Reactions to the proposed pay revision for political office-holders by the Committee to Review Ministerial Salaries 2011

The million-dollar question on fair pay

It remains to be seen if electorate will accept committee's reasoning

By Chua Lee Hoong, The Straits Times, 5 Jan 2012

A COLLEAGUE asked me to describe the recommendations of the ministerial pay review committee in one word. I debated between 'cautious' and 'fair'. Several hours later, I'm plumping for 'fair'.

This is not to say that there won't be criticisms. If you want to be negative, there are areas to zoom in on.

One is the mere fact that the peg remains - the pay of political office-holders will still be pegged to that of top earners, all of them presumably in the private sector. Idealists, for whom the very notion of linking political pay to the private sector is anathema, will continue to find this irksome.

Two is the fact that the base for benchmarking, while more than 20 times wider than the earlier one of 48, is still relatively small at 1,000 people. For a citizen workforce of about two million, that is 0.05 per cent.

Three is the fact that while the new salaries are substantially lower than before, they remain higher than that of political office-holders in other countries.

Why 'fair', then?

The first point to note is the terms of reference that were set for the committee by the Prime Minister's Office last May. The committee was not given a blank cheque: It was tasked with reviewing 'the basis and level of salaries for the President, Prime Minister, political appointment-holders and MPs'.

While doing so, it should 'take into account salaries of comparable jobs in the private sector and also other reference points such as the general wage levels in Singapore', and the salaries of ministers should have 'a significant discount to comparable private-sector salaries to signify the value and ethos of political service'.

There is no doubt that these requirements constrained the committee's work in terms of choice of benchmarks and factors to consider. In the event, the formula it came up with had all the required elements - private-sector pay levels, a 'significant discount' (of 40 per cent), and 'general wage levels' when it linked a part of the bonuses to median incomes as well as incomes of the bottom 20 per cent.

The committee's achievement is that while it had limited options from the outset, it has managed to come up with a framework that is coherent, transparent and, dare we say, politically more acceptable.

The new benchmark is based on salaries of citizens alone, rather than citizens, permanent residents and Malaysians, as in the old benchmark.

The new benchmark for the MR4 ministerial entry grade yields a pay of about $55,000 a month. Interestingly, back in 2000, opposition veteran Chiam See Tong suggested in a speech in Parliament that ministers should be paid a monthly salary of $50,000 a month - a level enough for them to maintain 'a comfortable life', with a bungalow, servants, two cars, annual holidays and funds for their children's education.

Asked about this at yesterday's press conference, committee chairman Gerard Ee said it was a coincidence that the figures were so close.

In any case, he added, after the inflation of the last decade is factored in, $50,000 in the year 2000 would be more than $70,000 today.

Then there is the inclusion of median incomes and incomes of the bottom 20 per cent in the pay formula - clearly a direct response to suggestions made by many Singaporeans, including opposition party leaders, in recent years.

The new benchmark pegs a portion of the ministerial annual bonus to these income levels, and while detractors wish for more weightage to be given to them, the difficulty, as the committee acknowledged, is deciding what multiple to use.

In the 2006 General Election, for instance, Workers' Party (WP) chief Low Thia Khiang suggested that ministers should get 100 times the median income of the poorest 20 per cent of Singaporeans. This year, however, the Singapore Democratic Party (SDP) suggested paying ministers just 30 times the income of the bottom 20 per cent.

Percentile breakdowns of individual - as opposed to household - incomes are not available from the Department of Statistics website, so it is not possible to calculate how much the two parties' suggestions amount to. Broadly speaking, however, it looks like the WP is three times as generous as the SDP in what it thinks ministers should be paid.

Another reason why the recommendations are fair: With the abolition of pensions, political office-holders will be on a par with the vast majority of public servants who have stopped enjoying pensions for years. This furthers the 'clean wage' ideal even more decisively than before.

The third reason: The new framework makes it clear that there is a 'public service discount' in pay for ministers - 40 per cent, to be exact.

Mr Ee said that if he were to ask a chief executive in the private sector if he would become a minister for $1.1 million, the CEO would likely 'tell me to get lost'.

I believe him. The demands on political office-holders are onerous in Singapore's context. Unlike in many countries where politicians concentrate more on politics and less on policy, Singapore's political leaders have to do both - make policy, and handle politics. Chair a meeting to plot future directions for Singapore's education system in the morning; a dialogue with students and teachers in a school; several more meetings to ponder other aspects of ministry work; and reply to e-mail from assorted residents in the night in spite of exhaustion - all in a day's work.

