May 26, 2011

Possible Formulae for Determining Ministers' Salaries

Mak Yuen Teen is an associate professor at NUS Business School. He has an article in TODAY which discusses ministerial salaries. Excerpts below:
Reviewing ministerial salaries: Seven lessons from the private sector
04:46 AM May 26, 2011
by Mak Yuen Teen

Last week, I taught executive and director pay to an executive MBA class and, during lunch, the subject of conversation at my table was ministerial pay in Singapore - a regular topic among the executives attending the programme over the years.

While most of the rest of the world is concerned with high executive pay, this must be the only country where ministerial salaries are of more interest.

Quite coincidentally, on Saturday morning, I had begun writing a commentary with the tentative title of "Ministerial pay: Lessons from corporate scandals and the financial crisis". That night, I saw on the news the Prime Minister's announcement that he was setting up a committee to review ministerial pay.

When you pay poorly, you might still get good people but, undoubtedly, the pool you select from will be smaller. You may also attract some who are willing to take low pay because they want to use their position for other benefit, such as taking bribes or getting directorships in companies.

When you pay very well, the pool will be larger, but you also risk attracting the wrong people who are motivated purely by money. People who are attracted to politics because of the money (or power) might still want to use their positions for their own benefit because for some, it is never enough.

I personally do not believe that high pay is effective for fighting corruption; I think it is an affront to the many who make an honest living on low pay to suggest that paying little encourages corruption.
I agree with Mak. Not only that, I think that it is also an affront to the many who make an honest living on high pay to suggest that paying them less would encourage corruption. I mean, just take a look at this nice, honest-looking man over here:

This man earns a lot of money (about 3 or 4 million dollars per year, excluding bonuses). He is also a well-respected man, who has held public office for many years. And in all those many years, there has never been any reason to believe that he has ever done anything corrupt.

But you know what his father says, and has said for many years, right? According to Daddy, if his son's salary was cut (for example, to only 1 or 2 million dollars per year), then he would feel tempted to become dishonest, and to cheat, and take bribes.

Now, if I were the son, I would feel very insulted by such remarks. For if I were a genuinely honest man, I would never think of taking bribes and Daddy's remarks are therefore indeed an insult to me. And the only temptation I would feel is the temptation to slap my father's face.

But that wouldn't be very nice. At least, I wouldn't do it in public - it would be politically incorrect. Daddy, after all, is a pretty powerful man. In practical terms, perhaps my only feasible course of action would be to  wait, wait and wait ... until Daddy grows very old, and retires. Then I could go about taking steps to change his long-standing policy on ministers' salaries.

However, it is very difficult to determine what is the "right" pay for CEOs, people with very specialised skills - and government ministers. For CEOs, certain "benchmarks" have been suggested, such as some percentage of profits, some ratio to average employee pay, the pay of sports stars and celebrities or fellow CEOs. None of these are wholly satisfactory.

Benchmarking ministerial pay to other professions has its limitations because they are totally different jobs, and different jobs come with different lifestyles and employment risks. When I look at my peers who have gone to the private sector, many are earning a lot more than I do now, but they do not have my more flexible lifestyle as an academic, and they are not able to achieve tenure which gives better job security.

In any case, I believe that the best people in any field are those who are driven first by their passion and calling.


As a corporate governance advocate, it has never been my concern if someone is well paid and earns it in the right way. I would be outraged if someone makes a lot of money but does so in an illegal or unethical manner, where it is not related to appropriate measures of performance, or the pay determined is through a contaminated process.

The corporate sector suggests the following "best practices" which should be followed in setting senior executives pay:

- An "arms length" process for determining remuneration policy and packages
- Benchmarks used should be comparable (similar job responsibilities, similar size and industry, etc)
- There should be a reasonable mix of short- and long-term pay
- Pay should be based mainly on factors within the executive's control
- Performance measures used for evaluation should have strong links with the corporation's long-term performance
- There should be minimal benefits and termination payments that are generally unrelated to performance
- There is good disclosure and transparency
A private sector approach which treats running a country as equivalent to running a corporation is, of course, flawed to start out with. After all, a government can always print money, raise taxes, determine whether it wants to make a profit (budget surplus) or a loss (budget deficit) and so on.

