Hong Kong’s recent budget measures, announced by Financial Secretary Paul Chan Mo-po, aim to balance fiscal prudence with economic recovery by increasing revenue while controlling government expenditure and minimising the impact on the public. They highlight the city’s struggle to implement sustainable solutions to its structural fiscal issues, which have persisted for years.

Key budget measures include a pay freeze for civil servants – including personnel in the executive authorities, legislature, judiciary and district council members. But the increment system remains unchanged so civil servants earning below the top of their pay scales can still receive salary increases, which reportedly add up to as much as HK$2.3 billion (US$296.26 million).

The Civil Service Bureau’s staff-related spending has risen to HK$156.2 billion, comprising nearly 26 per cent of the government’s operating expenditure for the 2023-2024 financial year. It’s an increase of over HK$7 billion or 4.75 per cent from the previous year, when it accounted for close to 22 per cent of operating costs. This upwards trend reflects the increasing fiscal pressure on public finances.

To address this, the government also plans to cut 10,000 civil service jobs over the next two years. But this is expected to occur through natural attrition. While these measures may lower costs, they are unlikely to offset the long-term fiscal challenges completely.