As various committee members acknowledged yesterday, its recommended pay cuts for ministers will make it even harder for the ruling party to attract private-sector talent to join its ranks. The party will have to rely more on those with a calling to public service.

What's next? The committee's work is done, but will this mean the end of ministerial pay as a sensitive political issue?

The pay cut, sizeable by any reasonable yardstick, will remove a lot of the unhappiness that has been in the air.

But opposition parties will continue to milk the issue. They will stoke the sentiments of those who are ideologically opposed to benchmarking pay to the private sector by suggesting more populist benchmarks, even when the outcomes - in terms of quantum of pay - are the same.

Will sentiment or reason prevail within the electorate at large? That's the million-dollar question.

Both kudos and concerns from MPs, observers

By Tessa Wong, The Straits Times, 5 Jan 2012

MEMBERS of Parliament and observers believe the proposed pay cuts for political office-holders will go some way in placating Singaporeans who see the salaries as being too high.

While there would still be a minority of critics, 'people would be generally mollified', said socio-political blogger Alex Au.

'The report will help in terms of earning the Government some goodwill,' he added.

The reason, said Tampines MP Baey Yam Keng, is that people had been expecting a significant downward revision.

'The magnitude of the cuts... is a signal that the committee wanted to address various points from people that the pay has been too high,' he said.

The ministerial pay review committee, in its report released yesterday, has recommended, among other things, that entry-level ministers' annual salary be cut by 37 per cent to $1.1 million (without pension), and for the President's pay to be reduced by 51 per cent to $1.54 million a year.

But political analyst Derek da Cunha is convinced that in the long term, ministerial salaries will still be a 'hot potato' because the proposed salaries are still among the highest in the world.

One suggested change, however, won all-round praise. It is the abolition of pensions for political office-holders.

It was welcomed by even the Singapore Democratic Party (SDP), a strident opponent of the ruling party. But it lamented that some ministers under the current pay structure will still qualify for pensions.

MPs like Mr Inderjit Singh of Ang Mo Kio GRC also praised the new formula for being fairer and easier to understand.

He said that the expansion of the benchmark to the top 1,000 income earners means 'we are now looking at a bigger pool of talent, that is big enough statistically to reflect how wages can change over a period of time'.

Professor Neo Boon Siong, a governance expert from Nanyang Business School, also found the new formula clearer and easier to relate to than the present formula which pegs the salaries to the top eight earners in each of six professions.

With the change, 'you don't have to explain why this profession, and why only this certain number from each profession is included. So it is an improvement,' Prof Neo said.

But the National Solidarity Party (NSP) criticised the formula for continuing to use top earners as a benchmark.

'It sends the message that our ministers are in the same boat with the top earners, not with the average person. It rewards the ministers more when income inequality increases and top earners get a larger and larger share of the economic pie,' it said in a statement.

Prof Neo also feels the new pay structure does not go far enough in factoring in the socio-economic plight of Singaporeans.

Factors like unemployment rate are used only to calculate the National Bonus, which forms just 15 per cent of the total pay package, he said.

Another factor is social inequality, represented by the growth in income of the lowest one-fifth of wage earners. But as it is one of four factors in the calculation of the National Bonus, it accounts for only about 4 per cent of the entire pay package.

'That's quite low and inadequate,' he said.

Mr Au suggested that the Gini coefficient, a measure of income inequality, be included in the pay structure.

The two opposition parties which responded yesterday, the SDP and NSP, also criticised the recommendations as not going far enough, taking issue with the fact that the recommended salaries are still higher than in other countries.

The Workers' Party and the Singapore People's Party said they are still studying the recommendations and will respond later.

On the other end of the spectrum, some voiced concern that the cuts may have gone too far and will make it more difficult to attract people into politics.

Dr Muhammad Faishal Ibrahim, MP for Nee Soon GRC, said there is 'a lot of opportunity cost' with the cuts. He said a few young big-earners in the private sector whom he spoke to said they felt the call to serve but still 'need to think carefully... they lose their private lives. And now there's the pay cut'.

In a Facebook update last night, Senior Minister of State Grace Fu said that when she joined politics, she 'had some ground to believe that my family would not suffer a drastic change in the standard of living even though I experienced a drop in my income. So it is with this recent pay cut.'

But, she added, 'if the balance is tilted further in the future, it will make it harder for anyone considering political office'.

Most welcome pay cuts: ST poll
Many surprised at size of reductions; some feel salaries will still be GE issue

By Jennani Durai, Amanda Tan, Lin Wenjian & Lin Zhaowei, The Straits Times, 5 Jan 2012

SINGAPOREANS interviewed have welcomed the proposed changes in ministerial pay announced yesterday, with many expressing surprise at the size of the cuts.

