil Servants' Association, Government Disciplined Services General Union, and Senior Non-expatriate Officers Association. She reminded the deputations that when addressing the Panel, they were not covered by the protection and immunity provided under the Legislative Council (Powers and Privileges) Ordinance (Cap. 382). Their written submissions were also not covered by the Ordinance.

Hong Kong Chinese Civil Servants' Association (HKCCSA)
(LC Paper No. CB(2) 1695/98-99(01))

4. Ms SO Chui-kuen, President of HKCCSA, said that whilst appreciating the need for reform, HKCCSA had reservations about the reform proposals and the way the Civil Service Bureau (CSB) had put up the proposals. She highlighted the following three major problems:

1. CSB had not examined the existing Civil Service system fully and objectively. This led to a wrong diagnosis of the problems of the existing system;

2. Based on the wrong diagnosis, CSB put up the following reform proposals which were alarming to the civil servants:

   1. replacing the current permanent and pensionable appointment terms at the basic ranks by agreement terms;

   2. filling vacancies at various promotion ranks not just by promoting serving civil servants but also by recruiting outside candidates;

   3. setting up of a Civil Service Provident Fund scheme to replace the pension scheme;

   4. introducing a new exit mechanism to allow pensionable civil servants to be directed by management to retire early; and

   5. adopting the performance-based pay system.

3. The Administration only regarded civil servants as the target of the reform and had not consulted them on the reform proposals before the Consultation Document was published. This arrangement had upset civil servants and undermined their morale.

(Post-meeting note: A copy of the speech delivered by the President of HKCCSA was issued to Members vide LC Paper No. CB(1) 1254/98-99 on 3 May 1999.)

Government Disciplined Services General Union (GDSGU)
(LC Paper No. CB(2) 1695/98-99(02))

5. Mr CHAN Kwai-keung of GDSGU said that GDSGU supported most of HKCCSA's views. GDSGU recognized the need for reform but doubted the sincerity of the Administration in consulting the civil servants unions on the reform proposals. Mr CHAN also highlighted GDSGU's views as follows:

1. Employment of staff on agreement terms was unsuitable for disciplined services;

2. GDSGU strongly objected to the proposal of linking the performance appraisal system with pay; and

3. The Administration should set priority among the reform proposals and first implement the less controversial ones, such as streamlining the disciplinary procedures and improving the performance management system.

Senior Non-expatriate Officers Association (SNEOA)
(LC Paper No. CB(1) 1206/98-99(01) )

6. Dr LEUNG Chi-chiu, Chairman of SNEOA, said that SNEOA recognized the need for Civil Service reform and held the following views:

1. The appointment system was the most vital part of the Civil Service system and it was not advisable to introduce drastic changes in this area. The proposal of appointing basic rank civil servants on agreement terms would result in different terms of employment between staff at supervisory ranks and basic ranks, and divide the staff into two categories. This would affect the unity of civil servants;

2. SNEOA had no objection to the introduction of the Civil Service Provident Fund scheme for the new recruits but considered that the scheme should be attractive enough to retain experienced staff in the Civil Service;

3. On management of human resources, SNEOA considered that the crux of the problem was the over-conservative management culture. Authorities should be delegated to front-line management to facilitate the effective operation of the existing disciplinary mechanism and performance management system; and

4. The active participation of civil servants was the key to the success of the reform. CSB should regard civil servants as partners, not target, of the reform.

Discussion with HKCCSA, GDSGU and SNEOA

7. Mr CHAN Wing-chan sought clarification from HKCCSA on the difficulties involved in introducing performance-based pay system in the Civil Service. He also invited the three deputations to elaborate on the new entry and exit arrangements proposed in the Consultation Document. On performance-based pay system, Mr WONG Hyo, Vice-President of HKCCSA, pointed out that it was difficult to set out clear standards and guidelines for performance appraisal. As far as he knew, the performance-based pay system introduced in other countries proved to be unsuccessful. Mr WONG also cautioned that with the introduction of performance-based pay system, civil servants might become money-oriented and the quality of services provided to the public might be affected. On the proposed new entry and exit arrangements, Mr WONG said that to allow flexibility in the appointment system of the Civil Service, HKCCSA accepted that a limited number of civil servants be appointed on agreement terms. Nevertheless, it would be a drastic move to replace all basic rank civil servants by contract staff. This proposal would no doubt affect the stability of the Civil Service.