Tying ministerial bonuses to annual GDP growth can create the same perverse incentives as tying CEO pay to annual revenue growth. For example, it can lead to incentives to invest in projects with high economic payoffs, but with attendant high social costs and under-investing for long-term growth.
"Projects with high economic payoffs, but with attendant high social costs" ...? Hmmm, that sounds like two things to me.

Firstly, our massive import of foreigners - which leads to economic growth, but strains our public infrastructure such as housing and transport.

Secondly, our two new casinos - which lead to economic growth, but also cause a variety of social ills such as crime, gambling addiction and the destruction of families.

What's also quite tragic is that many Singaporeans still don't realise that high economic growth doesn't necessarily translate into a better standard of living for citizens in general. High economic growth simply means that:

(1) Companies are producing and selling more goods and services; and
(2) The government gets to collect more corporate taxes.

Normally, (1) means that citizens get to earn more money, because successful companies can pay better salaries and bonuses and hire more employees. However, if labour & immigration policies are extremely lax, the companies don't actually pay citizens better, and won't invest in training them. Instead the companies will just hire plenty of cheap foreigners who earn a very large part of the extra money that might otherwise have gone to the citizens.

Normally, (2) means that the government has plenty of extra money which it can reinvest in society and redistribute to the people, for example, in areas such as education, healthcare and housing. However, if the government has the obsessive mindset that every extra cent must be channelled into the reserves and the reserves must never be touched until the end of the world has arrived, well, basically the people won't gain any benefit from (2).

Other problems are that high economic growth typically leads to increased inflation, which means that the cost of living escalates (hmmm, coincidentally that was the top election issue in Singapore) and furthermore the wealth created by a high GDP doesn't necessarily get distributed evenly across society (i.e, the rich get richer, and the poor get poorer - and guess which country holds the world record for having the largest income gap?)

But I digress. Back to Mak's article: 
But if we are determined to follow a private sector approach to setting ministerial pay, then we should go the whole nine yards and adopt similar sound pay practices, which could involve the following ....


One, have an independent ministerial pay committee to oversee ministerial pay policy and levels (members must be independent and perceived to be so).

Two, adopt a small number of macro performance measures which capture overall performance in a holistic way (such as average GDP growth, average wage growth, Gini coefficient and unemployment rate) and micro performance measures which directly reflect a particular minister's performance (such as traffic accident rates, average expressway speeds, admission rates of Singaporeans into local universities, percentage of low-income families owning HDB flats).

Three, tie a minister's pay primarily to his individual responsibilities and performance, based on his portfolio (a small component can be tied to more macro measures but these may be more relevant to assessing the performance of the "chief executive", that is, the Prime Minister).

Four, benchmark targets such as GDP growth to trends in comparable economies, to better ensure that improvements are not largely due to external factors (for example, a significant increase in GDP growth - just like a significant increase in a company's stock price - may be driven more by general trends in the inter-connected global economy).

Five, defer a part of a minister's pay for a number of years and put in place conditions under which the deferred pay may be reduced.

Six, eliminate or significantly reduce pensions and other benefits not linked to a minister's performance. And seven, publish a report each year on the actual amount of each minister's pay and its breakdown.

This may sound like an awfully tedious process for setting ministerial pay. Unfortunately, corporate scandals and the recent financial crisis have taught us that poorly designed pay schemes set through a flawed process and which lack transparency can create perverse incentives and undermine governance. The current approach to setting ministerial pay emulates the pay levels in the private sector but not the sound pay principles that well-governed companies follow.
Some good ideas there, and all worth considering.

There is also a simpler idea which Mak did not mention. Yes, I know that it needs some tweaks and adjustments, but basically the idea goes like this. Firstly, ensure that the civil service has a rational system for determining salaries. Secondly, extend this system to the ministers.