This was the main finding of a snap poll conducted by The Straits Times at Raffles Place, Ang Mo Kio and Bishan, and over the phone. They were asked for their reactions to the recommendations announced yesterday by the committee reviewing salaries for political appointment holders.

The salary of entry-level ministers is being cut by 37 per cent to $1.1 million, while that of the Prime Minister is being cut by 36 per cent to $2.2 million. The starting salary of a new minister is also lower at $935,000.

Of the 100 people polled, 73 were satisfied with the proposals, against 19 who were dissatisfied. A small number - eight - said they were undecided.

'It shows the Government is serious about listening to our views,' said retiree Weng Hiang Loong, 70, echoing the views of many of those polled. 'Now I hope they can also listen to us and make our cost of living lower.'

Several people said the pay cuts reassured them of politicians' motivations in seeking the country's top positions.

'It's good because now I know our ministers are making a real sacrifice to serve, especially those who were doctors or other professionals before,' said senior accounts officer Fong Shoo Wah, 32. 'In the past, I think when people were picked to join politics, it was a promotion for them.'

The size of the cuts surprised many, like civil servant Ng Wen Sheong, 31. 'For them to agree to such a drastic cut means they have been overpaying themselves all this while,' he said. 'I am, in general, happy with the pay cuts, but I feel they are long overdue.'

Student Jeremy Boo, 22, felt the review was fair, particularly the removal of pensions. 'One thing that people were unhappy about was that the ministers seem to be remunerated on a different system - we have CPF so why are they still receiving pensions? It's like a hidden salary.'

Most also felt the cuts were not so significant that the Government would have difficulty attracting talent. IT consultant Lim Khim Hwee, 61, said: 'It's a win-win outcome as it is a substantial discount but still high enough to attract capable people to join politics and serve.'

A minority felt the cuts were not deep enough. 'If they want to be ministers for the sake of the people, why do they need more than $1 million a year?' said personal assistant Angeline Benjamin, 27. 'They should be paid around half a million dollars.'

Aircraft engineer Lee Lin Shen, 29, agreed, saying: 'I was expecting a greater cut of around 50 per cent for ministers, and I had expected the President's pay to be comparable to the US president's.' But he felt the recommended cut is a big step forward.

Art director Shaun Siew, 35, said the revised salaries were still very attractive. 'I think even on this so-called reduced pay scale, they are still earning much more than the average Singaporean, so it will still be hard for them to really understand the feelings of Singaporeans, especially those who are jobless or earning very little,' he said.

Those polled also overwhelmingly felt that ministers' salaries would still be an issue in the next election. All but five of those polled said ministerial pay would continue to be a factor for voters.

'Even (with the cut), it's still a big salary, and if people don't see increases in their own salaries, they're still going to be upset at the difference,' said accountant Alwin Chen, 27.

Preschool teacher Sukhwinder Kaur Veena, 38, agreed, saying: 'The cost of living is still going up - like the recent taxi fare hike, for example - so there will still definitely be a lot of unhappiness.'

Private tutor Doris Teh, 56, said she doubted Singaporeans would stop talking about it any time soon. 'It's been festering for such a long time. I don't think that the issue will just go away overnight.'

Revisions fair and reasonable: HR experts
By Aaron Low, The Straits Times, 5 Jan 2012

FAIR and reasonable was how most human resource professionals described the recommendations to revise ministerial pay.

In particular, they said the move to reduce the potential amount of bonuses office-holders could get and instead peg the variable components to the socio-economic strides made by regular Singaporeans was in the right direction.

But several also felt that the cuts were too harsh and opened up a big gap between the private sector and political appointment holders.

Among those supportive of the changes was RDS Remuneration Data Specialists managing consultant Peter Lee. He said he found the revisions fair and reasonable, as the moves meant that the basic pay of office-holders was in line with that of the bosses of big firms in Singapore.

'If you look at the basic pay, the entry-level minister earns $715,000, which works out to $55,000 a month. This is what most CEOs of mid-sized listed firms get for their fixed portions. This also means the basic pay of $55,000 is just 12 times the average wage of Singaporeans here,' he said.

He also noted that the maximum amount one could earn in the past model included bonuses of about 25 months.

'But this model has up to a maximum of 13.5 months, which is about half of the previous framework. So if you take this into account, one could argue that the cuts in the new framework are closer to 60 per cent or more,' he said.

Yesterday, the committee to review ministers' salaries recommended a pay cut of 31 per cent for a minister at entry grade, who can now expect to earn $1.1 million a year.

