Reforming the civil service : the impact of HKSAR's 'Downsizing' policies to the civil service employees
CHAPTER 1 INTRODUCTION
In March 1999, the government released a consultation document on "Civil Service Reform" that covered almost all aspects of civil service management, ranging from entry and exit, pay and conditions of service, performance management,
discipline, and training.
This consultation document has emphasized that the initiative of the government to reduce the size of civil service establishment will not displace civil servants out of their jobs and will not result in redundancy of existing staff. As of 1 October, 1999, the total strength of the Civil Service was 188,000, with staff distributed among some 420 grades and 1,250 ranks1. From these two figures regarding the number of grades and ranks, it is not difficult to imagine the "enormous" size of the civil service establishment, and it would not be easy to reduce the size of the civil service establishment without displacing civil servants out of their jobs or causing redundancy of existing staff while implementing 'downsizing' policies. As a matter of fact, as disclosed by Grace O. M. Lee (2003) in her article: A de-capacitated state - Systemic constraints on government in Hong Kong, civil servants held no less than five rallies and procession demonstrations from April 1999
1 www.info.gov.hk/vearbook/1999, HKSAR.
2 just one month after the introduction of the consultation paper.
to June 2000. Three of which were reactions to the consultation document on civil service reform; and one was related to the issue of privatization. These demonstrations against the civil service reform proposals attracted the participation of over 10,000 civil servants (Ming Pao, 10 July 2000), the largest demonstrations held by any labour organization since the handover in 1997. As quoted by Grace Lee, 14,000 civil servants from more than one hundred different unions and representing staff from various government departments were organized by the Federation of Civil Service Unions to take part in the two-hour march to the SAR Government Headquarters (Luk and Chan, South China Morning Post, 24 May 1999). Also quoted by Grace Lee, thousands of civil servants and their families took to the streets again for a second consecutive Sunday in defiance of their seniors and superiors who had allegedly tried to dissuade them from taking part in the protest. The Hong Kong Chinese Civil Servants' Association that led the protest, claimed more than 200,000 civil servants and their families from more than a hundred unions took part (South China Morning Post, 31 May 1999). As commented by Grace Lee, these demonstrations had amply shown the uncertainties and worries of civil servants about their jobs and the great dissatisfaction they had with the reform proposals (Grace Lee, 2003:124).
Facing such resentment of civil servants and their families, probably
provoked by this civil service reform document, then why should cutting the size of civil service establishment become the initiative of that consultation paper issued in March 1999? What caused the cutting of the size of civil service establishment? How did the Hong Kong Government proceed with the 'downsizing' policies? What were their impacts on the civil service? This dissertation aims to answering these questions.
1.1 The Impact of the Asian Financial Crisis in Hong Kong
In late October 1997, the occurrence of the Asian financial crisis, as commented by Jane C. Y. Lee (2001), had triggered off a period of economic recession in Hong Kong. Within a year of the handover, real economic growth had fallen from +5.3% to -5.3%. As shown in Table 1, the unemployment rate rose from 2.4% in July 1997 to 6.1% in May 1999.
By mid-1998, the government was forced to readjust its budget from a balanced one to a deficit one (Jane Lee, 2001:59). As mentioned earlier by Grace Lee (2003), the most direct effect was a loss of public confidence in the civil service and the perception that changes needed to be made to its performance and conditions of service (Grace Lee, 2003:117). There was general resentment of the 'iron-rice bowl phenomenon' - tenure and privileges enjoyed by civil servants but not by
private sector employees.
Table 1: The Changing Economic Context of Public Sector Reform
Year Unemployment Real GDP Population
rate Growth rate (mid- ?ear)
Size % Chinese
1989 1.1% 2.7% 5,686,200 1.0%
1990 1.3% 3.4% 5,704,500 0.3%
1991 1.8% 5.1% 5,752,000 0.8%
1992 2.0% 6.3% 5,800,500 0.8%
1993 2.0% 6.1% 5,901,000 1.7%
1994 1.9% 5.4% 6,035,400 2.3%
1995 3.2% 3.9% 6,156,100 2.0%
1996 2.8% 4.5% 6,484,300 -
1997 2.2% 5.3% 6,564,200 1.2%
1998 4.7% -5.3% 6,645,600 1.2%
1999 6.3% -3.1% 6,720,700 1.1%
Source: DRI Asia Database, CEIC Data Co. Ltd.; Hong Kong Annual Digest of Statistics, Census and Statistics Department, HKSAR Government, various years.
