In an unusual move last month, the largest civil service union called for a pay freeze for 160,000 civil servants before the pay trend survey, which forms the basis for annual pay adjustments, had been completed.
Li Kwai-yin, the Chinese Civil Servants' Association's deputy secretary general, had said that an early decision by the government would boost public confidence. Predicting that the survey might show a rise in private-sector salaries in the past 12 months to April, she said a pay freeze could avoid the political fallout of a subsequent pay rise for civil servants.
The Civil Service Bureau responded that the government would take into account the survey findings and other factors, including the economy, the government's fiscal position, changes in the cost of living, staff pay claims and morale in the civil service.
On Monday, the bureau stuck to the same position when its pay trend study showed a drop in private-sector salaries, contrary to unions' forecast. As a result, civil servants from the lower, middle and upper salary bands could face pay cuts of 0.96 per cent, 1.98 per cent and 5.38 per cent, respectively.
Arguing that there was only a slight fall in pay in the lower and middle ranges, the union said civil servants' pay should be frozen, not cut. There should only be a pay cut if the economy turned from bad to worse. Another civil service body also reiterated its call for a pay freeze.
The study's negative pay findings reflect the fall in private-sector salaries since the financial turmoil unfolded last year. A further drop since April looks certain and there is likely to be more pressure for a pay cut for civil servants before long.
Meanwhile, the government faces the immediate task of avoiding a political row caused by the annual pay-adjustment exercise following the release of the pay survey. Any pay cut in line with the survey findings runs the risk of opposition from civil service unions, which may be followed by protests and other industrial action. In times of economic uncertainty and political restlessness, large-scale demonstrations by civil servants are the last thing the government wants.