And if the removal of pensions is taken into consideration, which has been proposed by the committee, the cuts would amount to 37 per cent. A minister starting at the lower end of grade MR4 will earn $935,000 a year after the revision.

Among the changes made were also for part of the variable components to include measures that are pegged to the welfare of average Singaporeans.

The committee wants the unemployment rate, economic growth rates, and median income growth rates of both Singaporeans and the lower-income groups to be factored in when calculating part of the office-holders' bonuses. This is the new 'National Bonus'.

Ms Peony Lim, director of commerce at Robert Walters Singapore, said this move to peg the bonuses to social welfare was a fair and positive one. 'In recent times, the focus should definitely be moved to the welfare of Singaporeans as opposed to being fixated on pure economic growth,' she said.

At the same time, she did not think the cuts would deter public-spirited individuals in the corporate sector from pursuing a career in public service at the highest levels.

'Even with the pay cuts - proposed to be aligned with market rates - it would still provide an attractive package to top-level professionals,' she said.

Agreeing, Ms Lynne Ng, regional director at Adecco South-east Asia, said it made good business sense to pay senior professionals a salary that is 'commensurate with their skills and experience'. 'However, what is also important is that the remuneration is continually reviewed and remains, as far as possible, transparent,' she said.

But some experts, such as AYP Associates managing director Annie Yap, believed the cuts were too deep.

'I thought the moves were a tad drastic. From an HR standpoint, a 30 per cent cut is huge,' she said.

She noted that CEOs and senior management of big firms such as SingTel, Keppel and DBS Bank were paid much higher than the Prime Minister, who would earn $2.2 million after the revisions.

For instance, Keppel Corp CEO Choo Chiau Beng received a package of between $11.3 million and $11.55 million in cash and shares in 2010, while the three local banks paid their CEOs between $7.48 million and $8.25 million each.

'So compared to these CEOs, the gap is huge. Even a top private banker or head of department at a local bank may earn more than a million dollars a year, beating the junior minister who runs the country,' said Ms Yap.

Still, RDS' Mr Lee said that while from a professional standpoint the revisions made sense, it will probably be difficult for the general public to accept the types of wages being talked about.

'If you factor in all the bonuses, which go up to eight months for a typical year, it still works out to more than $1 million a year for the junior minister. That is still a lot of money for the regular man in the street,' he said.

A job well done but ...
Some areas such as transparency and lack of long-term bonuses bear further review

By Mak Yuen Teen, TODAY, 5 Jan 2012

The Committee to Review Ministerial Salaries has attempted to address the design flaws in the current system of setting ministerial salaries and, in my view, it has done a commendable job undertaking an unenviable task.

The approach is thoughtful and rational, and I agree with most of the recommendations. However, there are some issues that need to be thought through more carefully: Namely, whether the formula can be simplified further, the new salary benchmark, performance evaluation, the lack of long-term performance bonuses and the need for transparency.

SIGNIFICANT IMPROVEMENT

The current approach is an odd combination of flawed private sector pay practices and outdated public sector pay practices. In the private sector, benchmarking pay to peers in the industry is common. Senior executives can earn performance bonuses significantly higher than their base salaries based on key performance indicators (KPIs) such as profit growth.

These practices were imported into the current system of setting ministerial pay and implemented in a questionable manner, due to the choice of a small "peer group" of the 48 most highly paid professionals in six professions, very aggressive potential short-term bonuses which can theoretically add up to a maximum of 22 months of salary, and the use of a single and "noisy" national performance indicator of annual gross domestic product growth.

The current approach also includes elements of outdated public sector pay practices, in particular, guaranteed lifelong pensions and pay linked more to job titles or seniority than actual job responsibilities - such that the President and Speaker are paid handsomely largely because of their position in the hierarchy.

The committee's across-the-board review of political salaries has resulted in cuts in all political salaries. The system's key principles are essentially unchanged: Salaries must be competitive so people of the right calibre are not deterred, the ethos of political service entails making sacrifices hence a discount in the pay formula; and there should be a "clean wage" with no hidden perks.

I have no problem with the key principles and believe that proposed changes in the salary formula, salary benchmark, salary discount, KPIs and pay components (including the elimination of pensions) are significant improvements to the current system.

SIMPLIFY 'BONUSES'

Some issues, however, warrant further thought. Let's start with the proposed revised salary formula for ministers, which is: Annual Salary = Fixed (13 months) + Annual Variable Component (AVC) (typically 1 month) + Individual Performance Bonus (typically 3 months for good performance) + National Bonus (typically three months if targets are met).

