An idea that isn’t going away

Former Transport and Housing Minister Anthony Cheung calls for a civil service pay freeze to help solve the government’s budget deficit. He notes that fiscal reserves of HK$1.1 trillion in 2018 are now at HK$570 billion. Much of that went to make up the shortfall during the economic shock of Covid – the ‘rainy day’ scenario officials have always used to justify the accumulation/hoarding of surpluses in the past. But with the economy now probably stuck with slower growth (basically a reflection of China’s own post-bubble slowdown), the deficits look structural.

Officials obviously hope to find new ways to boost growth. But all they can think of is more and more tourists, plus fanciful ideas for tech/bio/whatever hubs. Ultimately, Hong Kong needs to make some big adjustments. Assuming the currency peg will remain, the whole city needs to re-price itself. That means accepting lower housing and business rents as a good thing that will boost economic activity. And it means reducing the cost of government, most of which is salaries (and redundant infrastructure projects).

(Cheung warns that actual cuts to civil service pay would undermine consumption. Actually, a pay freeze is a cut, over time. But this is an old argument. If the economy is so dependent on public-sector employees’ household spending, that’s all the more reason to bring things back into balance.)

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6 Responses to An idea that isn’t going away

  1. Mjrelje says:

    Maybe it’s already happening. I got a 10% rent reduction from our Landlord for basically saying this place is overpriced and dying. He agreed.

  2. Probably says:

    Maybe the economy is dependent on public sector employee spending? The trial run at the new Kai Tak Stadium used 50,000 civil servants which are only a third of the total, hence 150,000. A classic case of Murphy’s Law that work expands to fill the space available (which actually was an academic paper written by an ex UK foreign office person who questioned why the FO staffing levels had quadrupled between 1907 when the empire covered a quarter of the globe and post colonial times).

    I read that in the Standard late last week and then mysteriously the story seems to have been taken down.

  3. Noah Webster says:

    Murphy’s Law is an adage that is typically stated as: “Anything that can go wrong will go wrong.”

    Parkinson’s Law is an adage that is typically stated as: “Work expands to fill the time allocated to the task.”

  4. Joe Blow says:

    Eggslut is closing its only shop (Fashion Lane, CWB) after 18 months or so. Because of the “challenging retail environment” in Hong Kong. Well, maybe, Eggslut. But if you are going to charge $ 80- for scrambled eggs on a bun (sorry: “brioche”), they have to be really special eggs.

  5. MeKnowNothing says:

    Mr Parkinson strikes me as someone one regrets not having had the chance to have a beer or two or six with…

    https://archive.ph/Mjd5N

  6. Mary Melville says:

    So the Orange Playground Bully and his pal Benji have finally come clean on The Final Solution to be rid of those pesky Palestinians getting in the way of their long planned maga property development Riviera of the Middle East………………………………………….
    MAR-A-GAZA

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