Why? Well, in any normal organisation (and the civil service is not different), your salary depends on where you stand, in the hierarchy. Junior employees earn less than middle management, and middle management earns less than senior management. And the most senior guy in senior management earns more than the other guys in senior management.

A minister occupies the highest position in his ministry. The Permanent Secretary of that ministry occupies the 2nd highest position. So the minister should earn a salary anywhere from 5% to 20% higher than the Permanent Secretary. Similarly, we would expect the Perm Sec to earn 5% to 20% more than the civil servants who occupy the rank immediately below him.

Now, if the pay structure of the civil service is correctly rationalised across the board (and that should be the ongoing aim of the civil service anyway), what we would get is a natural pegging of ministers' salaries to private sector salaries anyway.

Why? Because the civil service and the private sector are in natural economic competition for employees all the time. For example, government hospitals and private hospitals are continuously competing to hire  doctors and nurses all the time. Government schools, private schools and tuition centres are continuously  competing to hire teachers. Any ministry which wants to hire fresh grads has got to compete with private-sector companies who also want to hire fresh grads.

If civil service salaries are generally fair and competitive at every level, then pegging our ministers' salaries to the permanent secretaries (and paying the ministers incrementally more) makes good sense.

Of course, this logic will probably reveal that currently, our ministers are grossly overpaid and have been grossly overpaid for many years.

But then we already knew that. Didn't we?


Anonymous said...

What can you expect from a bunch of people who care a lot about how much they are paid? People whose duty is to serve the people and lead the country?

If they are PASSIONate about what they are doing, the monetary reward should be the last thought in their minds.

At least that's what they tell teachers.

Anonymous said...

I think the best formula is to review downwards minister salary every time the ruling party lose a GRC in the election. If it is a GRC lost, bigger cut, SMC lost smaller cut.

More GRCs or SMCs lost, more multiples of cuts.

That means it will be reviewed every 5 years until the ruling party loses majority seats and no longer can become the government.

Conversely, if it wins back a GRC or SMC or make a clean sweep, salaries can be increased accordingly again.

This means pegging their salaries to the appproval voting pattern of the electorate.

Anonymous said...

Ministers are "public servants" charge with steering the course of the country They are not directors in an MNC where all the variables is % growth, ROI.

Anonymous said...

Ministers are "public servants" charge with steering the course of the country
Anon May 26, 2011 9:00 PM

So? That doesn't mean they can't be highly paid what.

If the majority public disapprove of their high pay or not satisfied of their performance vs the pay, they can always vote them out during an election.

Anonymous said...

The Gini Coefficient is an important item to be used in this instance. Because I strongly believe that income re-distribution is a major responsibility of the Government.

An to extend the argument on meritocracy. If wages are to be meritocratic, explain to me why a public servant can be 10 times as clever and capable as I am? 2-3 times I can accept. 10 times? You seriously think the rest of us are morons?

Amused said...

I disagree with pegging Ministers' pay to civil service. A sports team manager often does earn more income than its players (e.g. Michael Jordan.) Further, civil servants in the finance ministry may earn more than those in the arts ministry. (Does the minister of finance necessarily earn more than the minister of arts?)

That said, here is a little proposal I posted in another blog -

In the good old days, before the Greed era, a CEO of a big corporation in the US made about 20x the income of lowest paid workers in the company. Now you see why American workers were well compensated and led happy lives. I strongly believe a similar formula will do wonder to the well being of Singaporeans. I proposed that they use lowering GINI as a goal in setting the formula. For example, if we use 3 income groups, lower 30%, middle 60%, and top 10%. The salary should be 20x of each group but weighted to narrow the GINI index, so 50% weight for lower, 45% for middle, and 5% for top. The weightings can be adjusted as progress is being made on lowering the GINI.

Anonymous said...

Hi Mr Wang, i believe the current ministerial pay system is already pegged to the civil service. In any case, currently, a permanent secretary can expect to earn more than a million, depending on how high his pay grade is. Going by the benchmark you suggested, the current ministerial salary should drop, but not by much. Probably PM pay will drop from close to 4mil to 2.5 mil. Most of the current ministers should earn around 1.5 to 2 mil, again depending on seniority.