This translates to an annual salary equal to 20 months in a typical year.

The committee could perhaps have considered doing away with the 13th month "bonus" (annual wage supplement) as it is an outdated salary component. Since it is guaranteed, it should be incorporated into the base salary.

Given the use of the National Bonus, which includes various socio-economic indicators, including real GDP growth, it could perhaps also have dispensed with the AVC which is linked to economic performance. The potential National Bonus can be increased. This will lead to further simplification of the formula into just a fixed 12-month base salary, plus an Individual Performance Bonus and a National Bonus.

IS TALENT BENCHMARK REFLECTIVE?

The benchmark for the entry MR4 minister's salary will be changed to the median income of the top 1,000 earners who are Singapore citizens, with a 40-per-cent discount. This will substantially reduce the level and volatility of the income used as the benchmark and will likely appeal to many as much more reasonable than the current benchmark. 

The committee believes the new benchmark will cover all professions and better reflect the talent pool from which political leaders will be drawn. But whether increasing the benchmark to the top 1,000 earners will necessarily broaden the pool across all professions is an empirical question, as the top-1,000 pool may still be skewed towards certain professions.

One may also argue that equating earning power with talent, and particularly the talent to be ministers, is flawed. Further, historically, many ministers have come from professions which are unlikely to figure among the top 1,000 earners, including career army officers, academics and trade unionists.

EVALUATING PERFORMANCE

Another issue is how the individual performance of ministers is going to be evaluated by the Prime Minister. Ideally, this should include some objective KPIs related to the minister's portfolio. If we can find objective KPIs for the national bonus, we can find objective KPIs for the Individual Performance Bonus.

It is also important that only truly exceptional performance will earn the minister the maximum bonus, and I am glad the committee has recommended that good performance should only earn half of the maximum individual bonus.

It is great to see that the National Bonus will include four KPIs of real median income growth rate of Singapore citizens, real growth rate of the lowest 20th percentile income of Singapore citizens, unemployment rate of Singapore citizens and real GDP growth. I particularly welcome the equal weighting to be put on each of these four indicators and the fact that the income and GDP growth measures are adjusted for the effects of inflation.

The committee has even gone as far as to recommend targets for these KPIs, which will remove the potential moral hazard of the Government setting its own targets.

MAKE REMUNERATION TRANSPARENT

The committee has chosen not to incorporate any long-term performance bonus, which is increasingly being used in the private sector to encourage executives to consider long-term implications of their decisions. As the impact of government policies may only be known after some time, the same argument can be made for some kind of long-term performance bonus, by reducing the annual bonus components.

However, the committee may understandably feel that this is too difficult to implement. In place of this, the Government will need to have better systems in place to monitor the effects of policies. There have been some policies where problems have been apparent for some time, but little action was taken to review these policies in a timely manner.

In order to build trust in the system, there should be adequate disclosure and transparency. The Government should publish an annual remuneration report with a detailed breakdown of salary and other remuneration components for each minister. If pay is fair, there is really nothing to hide.

Overall, I congratulate the committee for a job well done. 

Mak Yuen Teen is an associate professor of accounting at the NUS Business School who specialises in corporate governance.

What's enough to attract political talent?
We need that elusive social consensus on how much is right and necessary
By Eugene K B Tan, TODAY, 5 Jan 2012

Ministerial pay has been a hot-button issue ever since salaries benchmarks were introduced in 1994. The thinking then was that the use of benchmarks - a new management innovation of Xerox in 1980 - would reduce the political sting each time the issue of ministerial salaries was discussed in Parliament prior to an upward adjustment. But there was little buy-in for the benchmark.

The over-arching approach in the '90s and 2000s was a self-fulfilling one: That good ministers and bureaucrats are critical to Singapore's success and progress, and that it necessitates paying them their due worth, pegged to market value.

In the past, the Government consciously chose not to be overly concerned by the adverse reactions and stuck to its guns and the argument that ministers deserve what is due to them. In reality, it has through the years exacted a political cost on the Government, and perhaps enervated the meaning of public and political service.

UNPRECEDENTED PROCESS

The Committee to Review Ministerial Salaries recommends a significant pay-cut for key office holders. Nonetheless, behind the headline-grabbing figures, the committee also believes it has re-calibrated the compensation system so that the fundamental basis of a competent and committed government is left intact.

What is different this time is that there is an independent committee appointed to look into the divisive issue of ministerial pay.

In 1994, it was top civil servants who proposed the benchmarks (which also applied to them). This time, there is strong corporate expertise on the committee, recognising that it would be wholly unrealistic not to give due consideration to how public service pay compares with that of that of the private sector elite.