8. Mr CHEUNG Man-kwong and Ms Emily LAU were astonished to note the malpractices, in particular corrupt practices, involved in the performance appraisal and promotion in the disciplined services, as mentioned in pages 9 and 12 of GDSGU's submission. They sought GDSGU's views on how the problems could be solved. Mr WONG Wai-hung, Chairman of GDSGU, clarified that GDSGU only pointed out in its submission the loop-holes in the current performance appraisal and promotion systems. GDSGU had revised some of the wordings in the submission and would submit the revised submission to the Panel for Members' consideration. On the way forward, Mr WONG said that GDSGU was in support of the proposals in paragraph 4.2 of the Consultation Document, one of which was the launching of the "Civil Service Integrity Programme".

(Post-meeting note : The revised submission from GDSGU was circulated to Members vide LC Paper No. CB(1) 1237/98-99 on 30 April 1999.)

9. Ms Emily LAU invited SNEOA to comment on how the disciplinary procedures could be streamlined. Dr LEUNG Chi-chiu considered that the authority of handling disciplinary matters should be delegated to front-line management of individual departments. To ensure that individual departments would adopt uniform standards and procedures in handling disciplinary matters, the Administration might set up a disciplinary mechanism at the central level for the departments to follow. The management at the central level should only perform a monitoring role and assist the departments when necessary.

10. Mr LEE Cheuk-yan asked whether the Administration had consulted civil servants on the reform proposals. Mr WONG Hyo responded that despite the concern expressed by HKCCSA, CSB had not consulted HKCCSA before the publication of the Consultation Document on 8 March 1999. Nevertheless, HKCCSA had already provided its submission on the reform proposals to CSB on 8 March 1999. Furthermore, HKCCSA had been consulting civil servants on the reform proposals and would keep the Panel informed of the result in due course.

(Post-meeting note: The President of HKCCSA issued a letter to all Members of the Legislative Council on 1 June 1999 enclosing its views on the "Consultation Document on Civil Service Reform".)

11. The Deputy Chairman thanked the representatives of HKCCSA, GDSGU and SNEOA for attending the meeting.

Meeting with deputations (Second session)

12. The Deputy Chairman welcomed the representatives of the Hong Kong Civil Servants General Union, Federation of Civil Service Unions, and Government Employees Association. She reminded the deputations that when addressing the Panel, they were not covered by the protection and immunity provided under Cap. 382. Their written submissions were also not covered by the Ordinance.

Hong Kong Civil Servants General Union (HKCSGU)

13. Mr CHEUNG Kwok-bui, Chairman of HKCSGU, advised that HKCSGU supported the principles and objectives of the reform but had reservations on the reform proposals. The views of HKCSGU were summarized as follows:

1. The current permanent and pensionable appointment system should be retained as it provided security of tenure which was essential in the retention of quality and experienced staff;

2. The proposed appointment of basic rank civil servants on agreement terms would divide the basic rank civil servants at into two groups, i.e. the existing staff employed on permanent and pensionable terms, and the new staff on agreement terms. This proposal would affect the stability of the Civil Service;

3. On cases of management-initiated retirement, the management should discuss with the staff concerned and should not make the decision on its own;

4. Civil Service pay should not be linked to performance, as the reward for good performance should come though promotion while the annual salary increment was the reward for experience;

5. The existing allowances for civil servants could be adjusted in the light of the change in circumstances but should not be removed once and for all;

6. An appeal mechanism should be put in place for civil servants to appeal against the management decision to take disciplinary actions against them. An independent committee with lawyers as its members could be established for the purpose;

7. While the Administration was conducting the consultation on Civil Service reform, it introduced the measure of the employment of non-Civil Service contract staff and planned for corporatization/privatization of public services. These measures cast doubt on the sincerity of the Administration in conducting the consultation; and

8. The Administration should conduct a second round consultation when more concrete reform proposals were available.

Federation of Civil Service Unions (FCSU)
(LC Paper No. CB(1) 1206/98-99(02))