(Cheung and Lee, 2001:76)
A survey conducted by the Hong Kong Policy Research Institute in March 1999, immediately after the release of a civil service reform document, revealed that 79.1 per cent of the respondents (Hong Kong citizens) 'agreed' that the civil service needed to be reformed (Grace Lee, 2003:118).
As mentioned earlier about the release of a consultation document on 'Civil Service Reform' in March 1999, Grace Lee (2003) commented that this consultation
document represented a departure from previous reform efforts. While the earlier
reform did not have impact on the tenure of individual civil servants or on the stability of the civil service, this latest civil service reform document potentially threatens the security of tenure for some civil servants. Grace Lee further pointed out that the government had streamlined the redundancy arrangements3 for redeployment and redundancy of staff that found surplus to requirement or arising from reorganization or other efficiency enhancement initiatives (Grace Lee, 2003:122). Therefore, through the release of the consultation document on 'Civil Service Reform', the HKSAR Government wanted to cut down the size of civil service establishment for forming a 'small' government with less budget.
1.2 Containing the Size of the Civil Service
For the first time, the motion of "containing the size of the civil service" was appeared in a meeting record of Legislative Council (LegCo) Panel on Public Service dated 30 October 2000. In fact, this motion was introduced by the then Financial Secretary, Mr. Donald TSANG, while he was announcing his Budget Speech on 8 March 2000 about an initiative to reduce the total civil service establishment by 10,000 (or about 5%) back to its 1995 level (188,000) over the period 2000-01 to
for instance, as quoted by Grace Lee, the voluntary retirement scheme introduced by the Civil Service Bureau in year 2000, or the management-initiated retirement scheme which allows senior and long-serviced civil servants to be directed to retire early when these 'old' staff had become 'un-postable', that is, no suitable post can be found, or those 'old' staff got no interest in their current job anymore.
2002-03 [LC Paper No. CB (1) 90/00-01 (05):1]. According to this meeting record, the objectives of this motion were to demonstrate the commitment to enhancing public sector productivity; maintain a lean and fit civil service; and to give further impetus to increasing private sector participation in the delivery of public services.
To implement those motions, the following measures were to be taken:
(a) All Heads of Department/Grade (HoDs/HoGs) are required to critically assess their manpower situation, to apply to a Civil Service Bureau (CSB) and Finance Bureau (FB) Joint Panel co-chaired by the Secretary for the Civil Service and Secretary for the Treasury if they see a need to retain their existing vacancies and create new posts, and to draw up a three-year manpower plan in support of their applications;
(b) The general freeze on civil service recruitment implemented since 1999-2000 would continue for the year 2000-01. HoDs/HoGs will have to apply to the CSB/FB Joint Panel for exceptional approval to recruit from the outside into the civil service to meet their essential services, having regard to their manpower plans; and
(c) HoDs/HoGs are encouraged to take the opportunity to assess how the services of their departments/grades could be delivered more cost-effectively, how the departments/grades could be re-organized and existing staff re-deployed to meet services needs, and how alternative
means could be used to provide services.
[Extracted from the meeting record - LC Paper No. CB (1) 90/00-01 (05):1]
As stated in this meeting record, the motion to contain the size of the civil service provides an opportunity for government departments to take a more critical look at how public services could be delivered in a more efficient and cost-effective manner. It is also the Administration's commitment to maintain the quality of public service in implementing the motion. The Administration further emphasized that the motion to contain the size of the civil service will not displace civil servants out of their jobs. The reduction in establishment will be achieved through deletion of vacancies no longer required by conscious efforts of streamlining, re-engineering or outsourcing of services, as well as the release of surplus manpower through natural wastage, the Voluntary Retirement Scheme or other staff re-deployment measures. Lastly, it is the Administration's commitment that the motion to reduce the civil service establishment will not result in redundancy of existing staff [LC Paper No. CB (1) 90/00-01 (05):2].
Although the Administration tried to reduce the size of the civil service establishment for saving the public expenditures, as with most of the usual government policies' approaches, those approaches rarely covered (or at least not in many pages) the area related to employees. Even academic experts like Grace Lee (2003), who had discussed the wider problems with the governance in Hong Kong; and Jane Lee (2001) who commented the public sector reform in Hong Kong that
such reform had the effect of enhancing the degree of transparency and openness in the pre-1997 administrative system, but the government failed to reform the management structure and human resources framework at that time (Jane Lee, 2001:70). Therefore, Jane Lee (2001) suggested that the task of public sector reform in Hong Kong should tightly control, and if possible reduce the size of the public sector and that the public sector should build up more skills and methods to positively encourage greater bottom-up commitment (Jane Lee, 2001:71-2). Burns (2002) also carefully analyzes the 1990s civil service reform of Hong Kong which included improving accountability, decentralization, centralization, simplification, downsizing and managerialism (Burns, 2002:273).