Anonymous said...

Peg to what other 1st world ministers are paid.

I do not see our local ministers any more qualified then the ministers in the 1st world countries. So if it is good enough for them it should be good enough for us.

Gilbert Koh aka Mr Wang said...

Ministers' salary is actually pegged to the top six earners in any given year, in selected professions.

As for this comment:

"In any case, currently, a permanent secretary can expect to earn more than a million, depending on how high his pay grade is."

... your point is probably that the Perm Secs are overpaid, and therefore if ministers are pegged to perm secs, the ministers would be overpaid too.

That is why I said that civil service salaries have to be rationalised across the board. My idea makes sense, only if civil service salaries also make sense.

What's happening now is that only a very small section of the civil service (Admin Service, Perms Secs etc) are being paid very, very highly ....

Certainly you don't expect to receive eight months' bonus, if you are the typical school teacher or police officer or HR officer, in the civil service.

Anonymous said...

Dear Mr Wang,

I hope you will consider providing some publicity to the Black Sunday movement this Sun in protest against TPL in parliament. I am a resident of MP and cannot bear the thougt that my hard earned money will be used to pay for her internship. All we have to do is to wear black on Sunday. Nothing illegal. An exercise in democracy. I like to think that your article was one of the factors which brought down Aljunied. For your consideration please.

Anonymous said...

What's the issue with the high pay of ministers when the PAP can still win 93% of the seats?

So even if they make just a token cut, say 10%, they will still win at the next election!

Because if the high pay is no problem with majority voters, a slightly lower pay also will be no problem what, right or not?

Anonymous said...

This is a very interesting video that helps explain some of the problems this country has been facing in the last few years (leadership-wise):

RSA Animate - Drive: The surprising truth about what motivates us

Anonymous said...

I have another idea. Ministers who screwed up during and after their tenure (MBT) shd return part of their ill gotten renumerations as their policies have actually made citizens lives more difficult. I can't believe that idiot got off just like that, he shd be detained under ISA.

Anonymous said...

"If the annual salary of the Minister of Information, Communications and the Arts is only $500,000, it may pose some problems when he discusses policies with media CEOs who earn millions of dollars because they need not listen to the minister's ideas and proposals, hence a reasonable payout will help to maintain a bit of dignity."

Anonymous said...

Most important is to be able to win big at elections and form the government.

Once this is achieved, all other things, whether minister salaries, high HDB prices etc etc, slowly lah. Or just reduce a bit to show something lah. Or don't reduce also can if can still win big again.

And no need to worry about what those bloggers say. Because not much effect what, as shown in the last election.

Anonymous said...

guess what,

singapore needs the PAP more than the PAP needs singapore.

you think the jokers from the opposition is ready to govern? even the WP says it's not ready to form a government.

don't blame the PAP, blame ourselves. we deserve the government we get

Gilbert Koh aka Mr Wang said...

Of course the WP is not ready to govern. But that doesn't mean that the Opposition doesn't have an important role to play.

In a soccer team, goalkeepers are generally not ready to score goals or play in midfield. That doesn't mean that goalkeepers are unnecessary and irrelevant. They just have a different kind of role to play.

What I see is that in the current scheme of things, the Opposition has an important role to speak up and challenge and asks question. Otherwise the ruling party just gets stuck in its old mindset, and doesn't know how to evolve and improve. LKY and GCT voluntarily stepping down from the Cabinet helps to solve this problem to some extent (as they themselves said, their stepping down allows the PAP to start on a clean slate). Having a strong Opposition is the other big help.

As for winning big at the elections - yes, that is important. However, I don't think that the PAP would consider itself as having won big in GE2011. It would be a big win in many other countries, but Singapore has its own history. By every measure - overall vote; actual number of seats etc - the PAP performance has faltered badly, judging by its own past history.

