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LCQ20: Salary structure of subvented NGOs
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     Following is a question by the Hon Cheung Kwok-che and a written reply by the Secretary for Labour and Welfare, Mr Matthew Cheung Kin-chung, in the Legislative Council today (June 9):

Question:

     The Lump Sum Grant Subvention System has been implemented since January 2001.  Under the System, the staff salary structures of some subvented non-governmental welfare organisations (subvented NGOs) have been delinked from those of the civil service.  I have received complaints that despite the continuous downward adjustments in the overall remuneration of staff in subvented NGOs in the past few years, the salaries of the management staff in certain NGOs have increased instead.  In this connection, will the Government inform this Council:

(a) of the 10 subvented NGOs which were allocated the highest amounts of subventions in each of the past two financial years, and whether it knows the respective annual salaries of the five staff members of each of such NGOs who had the highest annual salaries in the relevant year;

(b) whether, apart from developing a Best Practice Manual, it will reconsider taking other measures to prevent subvented NGOs from adopting a salary structure which rewards the upper-ranked staff generously but gives the lower-ranked staff a niggardly pay; if it will, of the details of such measures; and

(c) whether the Social Welfare Department will require the subvented NGOs to provide information on their staff salary structures and make public such information; if it will not, of the reasons for that?

Reply:

President,

     Under the Lump Sum Grant subvention system (LSGSS), the Government no longer imposes rigid requirements on the staff establishment, salary structure and individual items of expenditure of non-governmental welfare organisations (NGOs).  Hence, NGOs have greater autonomy as long as they are able to meet the requirements of the relevant Funding and Service Agreement (FSA).  They can flexibly deploy the Lump Sum Grant and re-engineer their services to meet the changing needs of the society.  NGOs' boards of directors or management committees are free to formulate their own policies on human resources management according to their individual circumstances, and flexibly use the resources provided by the Government to pay staff remuneration and make salary adjustments based on their policies and the conditions of the labour market.

     NGOs can also expand their scope of welfare services on a self-financing or fee-charging basis.  In fact, the service scope of many NGOs is not limited to the provision of Government-subvented welfare services.  Some of their staff members, particularly the senior staff at the management level, may need to take charge of work relating to other service scopes, and their source of remuneration may not be limited to the subvention provided by the Social Welfare Department (SWD).  Members may wish to bear this point in mind when considering the remuneration of staff members, particularly that of their senior staff, in subvented NGOs.

     My reply to the questions raised by the Hon Cheung Kwok-che is set out below:

(a) & (c) The 10 NGOs that received the highest amount of annual subventions under the LSGSS from SWD in 2008-09 and 2009-10 are set out at Annex.  Under the LSGSS, SWD does not have information on the annual salaries of individual staff members or the pay structure of the NGOs.

(b) In view of the growing public demand for transparency in the remuneration policies governing senior executives in Government-subvented bodies, the Lump Sum Grant Independent Review Committee (LSGIRC) recommended that SWD should consult the subvented NGOs and implement the Government guidelines on the monitoring of remuneration of senior executives in subvented bodies (the Guidelines).  SWD has issued a letter to NGOs requesting them to review the remuneration of their top three-tier staff in accordance with the Guidelines and to submit a review report on the preceding financial year to SWD on an annual basis.  If any anomalies of practice are identified in the review reports, NGOs will be requested to take appropriate follow-up actions.  As a measure to enhance public accountability, NGOs should also set up channels for public disclosure of the relevant information in the review reports, such as posting the information at their notice boards or annual reports; or issuing special circulars, or newsletters, etc.; or informing the public of the means to obtain the information.

     Besides, in accordance with the LSGIRC's recommendation, SWD will commission a consultant to develop the Best Practice Manual in collaboration with the Lump Sum Grant Steering Committee and the welfare sector.  The Manual will set out feasible practice standards on NGOs' management matters, including formulation of fair pay policies, budgeting of resources for staff remuneration and salary adjustments, etc., so as to ensure the fairness and transparency in their human resource policies and to help them strive for excellence in management.

Ends/Wednesday, June 9, 2010
Issued at HKT 12:12

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