However, all three academic experts mentioned above did not pay much attention to touch on the impact of such policies on those civil servants.
1.3 The Significance of the Study
Those largest civil servants' demonstrations held in May 1999 have amply shown the uncertainties and worries of civil servants about their jobs and the great dissatisfaction they have with the reform proposals (Grace Lee, 2003:124). In foreign countries, as revealed in Chapter 2, many academic experts have tried to explore all sorts of impact of these policies of reforms, and a lot of these articles have
been touched on the employee's perspectives such as employee relationship, which has rarely been explored amongst Hong Kong's academic field. It is important to understand the impact of these policies on public sector's employees as suggested by Swimmer (2001), as it allows us to learn 'some reflections about the future of labour-management relations in the public sector' (Swimmer, 2001:2). Moreover, analyzing downsizing-driven uncertainties and worries of those civil servants about their jobs and the great dissatisfaction may solve the risks of labour relationship in the governance process of HKSAR' (Grace Lee, 2003:124).
1.4 Definitions of Terms
During the process of literature research, it is revealed that quite a number of different terms are used by different authors, in order to establish a good understanding about the terms adopted in the field of downsizing, another research is
conducted4 and Bonita J. Manson (2000)5 has provided the following definitions:
? Downsizing is the planned elimination of positions or jobs. It does not include the discharge of individual for cause, or individual departures via normal retirement or resignations (Cascio, 1993).
? Employee Morale is the mental and emotional condition of staff in the work environment. It is the level of psychological well-being based
and concluded that different terms like downsizing and layoff, as explained by Cascio (1993) and Brockner (1988), have the same meaning. One of the reasons for the using of different terms is probably the users of these two terms are from two different places like the former one is from UK while the latter is from US.
quoting other academic experts' suggestions,
? Impact is the way employees are affected by their job surroundings.
? Layoff is a permanent, involuntary separation of individuals from an organization due to a need to cut costs. It is the dismissals that are permanent rather than temporary, and not due to inappropriate or inadequate work behaviour (Brockner, 1988).
? Psychological contract is an emotional bond between employer and employee. It is implicit and thus unofficial and includes mutual responsibilities and expectations (Matbys and Burack, 1993).
? Pull strategies are plans which generally involve offering, for a limited time, some inducement to all or a subgroup of employees encouraging them to resign voluntarily (Tomasko, 1987).
? Redeployment is the reassignment of employees within an organization. The new assignment may or may not be equal to the previous position held.
? Re-engineering is the process of structuring an organization for change.
? Reorganizing6 is the process of undergoing a change. It involves making changes within an organization.
? Restructuring7 is an arrangement of different parts of a complex entity. A term used to describe downsizing
? Survivors are the persons who are left after an organization downsizes.
6 again, both re-engineering and reorganizing are indicating the process of making change within the organization, which may involve everything within the organization like the re-arrangement of the command structure, the number of departments or staff for cutting down, the jobs that can be contracted out. The usage of terms is depended on the preference of the users, and the main goal of re-engineering and reorganizing the organization is probably to save budget.
restructuring is definitely related to the arrangement of the structure of the organization, and the possible actions of restructuring should involve either expanding or reducing the size of respective department, however, such process of changing may not involve the cutting of budget if the action is 'expanding'.
1.5 The Structure of the Dissertation
Following the brief introduction about the initiative of the civil service reform: contain the size of civil service establishment and the importance of this study in exploring the possible impact of 'downsizing' policies in Chapter One, the theoretical frame of 'downsizing' would be dealt as Part I, for forming a framework, for example, definitions of 'downsizing'. Since this study is mainly focused at the impact of 'downsizing' in public sector, literature research on 'downsizing' itself and 'downsizing' on employee would be conducted in this Part I. Then all policies that are used or had been used by HKSAR Government for achieving the initiative of contain the size of civil service establishment would be discussed in Part II. Lastly, Part III will discuss the findings of Hong Kong's 'downsizing' policies and provide recommendations for the future development.
School:The University of Hong Kong
School Location:China - Hong Kong SAR
Source Type:Master's Thesis
Keywords:downsizing of organizations china hong kong civil service reform officials and employees
Date of Publication:01/01/2005