Director　　　
Mr Ng Shui Lai

Due to the expected deficit in the government budget, the fianical secretary is taking steps to cut its expenses for all government departments across the board. This includes subvention to non-governmental organizations or statutory bodies. In the process, a new challenge for social welfare organizations is created. Most social welfare organizations receive government funds for their services. For a voluntary organization, government funds usually account for 50% to 90% of its income. In most social welfare programs the majority expenses are for personal emolument. If there were a cut of government funding it would inevitably affect the pay for their staff.

Logically speaking, it is important for organizations to consider restructuring in order to survive in any changing environment. There is no exception for social welfare organizations. However, the recent cutback in the government financing would undoubtedly create extreme difficulties especially for the social welfare industry due to its nature of operation.

The following circumstances create and thus illustrate such predicament. Social welfare organizations had just completed a 3-year Enhance Productivity Program (EPP) in which they trimmed down what they could financially to remain functional. In 2002, following the government practice, the staff salary scale of these organizations had also been adjusted downwardly of. When the government changes its social welfare subvention mode to a Lump Sum Grant, social welfare organizations understand that there shall be no change in the contractual agreements with existing staff. However, when a reduction is seen in their major funding source, i.e. government funding, social welfare organizations have very few options to take to remain viable. Salary reduction on existing staff seems unacceptable under the Lump Sum Grant arrangement. The alternative is cutting staff, which means cutting services. Another possible way is to further reduce the already low salary rate for newly recruited staff. Both of which are not really feasible options.

Our Government has to realize that the government departments are different from social welfare organizations; hence, different administrative methods. To cut expenses across the board to achieve savings is irrational and impractical in social welfare organizations. A sensible way for the government to deal with the social welfare industry amidst our current economic challenge is to rationalize the saving through a plan such as the one implemented through EPP.

Financial challenges in a stressed economy must be faced and dealt with in a responsible and sensible manner especially among the social welfare industry. With less than such attitudes, those who ultimately suffer are the ones who need the services most.