Every year the Hong Kong government formulates salary adjustments for civil servants based on the results of a so-called Pay Trend survey, which measures salary changes of comparable jobs in the private sector. This system has been effective for many years, but all of a sudden, it is being hotly disputed this year.

The government does tasks that the private sector cannot perform. Hence, it is hard to compare the salaries of civil servants with those in the private sector, and it is simply impossible to compare government jobs with private jobs on a like-for-like basis. This also makes the salary adjustment of civil servants difficult to gauge because any external benchmark is missing. In order to reduce disputes, the government conducts the Pay Trend survey annually to collect market data. This mechanism has been working since the 1980s and despite minor disputes the system has worked well over the past decades.

This year the results of the Pay Trend do not show high percentages, which means civil servants will not have high salary rises. Representatives from some civil service bodies have shown marked dissatisfaction with the results, with some even threatening to withdraw from the mechanism, or to ask for mediation. In general, people do not side with the servants because the Pay Trend has been in place for so many years. If there was anything wrong with the Pay Trend survey, civil servants should have made it known before. Actually, civil servants endorsed the methodology before the Pay Trend was started. Hence, even though civil servants are not happy with the latest figures, there is little support from the general public. Some even think that civil servants are simply greedy. In short, the dispute over the results has earned civil servants a negative image.

The government has the right to uphold the Pay Trend results, as the mechanism has become an implicit contract between it and civil servants. Breaching this contract implies an end to the Pay Trend, an idea the government will clearly not welcome. When public opinion sides with the government, it is not surprising to see the government stand firm on this issue.

But the dispute over the results is not a simple matter of salary adjustment. The differences between the percentages being offered and the ones civil servants are asking for is not big enough to cause alarm. But the underlying message is more complicated. One representative once said that civil servants are under constant pressure because of the wrongdoings from top management. And, given such a work environment, their request for a salary adjustment can be seen as a "hardship" allowance.

If we look at the issue from this angle, the message is indeed quite negative. No doubt the government is not working smoothly in formulating policies, but is at least still functioning because civil servants are carrying out their duties despite the pressure. Civil servants appear to have reached their limits and hence want higher pay to compensate for the hardship. Since the Pay Trend does not consider this factor, the expectation gap is big. When their requests are not fulfilled, mistrust and uncooperative behavior may occur, an unfavorable scenario for the government as it will further worsen the government's reputation and lead to public dissatisfaction. The outcome will be a "lose-lose" situation.

A promise to revise the pay adjustment system is a positive remedy to the stalemate. The worst scenario is that the government will abruptly turn down the demand of civil servants leveraging on the general public's support. In that case, the rift between the government and civil servants will be too huge to mend.

The author is dean of the School of Business at Hang Seng Management College.

(HK Edition 06/20/2013 page9)