21 October 2016
Most of the workers outsourced by the government such as street sweepers receive low pay and work for long hours. Photo: AFP
Most of the workers outsourced by the government such as street sweepers receive low pay and work for long hours. Photo: AFP

Outsourcing of public services hurts Hong Kong in the long term

Since the ’90s Hong Kong has been outsourcing public services and reducing the number of public servants in order to lower costs and maintain a small and efficient government, which can then focus more on core services.

Since 2001, our government has further stepped up its outsourcing efforts. Last year the government outsourced 60,000 positions.

Almost 90 percent of these workers were for the Housing Department, the Food and Environmental Hygiene Department and the Leisure and Cultural Services Department. A majority of these workers were low-paid and low-skilled, mainly serving as security guards and cleaners.

At a recent Legco meeting on the outsourcing of public services, the administration failed to provide any information on exactly how much public money had been saved through outsourcing.

To make matters worse, the officials present at the meeting did not, nor did they ever intend to, put forward any suggestions as to how to protect the rights and well-being of outsourced workers.

These workers hired by the government through staffing agencies usually suffer from low pay, inhumane working hours, almost zero labor rights protection and have no prospective career whatsoever, not to mention their low morale and high turnover.

Furthermore, outsourcing has created an army of low-income workers within the community. These workers are mainly new immigrants who are living from hand to mouth and have no bargaining power with their employers.

Their large number has widened the income gap among our working population.

Here is one simple example: If the government wants to hire a cleaner under a permanent contract, it will normally have to pay HK$11,000 a month. However, if the position is outsourced, the government will only need to pay HK$9,000, of which the cleaner will probably get HK$7,000 while the rest will go to the staffing agency.

According to government statistics, the median monthly salary in Hong Kong rose by almost 80 percent from 1991 to 2001, increasing from HK$10,000 to HK$18,000.

However, from 2001 to 2011, the pay level grew only 12 percent while Hong Kong’s GDP expanded 40 percent.

In other words, while our economy continues to prosper, the vast majority of our low-income workers have not been benefited at all. In fact, their condition now could even be worse had it not been for the implementation of the statutory minimum wage in 2011.

So how much benefit can the general public actually get from outsourcing public services?

Unfortunately, not much in financial terms. However, outsourcing could have far-reaching implications for our society, as it produces hundreds of thousands of low-income families, which may in the end look to our social welfare system for help, thereby increasing the burden on our social welfare safety net.

Most of the outsourcing contracts only last two to three years, and there is basically no incentive for private contractors to improve the working conditions of their workers, let alone invest in new technologies to enhance efficiency.

As a result, outsourcing fails to improve the quality of public services, and the general public is no doubt on the receiving end, while outsourced workers are subject to a worsening accident rate.

Rather than focusing on short-term financial savings, the government needs to look at its outsourcing plan from the angle of the citizens’ long-term benefit.

With a robust level of reserve, it’s time for our government to start investing in “capacity building” by offering real job opportunities and decent salaries to our working population, rather than continuing to exploit the disadvantaged in our society.

The article first appeared in the Hong Kong Economic Journal on June 12.

Translation by Alan Lee

[Chinese version 中文版]

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Professor in the Department of Social Work and Social Administration at the University of Hong Kong

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