In the end, as a citizen, I have no blind loyalty to any party labels. I really don't care whether the ruling party is PAP or WP or APA INI or whatever. I just care about whether Singapore & its citizens are doing well and whether the government policies are helping us to do better. If that is not happening, then things must change. Unfortunately, I don't think that the PAP has done a good job at all, certainly not in the past five years.

Here's a surprise for some of you. In the 1990s, I was a big supporter of the PAP. At that time, I was also active on the Internet (soc.culture.singapore, Young PAP forum etc), vigorously explaining PAP policies to my audience and telling people why the PAP was great.

That changed over time. What changed me? Nothing more than my own keen interest in Singapore's current affairs, and my own honest observations of what was happening in this country. As the years passed, it steadily grew impossible for me, to support the PAP as fervently as I used to. Why? Because I could FEEL how it was steadily growing more and more difficult to write intelligent, convincing and well-argued posts in support of the PAP.

Because more and more of their policies, and more and more of their actions .... were just not making sense!

Still, hope springs eternal. By 2016, if the PAP can change itself and actually deliver good results and successfully solve the problems that the nation faces today, I would be entirely open to the possibility of voting for them. (That is what I mean, when I say I have no blind loyalty to party labels).

But the last five years, the PAP sucked. Very badly. They flopped on public transport; housing; cost of living; fairness issues vis-a-viz foreigners; national security; income growth; income gap; and furthermore offered a slate of new election candidates many of whom were unimpressive and one of whom became nationally notorious for her incompetence and lack of maturity.

Liddat, how to vote for PAP?? I cannot do it lah. I am an intelligent, honest and fair person.

The said...

/// Gilbert Koh aka Mr Wang said...
Ministers' salary is actually pegged to the top six earners in any given year, in selected professions. ///

The exact formula is 2/3 of the median of the top eight earners in each of these 6 professions - bankers, lawyers, accountants, engineers, employees of MNCs and local manufacturers.

Anonymous said...

"Of course, this logic will probably reveal that currently, our ministers are grossly overpaid and have been grossly overpaid for many years".

It seems that the 60% are fine with their high salaries. People are generally selfish. Policies that don't affect them, they would not bother to care or raise any issues. Do you think employers would speak out that too many FT on our land? The lower salaries (here I'm referring to blue collar jobs to mid-level office jobs) they are paying would bring higher profits. Hence employers would not care if the ministers are overly paid as long as policies are made to benefit them.

Wait and see if the review committee is of any help. Its a long way till another 5 years. Maybe they might come up with lower salaries by 5% this year then next year increase 15% due to "extremely good" performance.

~Lost Hope~

The said...

Quoting from the Hansard: /// These six professions have been selected as they are alternative professions that top calibre senior civil servants could have joined. Our Ministers and top civil servants should be of calibre similar to those who would have risen to the top in these professions. ///

I wonder then why don't they include the top earners from the armed forces (army, navy & air force), NTUC and the universities - their traditional source of candidates?

Anonymous said...

"You may also attract some who ... want to use their position for other benefit, such as ...getting directorships in companies."

Rumour is that already happened, $15K/month for new MP pay is not enough, and it is topped with triple promotion to directorship.

Gilbert Koh aka Mr Wang said...

"It seems that the 60% are fine with their high salaries."


It doesn't work like that. In the end, the vote is pretty digital (you either vote PAP, or Opposition, or spoil your vote), but the voter's decision is not made based on any one factor (eg ministers' salaries) but on his overall assessment of a range of different factors (eg his liking or disliking of his particular MP; his opinion of how well his HDB estate is run; his opinion on public housing, foreign talent, cost of living etc).

Thus, as far as ministers' salaries go, 60% votes does not mean that 60% agree that the salaries are ok. For example, a person may disagree with ministers' salaries, but still vote for the PAP because he feels, for instance, that the PAP has performed well in other areas.

Gilbert Koh aka Mr Wang said...

/// These six professions have been selected as they are alternative professions that top calibre senior civil servants could have joined. Our Ministers and top civil servants should be of calibre similar to those who would have risen to the top in these professions. ///

Anyway, this formula is a sham. Let me explain why.

