The Chief Executive in Council accepted on November 29 the recommendations of the Independent Commission on Remuneration for Members of the Executive Council and the Legislature, and Officials under the Political Appointment System of the Hong Kong Special Administrative Region (the Independent Commission) regarding the remuneration package for Politically Appointed Officials (PAOs) serving in the fifth-term Hong Kong Special Administrative Region Government (HKSARG).
 
Annual adjustment mechanism for the remuneration for PAOs
 
     "At present, there is no annual adjustment mechanism for the remuneration for PAOs. In fact, the pay levels of Directors of Bureau (DoBs) have remained at the same level as approved by the Finance Committee (FC) of the Legislative Council (LegCo) in 2002, and the remuneration of Deputy Directors of Bureau (DDoBs) and Political Assistants (PAs) at that in 2007. The real value of the remuneration for PAOs has declined substantially over the years due to inflation," a Government spokesman said.
 
     "We note that the Independent Commission considers it essential and of utmost importance to put in place an objective and transparent annual adjustment mechanism to ensure that the remuneration of PAOs in terms of purchasing power is maintained at an appropriate level and thus needs to be adjusted in line with movements of inflation."
 
     The Independent Commission notes that the remuneration of Members of the LegCo is adjusted in line with the movement of the Consumer Price Index (C) (CPI(C)) on an annual basis. The CPI(C) is an objective and transparent economic indicator which measures the changes over time in the price level of consumer goods and services generally purchased by households in the relatively high expenditure range, which should also be relevant to PAOs.
 
     The Government accepts the recommendation of the Independent Commission that the remuneration for PAOs should be adjusted annually in line with the movement of the CPI(C).
 
Cash remuneration for DoBs
 
     The spokesman said, "The Independent Commission notes that the prevailing cash remuneration for a DoB is the same as in 2002 when the Political Appointment System was first introduced and no adjustment has been made since then, thus does not reflect the economic growth or the cumulative increase in the CPI(C) since 2002. The Independent Commission also notes that the remuneration of PAOs has fallen behind the prevailing level of public sector pay, and has fallen significantly behind increases in private sector pay. Furthermore, since DoBs are responsible for the designated policy portfolios and accountable for the performance of the underpinning executive departments, as a matter of principle, their remuneration should not lag behind the senior civil servants that they are working with.
 
     "The Independent Commission considers that the remuneration for PAOs should be pitched at an attractive level to facilitate the recruitment and retention of high-calibre talents to serve such important positions in the HKSARG. Nevertheless, the Independent Commission recognises that the community generally considers that DoB appointments come with great honour and thus cash remuneration should not be the primary incentive for attracting high-calibre talents to take up such appointments."
 
     Taking all factors into consideration, the Independent Commission recommends that the cash remuneration for DoBs for the fifth-term HKSARG should be increased by 12.4 per cent starting from July 1, 2017, which is equivalent to the cumulative change in the CPI(C) from 2012 to 2016 (the figure for 2016 is estimated to be 2.5 per cent), so as to compensate for the erosion of purchasing power of a DoB's cash remuneration since 2012 when the Independent Commission completed its last review.
 
Differential in remuneration among Secretaries of Department (SoDs), DoBs and DDoBs
 
     On the basis that there is no substantial change in the roles and responsibilities of SoDs, DoBs and DDoBs, the Independent Commission recommends to maintain the current 3.5 per cent pay differential for different layers of SoDs and with DoBs for the fifth-term HKSARG, and to maintain the cash remuneration of DDoBs at 65 per cent to 75 per cent of that for DoBs.
 
Cash remuneration for PAs
 
     "The Independent Commission also notes that for the fourth-term HKSARG, the cash remuneration for all serving PAs engaged by the corresponding SoDs and DoBs has been fixed at the minimum level, i.e. 35 per cent of a DoB's remuneration without variation. The Independent Commission takes into account that some consider such standard arrangement does not reflect the diversity of job requirements or functions among PAs, as stipulated by individual SoDs or DoBs," the spokesman said.
 
     Rather than setting a fixed level of cash remuneration among PAs, the Independent Commission recommends that the cash remuneration for each PA engaged by an SoD or DoB should be capped at 35 per cent of the remuneration for a DoB, i.e. not more than $104,340 a month based on the prevailing pay level of $298,115 a month for a DoB. It would be for the SoD or the DoB to decide on the appropriate level that his or her PA should be paid based on the functional requirements of the job but within the 35 per cent ceiling. The SoD or the DoB may wish to redeploy any unspent savings to engage other support in order to achieve the objectives of the respective department or bureau in the most cost-effective manner.
 
Other remuneration components
 
     The other components of PAOs' remuneration (such as 22 days of annual leave and medical and dental benefits on the same basis as those provided to civil servants during the term of their employment) should remain unchanged at this stage.
 
     The Government will brief the LegCo Panel on Constitutional Affairs at its meeting on December 19. Thereafter, the Government will seek funding approval of the FC for the proposed annual adjustment mechanism and the proposed 12.4 per cent increase in PAOs' cash remuneration.
 
     The Independent Commission is chaired by Mr Nicky Lo, with Ms Kelly Chan, Mr Andrew Fung, Professor Leonard Cheng, Ms Lau Ka-shi and Ms Elaine Lo as other members. One of its duties is to provide advice to the Chief Executive on the remuneration package for PAOs. The Independent Commission has completed the review. 

     A copy of the Independent Commission's report is in the Annex for reference.

Ends/Monday, December 12, 2016
Issued at HKT 12:00

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