14. Mr LEUNG Chau-ting, Chairman of FCSU, said that the FCSU supported the principles of the reform but considered some of the proposals unfair to civil servants. He highlighted that:

1. Employment on agreement terms was not suitable for the Civil Service. Without security of tenure, it would be difficult for the contract staff to develop a sense of belonging and for the Civil Service to recruit and retain quality and experienced staff. The high mobility of contract staff would also result in the wastage of training resources;

2. The proposal of linking pay to performance was impracticable as it was difficult to quantify the duties of civil servants and to set out objective criteria for the assessment of performance; and

3. Management-initiated retirement to cater for human resource management needs should only be applied to directorate officers only.

Government Employees Association (GEA)
(LC Paper No. CB(1) 1206/98-99(03))

15. Mr CHAN Che-kwong, Chairman of GEA, said that GEA considered that the Administration should adhere to the six basic principles set out in the Consultation Document when formulating its reform proposals, i.e. "Change amidst stability", "Step by step", "Comprehensive overview", "Wide consultation", "Practicable measures" and "Reasonable and lawful". The views of GEA were summarized as follows:

1. Some proposals such as the employment of basic rank civil servants on agreement terms, performance-based pay system and management-initiated retirement were too drastic and might result in a revolution rather than a reform in the Civil Service;

2. Employment of basic rank civil servants on agreement terms was unfair to them and would affect the stability of the Civil Service;

3. An appeal channel should be provided for the civil servants directed by management to retire early;

4. An appeal mechanism should be set up for civil servants to appeal against performance appraisal;

5. The existing mechanism for determining Civil Service pay adjustment was well established and accepted. Civil servants should be consulted on any proposed changes to this mechanism;

6. As regards the proposal of setting up an independent standing secretariat to process disciplinary cases for all civil servants, representatives of the staff side should be allowed to participate in the process; and

7. diversified training programmes should be provided to civil servants and those who had been trained should have priority for promotion.

Discussion with HKCSGU, FCSU and GEA

16. Mr CHAN Wing-chan sought the deputations' views on whether reform at the senior level of the Civil Service was required. Mr CHEUNG Kwok-bui responded that as most of the reform proposals involved only the civil servants at lower and middle levels, it appeared that they were the target of the reform. In fact, civil servants at senior levels should also be involved.

17. Ms Emily LAU asked whether the existing fringe benefits and allowances for civil servants were too generous. Mr LEUNG Chau-ting and Mr CHEUNG Kwok-bui considered that that was not so. Mr LEUNG pointed out that low rank civil servants only enjoyed very limited fringe benefits. For example, a low rank civil servant who had 20 years of service would be eligible for applying monthly housing allowance in the sum of HK$4,000 for ten years. However, he might reach the retirement age before the end of the ten-year period. Mr CHEUNG added that fringe benefits and allowances for civil servants should be better than those in the private sector in order to retain quality and experienced staff.

18. Ms Emily LAU also invited the deputations to comment on whether the handling of disciplinary cases was a lengthy process. Mr CHEUNG Kwok-bui considered that the time required for processing a disciplinary case was not too long. However, the current problem was that the relevant provisions in the Civil Service Regulations had not been strictly enforced.

19. Mr LEE Cheuk-yan asked whether the deputations were satisfied with the consultation process, and whether the 3-month consultation period was appropriate. Mr LEUNG Chau-ting and Mr CHEUNG Kwok-bui doubted the sincerity of the Administration in conducting the consultation. They pointed out that the Administration had not discussed with civil servants on its reform proposals before the Consultation Document was published. Moreover, new measures, such as the employment of non-Civil Service contract staff, were introduced before the consultation was completed. They also considered the 3-month consultation period too short for such a large-scale reform.

20. The Deputy Chairman thanked the representatives of HKCSGU, FCSU and GEA for attending the meeting.

Meeting with deputations (Third session)

21. The Deputy Chairman welcomed the representatives of the Clerical Grades Civil Servants General Union, Government Electrical & Mechanical Works Supervisors, Craftsmen & Workmen Association, Model Scale I Staff Consultative Council (Staff Side) and Hong Kong Confederation of Trade Unions. She reminded the deputations that when addressing the Panel, they were not covered by the protection and immunity provided under Cap. 382. Their written submissions were also not covered by the Ordinance.