Suppose I am a top surgeon. One particular year, I am very successful because I get to do a particularly large number of operations and I make a lot of money and I am a top 6 earner.

However, I won't be so successful every year. In 2011, I might earn a lot, in 2012 I could earn much less. In 2013, I might take a three-month break from work, for personal reasons, and I earn less and am not a top six earner anymore. That's life, and that's normal.

The PAP's formula, however, is a cheating formula. Why? Because they peg to whoever is in the top six, in ANY given year. If I am not a top six earner in any year, the PAP just unpegs itself from my income, and decides to peg itself to someone else.

The said...

"It seems that the 60% are fine with their high salaries."

Of these 60%:
10% want estate upgrading
10% are happy with the grow & share dividends
10% do not want to regret and repent
10% voted out of gratitude to the 1st generation leaders
10% really thought their votes are not secret

Only 10% agree with their high salaries.

Anonymous said...

If ministers cannot manage a budget, and do not take up responsibilities, why will they implement change.

I believe an "independent committee" will be set up and NOTHING will be done, perhaps cutting 20% of salaries and maybe adding a 50% bonus at the end of the year.

The salary gap and income disparity is a big problem, and the government is showing that it is ok when you are an elite, poor people can be ignored.

The mindsets of the people must change and it can start by a change of government, but as we can see from the elections results, we have 5 more years of suffering

Anonymous said...

You are asking too much of your leaders.

You are asking them to take less when they
- can take more
- believe they deserve more
- decide how much they can take
- are the main reason for Singapore's success (so they say)

This question was relevant a month ago and will become relevant again in 5 years time.

For now, it is irrelevant.

Anonymous said...

I think that Dr Lim Wee Kiak's remarks pretty much echos what PAP think is about minister's salary.

Anyway, Singapore moves too slowly with political change. Many years ago, I used to correct aquaintances whenever thay said "Singapore's standard of living was high"... I would tell them "Singapore's COST of living was high". I got a lot of puzzled looks then. Now after many years, when I say "Singapore's COST of living was high", I do get looks of understanding... But it takes many years for Sinkies to get the subtleties.

I have been saying for sometime that GDP growth does not equate to increased welfare of people in Singapore... Thanks Mr Wang for pointing that out. Let's see how long this propaganda tag line lasts.

Anonymous said...

"It would be a big win in many other countries, but Singapore has its own history. By every measure - overall vote; actual number of seats etc - the PAP performance has faltered badly, judging by its own past history."
Mr Wang May 27, 2011 4:13 PM

Precisely because the PAP has very high standards in the past and now a 93% of seats won is considered very bad, it means that their buffer against being voted out is still very large! And despite so much resentment and unhappiness among voters!

Which also means they can continue as they are or changes slightly without any much adverse repercussions at the next election.

This is the ultimate dream for any political party or government but a reality for the PAP.

Anonymous said...

Seriously, if I were PM Lee, I will be the happiest PM in the world!

Because I am so lucky and blessed with at least 60% of the electorate loving me and my party through thick and thin. And managed to sweep 93% seats with only 60% of the vote.

What more efficient and effective can an election system get? But I am also surprised why other countries don't want to copy and use my system.

Amused said...

"Here's a surprise for some of you. In the 1990s, I was a big supporter of the PAP." - Mr Wang.

Actually people get wiser as they grow older ;) The accessibility of information and alternate views also play a big role.

I don’t think PAP can maintain the 60% vote in 5 years. Their pathetic election rallies tell you as much.

Anonymous said...

GE 2011 could mark the start of the fall of the PAP.

Whilst opposition parties like the WP have upped the quality of their candidates in the shape of Chew Shao Mao and Pritam Singh, the PAP has done the reverse by recruiting young and inexperienced greenhorns like Ting Pei Ling.

I foresee trouble ahead for the PAP with its current batch of new MPs.

PM Lee has sounded the alarm bells with the issuance of the code of conduct. But a leopard can't change its spots. Sooner or later, one or two or more of the new MPs will fall from grace and tarnish the clean and honest image the PAP.

