****************************
Following is the letter issued by the Secretary for the Civil Service, Mr Joseph W P Wong, to all civil servants on Second Voluntary Retirement Scheme today (January 14):
Dear Colleagues,
The Chief Executive announced his 2003 Policy Address last week. He reiterated that he had a high regard for the civil service. He believed that a clean and efficient civil service was one of the fundamental strengths of Hong Kong. In addition, he appreciated the solid contributions from the civil service in enabling the Government to reduce expenditure under the Enhanced Productivity Programme.
Given the large fiscal deficit, the Chief Executive reiterated that solving this problem was an immediate imperative for the Government. As part of his three-pronged strategy in tackling this problem, the Government's projected operating expenditure will be reduced by $20 billion to $200 billion by 2006-07. In contributing to this expenditure cut, he has also announced a package of measures to reduce the size of the civil service. They include reducing the establishment of the civil service by 10% to around 160,000 by 2006-07; imposing a general recruitment freeze on the civil service with effect from 1 April 2003 and introducing a second Voluntary Retirement (VR) Scheme. It is important to note the Chief Executive has once again stressed that civil servants are not the cause of the deficit. Yet, as I said in my letter of 11 December 2002, civil servants can be part of the solution.
The Chief Executive in Council has endorsed the features of the second VR Scheme today. The launching of the Scheme will enable surplus staff to leave voluntarily and bring about a leaner civil service and corresponding long-term savings to the Government. I write to give you an account of the salient features of the Scheme.
Eligibility
Like the first VR Scheme, the second VR Scheme will only be open to officers of designated grades, which have identified or anticipated surplus staff. Our initial assessment indicates that some 200 grades with a strength of over 100,000 may be covered in this Scheme. The final list of grades for inclusion into the Scheme is yet to be confirmed.
The Scheme will however not cover the following groups of officers even if they are in the designated VR grades :
* non-pensionable officers;
* officers on agreement or short-term employment;
* officers who have tendered notice to retire or resign;
* officers under disciplinary proceedings and may be removed from office; and
* officers with five or less years of active service before reaching normal retirement age in accordance with the relevant pensions legislation counting from the end date of the VR application period.
Special arrangement will be made for MOD I officers under the Old Pension Scheme aged 45 or above. If they belong to a designated VR grade and meet the same selection and eligibility criteria for the VR Scheme, they will be eligible for early retirement under the Pensions Ordinance and receive retirement benefits under the Ordinance and an ex-gratia payment equivalent to the VR payment upon approval of their applications.
Compensation Package
Officers joining the VR Scheme will receive :
a) the pension benefits which he or she would be eligible as at the date of retirement under the Scheme. This includes a commuted pension gratuity payable on the date of retirement and a monthly pension payable immediately on retirement; and
b) a lump-sum VR payment calculated on the basis of one month's salary for every two complete years of service but is subject to the ceiling that the amount of the VR payment when added to the commuted value of the pension benefits for which the officer would be eligible upon retirement under the VR Scheme, will not exceed the commuted value of the pension benefits that the officer would otherwise receive upon normal retirement.
Notwithstanding (a) and (b) above, officers who have less than 10 years of qualifying length of service in accordance with the prescribed pensions legislation on retirement under the Scheme will only be eligible for the VR payment.
The compensation package, which has taken into account the Government's fiscal position, should be sufficiently attractive to encourage colleagues to apply.
Establishment Control
Upon the departure of a VR taker, his post or a post of the same rank in the grade should be deleted. Exceptional approval may be sought from the centre to delete a post one rank lower than that of the VR taker's post. In addition, there will be a 5-year recruitment freeze to the VR grades.
We have uploaded the Legislative Council Brief on the second VR Scheme onto the CSB website (www.csb.gov.hk). If you are interested to learn more about the Scheme, please refer to the document.
I would like to emphasise that application for joining the scheme will be entirely on a voluntary basis. Approval of applications will be based on the operational needs of bureaux/departments, the length of service of the applicants and financial resources available. We intend to seek the necessary funding for the ex-gratia compensation under the Scheme from the Finance Committee as soon as practicable with a view to launching the Scheme in the first half of this year. We are now working on the detailed implementation plan and will announce further details in due course.
Last but not least, we notice that there have been from time to time some misquotes in the public domain on the amount of civil service personnel-related expenditure. As you may know, the personnel-related expenditure of the civil service, including salaries and pensions, amounted to about 35% of the Government's operating expenditure in 2001/02 (25% being salaries and the rest pensions and civil service benefits) while the staff-related subvention in the subvented sector constituted another 34%. To set the record straight, we have uploaded these statistics onto the CSB website for general reference.
Mr Wong's letter has been uploaded onto the Civil Service Bureau web site at http://www.csb.gov.hk.
End/Tuesday, January 14, 2003
NNNN