Both, after all, seek to draw from the same talent pool.

TOO MUCH OR NOT ENOUGH?

To be sure, the recommendations will not appeal to every Singaporean. For some, the recalibrated pay benchmarks are still too high, particularly if they hold rigidly to the United States presidency pay benchmark.

For others, the concern centres on whether the recommendations will short-change Singapore and Singaporeans in the long term. Specifically, will Singapore be able to continue to attract sufficient talented and committed Singaporeans for political service?

They point to how the "new normal" political climate has upped the demands of political office, the quotient for sacrifice. There is nothing wrong with that since politics is not for the faint-hearted especially if one wants to serve at the highest levels.

But cognizance has to be given to the reality that for talented Singaporeans, responding to a call to political service is but one option among many. We need to be mindful not to push this public service logic and sacrifice too far. As much as serving Singaporeans through political office is a calling, it is by no means a priesthood. Often, as in the private sector, you get what you pay for.

Benchmarking and the discount factor will never be free of controversy: Questions and polemics will abound not only on why the benchmarks were chosen but also how they were chosen.

The discount factor "to signify the sacrifice that comes with the ethos of political service", on top of a less generous benchmark, has increased marginally from 33 to 40 per cent. It reiterates the self-sacrificing notion that those at the top need to pay attention to the general good rather than focusing on their private financial affairs.

Is that too much or too little of a discount? Ultimately, any pay formula will need constant and robust review. This means regular reviews as suggested by the committee.

WORST CASE OUTCOMES

There will also be the reality of trade-offs in pursuing one policy option over another.

What is the worst and best outcome for Singapore and Singaporeans if the recommendations are implemented? (Prime Minister Lee Hsien Loong has indicated that the Government intends to accept the recommendations.)

The worst case scenario would be a double whammy. Political pay remains a contested issue, resulting in the continuing loss of political capital for the Government. As has happened in the past, any discussion of policy flaws could be inflected with the issue of political pay, undermining the ability to examine issues in an objective and rational manner.

And at the same time, political pay is viewed as out of touch with the market value for that sort of ability. If capable and committed Singaporeans shy away from political office because the sacrifice asked is perceived to be excessive and inequitable, Singapore will be poorer for it and the virtuous cycle of good governance will be severely undermined.

BEST CASE SCENARIO

What about the best outcome? First, political pay no longer is an issue that exercises Singaporeans unnecessarily. There is strong consensus among citizens about what compensation is needed for a capable and committed government. In this way, policies are not viewed through the prism of political pay.

Second, the revised benchmarks make political service more attractive to talented and dedicated Singaporeans. Those who were put off by the relatively high pay under the current benchmarks might now re-evaluate their keenness to serve the larger good through political office. The larger the pool of political talent that we have, the better for Singapore.

WHITHER PUBLIC SERVICE ETHOS?

The committee's recommendations, and the debate in Parliament on Jan 16, provide more food for thought. There is a larger imperative behind this effort to right-size political pay that should also be deliberated. How do we encourage and nurture an ethos of public and political service among Singaporeans in a young society like ours, where there is the abiding focus on one's market value?

The ministerial salaries review is primarily concerned with the value of political service - how much to pay? - but the subtext is about the values that undergird our society.

The subject of salaries, for politicians and top civil servants, is inherently contested. But social consensus on what is needed to attract talented men and women to serve the larger good is vital. There has not been such consensus since 1994 when the existing benchmarks were introduced. It is now time to build a strong and sustainable consensus, notwithstanding the limitations of benchmarks.

Eugene K B Tan is assistant professor of law at the Singapore Management University School of Law.

Mixed reactions to recommendations

By Esther Ng, TODAY, 5 Jan 2012

While proposed cuts to Ministers' salaries may never be enough to satisfy critics, observers felt the key, going forward, is how the Government will convince Singaporeans that the revisions are palatable.

Singaporeans need not wait long, as Parliament will debate the proposed cuts on Jan 16.

Shortly after the 47-page report by the review committee was released yesterday, two Opposition parties weighed in with their suggestions.

The Singapore Democratic Party (SDP) suggested that the "continued revisions" of political salaries be undertaken on an annual basis by a legally-independent committee.

"Such a committee should work towards bringing the wage levels of Singaporean politicians in line with that of international standards," said SDP head of policy unit James Gomez.

The National Solidarity Party (NSP), meanwhile, took aim at what it felt was a larger issue - changing Singapore's political culture to make politics attractive.