Clerical Grades Civil Servants General Union (CGCSGU)
(LC Paper No. CB(1) 1206/98-99(04))

22. Miss CHAN Suet-king, 2nd Vice-President of CGCSGU, echoed the views of Mr LEUNG Chau-ting of FCSU in paragraph 17 above and pointed out that the fringe benefits available for clerical grades civil servants were very limited. Mr CHAN Wai-keung, 1st Vice-President of CGCSGU considered that the Government had set a bad example for the private sector by employing staff on agreement terms. The private sector might follow suit and as a result, the stability of the labour market in Hong Kong would be greatly affected.

Government Electrical & Mechanical Works Supervisors, Craftsmen & Workmen Association (GEMWSCWA)
(LC Paper No. CB(1) 1206/98-99(05))

23. Mr FUNG Siu-ming, Vice-Chairman of GEMWSCWA, said that GEMWSCWA was in support of three of the principles of the reform set out in the Consultation Document, i.e. "Change amidst stability", "Step by step" and "Reasonable and lawful". The views of GEMWSCWA were summarized as follows:

1. The current Civil Service system was not a system of permanent employment as stated in paragraph 2.2 of the Consultation Document. In fact, civil servants were subject to disciplinary proceedings and dismissal;

2. The drawbacks of the current Civil Service system as stated in paragraph 2.4 of the Consultation Document were misleading;

3. Basic rank civil servants might be appointed on agreement terms when they first joined the Civil Service. However, those with good performance should be offered permanent terms upon expiry of the contract;

4. GEMWSCWA supported the setting up of the Civil Service Provident Fund scheme. Existing civil servants should be allowed to opt whether they would join the scheme;

5. GEMWSCWA had great reservations on the proposal of introducing voluntary retirement as stated in paragraph 2.11 of the Consultation Document;

6. Management-initiated retirement should only apply to directorate officers;

7. The Starting Salaries Review of the Civil Service should base on the relevant data in the past three years instead of one year;

8. On the proposal of linking pay to performance, the Administration might consider awarding an increment to those civil servants who had achieved "A" or "B" grade in the appraisal report. Nevertheless, the existing mechanism for determining annual Civil Service pay adjustment on the basis of the Pay Trend Survey should be maintained;

9. On the review of the provisions of the Public Service (Administration) Order 1997 and the Public Service (Disciplinary) Regulation, the Administration should consult civil servants unions. Representatives of the unions should also be involved in the proposed independent review mechanism for handling appeal against decisions on disciplinary cases; and

10. On performance management, GEMWSCWA supported the proposal of establishing a system of assessment panels to monitor performance appraisal and handle appeal against the appraisal. However, it was against the idea of setting an indicative benchmark for grading distribution.

Model Scale I Staff Consultative Council (Staff Side)(MSISCC)
(LC Paper No. CB(1) 1206/98-99(06))

24. Mr CHAN Cheung-yee, Chairman of MSISCC, pointed out that most of the reform proposals in the Consultation Document were unfair to civil servants. He highlighted that:

1. All Model Scale I (MSI) staff were at recruitment ranks. The proposal of appointing basic rank civil servants on agreement terms meant that MSI staff would have no chance of changing to permanent terms even they had achieved very good performance;

2. No on-the-job training had been arranged for MSI staff;

3. On performance management, it was unreasonable to set up an indicative benchmark for grading distribution;

4. It was unfair to introduce the performance-based pay system in the absence of a mechanism for fair assessment of performance; and

5. MSI staff were worried that reorganization and restructuring of departments arising from the reform proposals would result in redundancy of staff.