The day will come when the WP's image becomes whiter than the PAP's white.

Anonymous said...

Mr.Wang, your recommendation is
laudable but frankly no developed
country has such a complicated
formula.We have been brain-washed
to believe that capable and talented individuals will only serve the country if they are paid obscene amounts.Its really an affront to our values.
Corruption is almost as inconceivable in countries like Australia and Canada(for example)
because the basic human right of free speech is entrenched in their
laws.The press is like a watch-dog,
keeping the integrity of the govt.
in check.There are auditor-generals
who report to parliament only.
These are public servants who would
sometimes go the press first to
report their findings if anything
unsavory is discovered of any ministries. And of course, there are the elected opposition
parties to keep the incumbent govt. honest.
But then, we do not have the above,do we?Our honorable LKY has to devise, in my opinion, a convoluted pay scheme to so-call attract `talented` individuals which is then so ridiculously overpaid to so-call keep themselves honest.
In conclusion the answer is so simple...
create a a truly democratic
electoral system,allow free press
and create checks and balances
independent of the ruling govt.

Anonymous said...

There already is some form of rationalisation in civil servants' pay. However, the different service schemes adopt different private sector salary equivalents in their benchmarking process.

Ministers' salaries are linked to Admin Service ones because the politicians want a convenient 'front' - that the high pay is for Admin Officers, not for themselves. And since a Minister can't be paid less than a Perm Sec, well, what to do, I have to be paid $x million.

I have a somewhat radical suggestion. A Minister's pay for his first term shall be set at his average pay before being appointed Minister. This will then be annually adjusted according to CPI during his first term. So, an army general will continue to draw that pay, an eye surgeon, lawyer, etc will continue to draw their old pay. That way, he is given some form of insurance as far as financial returns are concerned for his first term.

This may mean that he could be paid less than his Perm Sec. But then again, in his first term, he is really learning and not contributing quite as much yet.

In his second and subsequent terms, his pay will be based on the size of the job that he performs. For example, a Ministry with a much bigger social/economic impact will be paid more than one with a lesser impact. An independent committee will have to be convened to assess the size of his job and his performance each year. These recommendations will be released to Parliament for debate before being endorsed.

Anonymous said...

No need committee lah,pm lee should just state themselve.
HOw much they want ?If they think present pay is fine , can remain . Nobody can stop them . Anyway they are supported by majority mandate.
But if want to cut they should cut voluntary. The more they cut themselves , the higher their moral authority and passion commitment sacrifice etc. Individual minister know how much is enough or proper themselve . To some 200k may be enough , others 2 million is adequate .
Stop all

Anonymous said...

mr wang intelligent?

i remember mr wang in his older blog casting doubts on dr csj and sdp. i was thinking how can an intelligent and educated person not see through the smearing and false picture painted by the pap-controlled media?

well better late than never :)

Anonymous said...

Ministers and Government MPs are often not just receiving salaries but also Directors' fees and bonuses from the various companies (such as GIC linked companies) on which boards they sit.

Sirely they should declare these earnings as part of the transparency process and also as part of their earnings while acting in Government?

Anonymous said...

Well this review of Minister's pay and the largely unstated assumption that the pay would be revised downwards raise a very important question.

What can we say about the JUDGEMENT of the PAP ministers and the Government during the past terms of the Ministers when salaries were sky high?

Does not this review show that the Government's action can be impaired and are wrong? If that is the case SECRECY and NON-TRANSPARENCY in areas such as the reserves and the GIC and Temasek Investment COULD also be wrong and COULD also cover up problems. What DOES THE PAP have to say about this?

The review shows that the PAP was and IS wrong in the matter of the Ministers' salaries. Would the PAP now admit that they HAVE BEEN FREQUENTLY WRONG in contemptuously dismissing all criticisms and comments on its policies? What are SOME of the areas they hve been wrong in. Would they own up?

Anonymous said...

