The Chief Executive in Council has decided that the pay for civil servants in the upper, middle and lower salary bands and the directorate in 2020-21 should be frozen with retrospective effect from April 1.

Announcing the pay freeze today, the Civil Service Bureau said the decision was reached after all relevant factors under the established annual civil service pay adjustment mechanism had been thoroughly considered.

According to the 2020 Pay Trend Survey, the net pay trend indicators (net PTIs) for the upper, middle and lower salary bands are 1.68%, 1.98% and 1.15%.

The staff side of the four central consultative councils made different pay claims for the 2020-21 pay adjustment, ranging from a pay freeze to a 4% pay rise.

Apart from the net PTIs and the pay claims of the staff side, the relevant factors for consideration also included the state of Hong Kong's economy, the Government's fiscal position, changes in the cost of living and civil service morale.

The threat of COVID-19 and the necessary anti-epidemic measures seriously disrupted a wide range of economic activities in Hong Kong with the real Gross Domestic Product contracting sharply by a record 8.9% year-on-year in the first quarter of 2020.

The Government ran a fiscal deficit of about $10.6 billion in 2019-20, the first for Hong Kong over the past 15 years, and the deficit is estimated to increase substantially to around $280 billion or even more in 2020-21.

As regards the changes in the cost of living, for the 12-month period ending March, the headline Composite Consumer Price Index which reflects the impact of the changes in consumer prices on approximately 90% of households increased 2.8% compared to the previous 12-month period ending March 2019.

The Civil Service Bureau said the Chief Executive in Council fully recognised civil servants' efforts and contributions in coping with the social events and COVID-19 in the past year, but it decided upon the pay freeze after thoroughly considering these relevant factors under the established mechanism.

While all three net PTIs and the headline Composite CPI are in the positive, it should be pointed out that the net PTIs are but one of the six factors to be taken into account for deciding the annual civil service pay adjustment, the bureau noted.

The pay freeze decision has therefore been made in strict accordance with the established civil service pay adjustment mechanism, it added.

The Government has informed the staff side representatives of the four central consultative councils and representatives of the four major service-wide staff unions of the decision and will brief the Legislative Council Panel on Public Service on June 19.