Hong Kong Confederation of Trade Unions (HKCTU)
(LC Paper No. CB(1) 1206/98-99(07))

25. Mr MAN Yui-kwong, Vice-Chairman of HKCTU, said that HKCTU recognized the need for Civil Service reform but urged the Administration to consider carefully the impacts of its reform proposals on civil servants and Hong Kong as a whole. Moreover, the 3-month consultation period for such an important reform was too short and should be extended. The views of HKCTU were summarized as follows:

1. The proposed appointment of basic rank civil servants on agreement terms would affect the stability of the Civil Service and undermine the morale of civil servants;

2. It was difficult to adopt performance-based pay system in the Civil Service as the duties and performance of civil servants could not be quantified; and

3. The proposed introduction of management-initiated retirement was unfair to civil servants.

Discussion with CGCSGU, GEMWSCWA, MSISCC and HKCTU

26. Ms Emily LAU sought clarification from CGCSGU on how the Administration's proposal of employing staff on agreement terms would affect the private sector. Mr CHAN Wai-keung responded that the Government had along been regarded as a "good employer" and many companies in the private sector followed its employment policies. If employers in the private sector followed the Government to employ staff on agreement terms, it would affect the stability of the labour market in Hong Kong.

27. In response to Mr LEE Kai-ming, Mr FUNG Siu-ming said that some civil servants had indicated that if their terms of employment had to be changed from permanent and pensionable terms to agreement terms upon promotion to a post of other grades or in other departments, they would decline promotion.

28. On the point mentioned by GEMWSCWA in paragraph 23(a) above, Mr Howard YOUNG sought clarification from GEMWSCWA as to why it considered that the Civil Service system was not a system of permanent employment. Mr TUNG Sing-kan, Chairman of GEMWSCWA, pointed out that the Consultation Document was presented in such a way that the public might have the impression that civil servants, once joined the Civil Service, would remain there until retirement. In fact, civil servants were also subject to dismissal.

29. Mr CHAN Wing-chan asked how the deputations would respond if the Administration insisted to implement the reform proposals. Mr MAN Yui-kwong requested the Administration to extend the consultation period. Mr FUNG Siu-ming urged the Administration to conduct a second round consultation before finalizing the reform proposals.

30. Mr Andrew WONG advised that before the establishment of the Standing Commission on Civil Service and Conditions of Service in 1979, the Administration normally commissioned independent ad hoc committees to give views on Civil Service reform. However, the current reform proposals were put up by CSB and the consultation was also conducted by CSB. Mr FUNG Siu-ming considered it more appropriate for an independent committee to work out the reform proposals and conduct consultation.

31. The Deputy Chairman thanked the representatives of CGCSGU, GEMWSCWA, MSISCC and HKCTU for attending the meeting.

Meeting with the Administration

32. The Deputy Chairman invited the representatives of CSB to give a brief response to the deputations' views. Deputy Secretary for the Civil Service 2 (DSCS2) said that he was pleased that all the deputations supported the need for Civil Service reform. He also noted that there was a diversity of views on the reform proposals. Nevertheless, the initial 3-month consultation period would allow the Administration to gather views from civil servants and various parties. The Administration would then develop its ideas on each of the areas involved in the reform and conduct further consultation. DSCS2 emphasized that though the reform was a complicated task, the Administration would take it forward in an open process. The Administration would regularly publish a series of "Civil Service Reform Newsletters" to update the civil servants on the progress of the reform and answer their questions.

33. Mr Andrew WONG pointed out that the deputations had certain views in common. For example, most of them were against the proposal of appointing basic rank civil servants on agreement terms. He urged the Administration to consider seriously the views of the deputations.

34. Mr LEE Cheuk-yan sought the Administration's clarification on the rationale behind the proposal of appointing basic rank civil servants on agreement terms and why supervisory rank civil servants were not involved. In response, DSCS2 advised that the purpose of introducing the proposal of employment on agreement terms was to allow flexibility in the Civil Service appointment system. As illustrated in the diagram on page 13 of the Consultation Document, supervisory rank civil servants might also be appointed on agreement terms.

35. On the way forward, the Deputy Chairman advised that the Administration had undertaken at a previous meeting to report the results of the consultation to the Panel in June 1999. Ms Emily LAU also suggested to invite academics' views on the reform proposals set out in the Consultation Document.

(Post-meeting note : With the concurrence of Hon TAM Yiu-chung, Chairman of the Panel, a special Panel meeting was held on 31 May 1999 to meet the academics.)

II. Any other business

36. The meeting ended at 1:45 pm.

Legislative Council Secretariat
13 July 1999