"Our Government had chosen not to address the issue holistically, opting instead for the simplistic approach of increasing salaries which, unsurprisingly, has proven ineffective," said NSP secretary-general Hazel Poa.

"It is time they realise that it is not all about the money."

On the Internet, Singaporeans from all walks of life also gave their take on the recommendations. Some noted that the reason for paying high salaries - that it was necessary to attract top private sector talent to join politics - will be further tested.

Netizen "Obsedius" tweeted: "I'm worried that we won't be able to attract top talent now that there isn't a multi-million pay."

But some chief executives of smaller-sized multinationals earn around S$1.1 million, too - the entry level salary for a minister under the recommendations - noted Ms J S Tan, a human resource regional director of an American multinational corporation.

She said: "For the top people who consider if it's worth their while to jump to politics, it is not just the annual salary alone that they have to consider, but the total package. There are long term benefits like stock options that they will have to give up once they join public service."

The ruling People's Action Party (PAP) may likely be the most affected by the reduction of ministerial salaries, based on the profiles of its typical candidates, said National University of Singapore's political science lecturer Reuben Wong. 

"Why give up lucrative jobs for the rough and tumble, and uncertain job security of politics?" he said.

Pay, however, is not an "over-riding factor" for those who join the Opposition as they are "driven by ideals and passion", Asst Prof Wong argued.

Some observers noted that the deliberations of the committee - and its rationale for the recommendations - could be lost on the man-in-the-street.

On the size of the ministerial pay package, former Nominated Member of Parliament Siew Kum Hong said: "It's a huge number beyond the imagination of the working class."

Mr Siew felt the new formula is a "vast improvement". However, he noted that the recommendations are "technical in nature and do not address the political challenges in having high ministerial salaries".

"That is why I think it will continue to plague the People's Action Party," he added.

Another former NMP, Mr Zulkifli Baharudin, disagreed. He noted that Prime Minister Lee Hsien Loong - who had appointed the committee - "responded quickly to the call because he didn't want high ministerial salaries as a dividing force".

Mr Zulkifli said: "There is now more transparency in deciding salaries for Ministers, the removal of pensions makes wages cleaner, so I think the committee has achieved its objectives."

But Asst Prof Wong noted that in pegging the fixed salary component to the median income of top 1,000 Singaporean earners, "the committee's decision is still very much informed by a 'top salaries' paradigm".

Former NMP Mildred Tan, who is Ernst & Young Advisory managing director, reiterated the need for more clarity on the rationale to benchmark the ministerial salaries this way as well as for the indicators for the National Bonus. Said Mrs Tan: "It will be good if we have the details and further elaboration on how we arrive at the different criteria."




Opposition members respond to pay cut

By Hetty Musfirah, Channel NewsAsia, 4 Jan 2012

Several members of the opposition parties in Singapore have responded to the recommendations of the Ministerial Salaries Review Committee announced on Wednesday.

Ministerial pay was a hot topic in last year's General Election.

Chairman of the Workers' Party Sylvia Lim said her party is studying the recommendations and will also respond in due course.

Similarly, Non-Constituency MP Lina Chiam from the Singapore People's Party said she is studying if the changes will benefit Singaporeans.

The Singapore Democratic Party (SDP) said it welcomed the proposed removal of pensions but it is still unhappy over the overall pay package.

SDP's James Gomez said: "However, at the SDP, we feel that the quantum is still extremely very high. I don't think the new Singaporean politician who wants to bring Singaporean issues forward is motivated by monetary incentives.'

The National Solidarity Party (NSP) said it is disappointed that the proposed benchmark for political salaries is still pegged to the top earners in Singapore.

The NSP said it had suggested the pay structure also take into account the bottom 20th percentile of wage earners here and despite suggestions to incorporate this into the national bonus, the overall pay package is still high.

NSP's Hazel Poa said: "Comparing the new salary levels for an entry level minister, S$1.1 million, that's already higher than the salaries of prime ministers and presidents in other developed countries.

"I think that is still a bit hard to swallow. We had been hoping for at least a 50 per cent cut to bring it down to more reasonable levels."

A pay review that sends the right message

The Business Times, 5 Jan 2012

'POLITICAL service is not a job or a career promotion,' said Prime Minister Lee Hsien Loong in his swearing-in speech after the general election last May 21. 'It is a calling to serve the larger good of Singapore.' But he added that ministers 'should also be paid properly in order that Singapore can have honest, competent leadership over the long term'. The recommendations of the committee on ministerial pay, which were made public yesterday, capture the spirit of these sentiments.

