17 June 2002
KCRC announces cuts in pay and allowances
The Managing Board of the Kowloon-Canton Railway Corporation (KCRC) has approved Management’s proposal to seek a 2% voluntary reduction in the total pay package of senior staff. This is generally equivalent to 3.1% to 4.0% of their base salaries.
These cuts will affect about 280 staff members, comprising Executives, Senior Executives (General Managers), Directors and the Chief Executive Officer.
At the same time, the Managing Board has approved a proposal to abolish and modify a range of allowances and benefits for junior staff below the rank of Executive. Their base salaries will remain unchanged.
This reform will affect about 4,940 staff members.
A spokesman said that the decision to request senior staff to take a voluntary cut of 2% of their total pay package, which includes base salaries and allowances, was made after the Corporation has completed its latest pay level survey of 10 comparator companies. "The Corporation’s pay policy is to follow the market within defined ranges," he said.
"The results of the 2002 survey show that the pay levels of comparator companies have generally fallen, and that the pay package of the majority of senior staff at Executive level and above is 2% above the market rate."
The spokesman added that the pay cut could not be imposed on employees because contracts of employment are binding on the Corporation.
"This is why the cuts must be made on a voluntary basis."
The senior staff were briefed on this proposal at a conference held last Thursday, 13 June, and the vast majority of them expressed understanding and support.
For staff ranked below Executive, the spokesman said a separate pay level survey undertaken earlier this year had shown that their total take-home income was also above market rates.
He said that Management had earlier carried out a review of allowances and benefits. These have not been examined for a long time.
Having regard to the survey results and the review of allowances and benefits, there is a case for abolishing, modifying and reducing the rates of some of the allowances and benefits.

These include:

  • abolition of acting pay;
  • abolition of obnoxious duty allowance;
  • abolition of maternity benefits;
  • abolition of Lo Wu overnight allowance;
  • grandfathering of the local education allowance;
  • modification of the rules of shift premium;
  • reduction in the rate of overtime allowance by 10%;
  • reduction in the rate of overnight shift allowance by 10%;
  • reduction in housing allowance by 10%; and
  • where employment contracts so allow, levying a charge of $20 for each visit to a general practitioner under the Corporation’s medical insurance scheme.
The spokesman said that, on the basis of actual 2001 payroll, the estimated impact of these changes should result in an average reduction of 2% in total take-home income.
"Union representatives and the staff at large have been briefed on these changes and they have generally expressed understanding."
He added that there will be an overall review of the Corporation’s system of human resource management during the second half of this year. The last review was carried out in 1992.
The new package will take effect from 1 August 2002. The overall financial impact would be to achieve a saving for the Corporation of $41 million for a full year.