The headline numbers are dramatic. If the recommendations are accepted (and the government has indicated a readiness to do so), the pay of an entry-level minister will be cut by 37 per cent, with the abolition of pensions factored in. The Prime Minister's pay will be cut 36 per cent, while the President and the Speaker of Parliament will take even heftier cuts of 51 per cent and 53 per cent, respectively.

The methodology underlying the recommendations is significant. Under the existing formula, a minister's starting salary is pegged at a one-third discount to the median income of the top eight earners in six professions: accounting, banking, engineering, law, local manufacturing firms, and multinational corporations.

Under the recommended formula, entry-level ministerial pay will be pegged to the top 1,000 earners who are Singaporeans, with a 40 per cent discount. Three notable changes here: first, the benchmark will comprise only Singaporeans, not all top earners. Second, it will cover a broader cross-section of occupations than just the six (relatively high-paying) professions covered by the present formula - and to that extent will be more representative of the variety of occupations Singaporeans engage in. And third, the discount 'to signify the sacrifice that comes with the ethos of political service' is greater.

Also of note is the 'National Bonus' component of variable pay for ministers. Under the current formula, this is linked to just GDP growth. Under the recommended formula, it will be linked to four socio-economic variables, each getting equal weightage: the median income growth of Singapore citizens; the real income growth of the poorest one-fifth of Singaporeans; the unemployment rate; and real GDP growth. This sends a clear signal that GDP growth alone is not the yardstick by which ministerial performance will be assessed; the general well-being of Singaporeans and the degree of hardship and inequality also count. The recommended reward structure thus reflects the changing priorities of the government, which are more in tune with the popular aspirations aired during last year's general election.

A commendable feature of the recommendations is their emphasis on transparency - on 'a clean wage', with no hidden perks, in keeping with the practice thus far. The committee report sets out its recommended pay structure in detail, right down to every last allowance. This sets Singapore apart from many countries, where ministerial remuneration is padded with all manner of opaque perks, including housing and other allowances. And this underlines the point that comparisons of Singapore's ministerial pay structure with that of other countries - a frequent practice in public discourse - can be misleading. The committee's recommendations, which are the result of an intense and prolonged consultation process, are far-reaching in that they call for meaningful, rather than cosmetic, changes in ministerial remuneration and its basis.

But the recommendations raise an important question, which is whether pay cuts of this magnitude will make it harder for government to attract top talent. It must be acknowledged that this is a possibility, given that the gap between the reward structures in the private sector and the government will widen. However, while the recommended pay scales are not as generous as at present, they are not parsimonious either. More- over, it is also possible that people with a high sense of public duty will not be deterred. In the years to come, this desire to serve the public good - the quality that most motivated Singapore's founding fathers - will, quite appropriately, gain in importance for aspirants to public office.

A salary and growth comparison

Letter from Damian Sim, TODAY, 7 Jan 2012

OUR Prime Minister's salary is 4.3 times that of the American President's. If our per capita Gross Domestic Product (GDP) since 1965 has grown many times more, relative to America's growth, would our PM's salary be justified?

Singapore's real per capita GDP grew from S$1,580 to S$59,813 in 2010, a growth of about 3,700 per cent. The United States' per capita GDP since 1965 grew by about 200 per cent to US$47,200 (S$61,100).

Granted, our economic results are not the culmination of a single term of leadership, and the US declared independence far earlier. But the comparison does reflect the consistently successful management of the Singapore economy and the improvements to date under the People's Action Party.

Further, the overall government budget last year was a US$1.297 trillion deficit for the US and a US$0.08 billion surplus for Singapore. The Republic is also noted for managing one of the largest sovereign wealth funds globally.

Temasek Holdings has a portfolio value of S$193 billion, the Monetary Authority of Singapore holds official foreign reserves of US$240 billion and the Government of Singapore Investment Corporation manages well over US$100 billion in assets.

If society narrowly utilises the political salaries in developed nations, like the US, as a yardstick, then based solely on performance, would the salaries in Singapore not be justified?

On another note, election spending in Singapore is limited to S$0.30 and S$3.50 per voter in the Presidential and Parliamentary elections, respectively.

In the US, there are no limits when federal funding is not tapped, thus financial muscle has significant influence. US President Barack Obama raised US$745 million, or about US$3.60 per eligible voter.

This may not seem significantly different from the election expenses limit in Singapore.

But if there are individuals and organisations donating big sums to help a person to attain one of the most powerful political appointments, what would the donors expect in return? 



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Salaries for a Capable and Committed Government
Ministers' Salary Review Key Recommendations by the Committee to Review Ministerial Salaries