The argument that you need to pat a man big bucks to prevent him from being open to temptation and corruption is an insidiously demeaning one. demeaning to the person receiving the big bucks because it is a judgement on his character.

If an honest man were to be told that this is the reason he is paid so much that honest man might well (to preserve his honesty) reject the pay which is a form of insult and a slur on his character.

This reminds me of the incident in an elegant French restaurant in Lyon, France. On the cashier's desk was a sign that read, "THIS IS A HIGH CLASS ESTABLISHMENT. DO NOT INSULT OUR WAITERS BY OFFERING TIPS." Right next to the sign was a box that red, "INSULTS".

Robert L said...

Dear Mr Wang, thank you for writing this article.

There are at least 4 big mechanisms governing Ministers' salaries, some of them largely below the radar of Singaporeans. This is not to say we are unaware, but many Singaporeans do not see the picture as a cohesive whole.

1. The first mechanism is the 2/3 salary peg. Everybody sees that. And I agree with the point you brought up: that as soon as a top earner's salary drops, they promptly shifts to another top earner - a ridiculous deception.

2. The 2nd mechanism is the annual bonus pegged to GDP. Not many people see that if you add up 1 and 2, then their salary overtake that of the private sector.

Worse still, in all sanity, the rise in GDP must be distributed over the increase in the govt/civil service manpower numbers. Logic tells me that if you bring in a million foreign workers, the number of civil servants have to increase disproportionately more than to cater to growth of native population. And if you get 10 Ministers to sit in the PM Office, then all those salaries take out the share from the GDP growth. If you go by this method of distributing the GDP growth, I'll bet that the Ministers' bonus becomes negative.

3. The 3rd mechanism is the pension. No private sector has pension (including medical benefits after retirement from service). When the PM said that their salary must have a discount, my immediate reaction is that the pension alone already made up for that "discount".

4. The 4th mechanism is the influence that they have to be able to put their cronies into lucrative paying jobs. Can't say more, less I get into trouble. (Black Sunday, anyone?)

As I have said at start, these points are all known to us, only we seldom see them put together as a total wage deal.

Anonymous said...

Mr Wang,

How could you even suggest for the Son to slap the Father?

There is still some controvesy about who is the real driver; the Father or the Son? For most of the elections campaign, it was clear that the Father was the driver. And many still think he is the driver, even though he may wish to now title himself as "backbencher MP" or backseat driver or backseat passenger.

And we all know what will happen when the co-driver slaps the driver...

The said...

/// Robert L said...
4. The 4th mechanism is the influence that they have to be able to put their cronies into lucrative paying jobs. Can't say more, less I get into trouble. ///


Anonymous said...

"The review shows that the PAP was and IS wrong in the matter of the Ministers' salaries."
Anon May 28, 2011 5:37 PM

Does it matter right or wrong?

Most important is even if they are wrong, 60% voters still supported them.

So they can afford to go wrong!

Anonymous said...

My friend came back from Shanghai to vote and I shared with him my change of perception of the PAP. Twenty years ago, I was also very supportive of the PAP and spoke well of them. At that time, if LKY dies, I will be very sad and will cry. Now if the same happens, I will probably do a bar top dance,(my first). He was very surprised at the drastic change and so was I.

Anonymous said...

We need only quality GDP not those, not from mass import of FTs.

Their pay can never be low, its should not edge unto obscene and ridicule range, it should be benchmark to First world country politician pay.

Anonymous said...

"We need only quality GDP not those, not from mass import of FTs."
Anon May 29, 2011 8:37 AM

It's not that the PAP does not want quality GDP or quality FTs.

It is because they have to accept whatever type of GDP or FT BEST AVAILABLE to Singapore!

If the best don't want to come here or not available to us, then we have no choice but also to accept the best available lah.

Which is what we are getting now.

Same thing for the type of election candidates available to the voters lah.

Die-hard PAP Supporter said...

I am a SME owner and I fully support the PAP. The other day, I just replace my local-talented accountant which cost me $4,000/mth with a foreign-talented accountant that cost me $2,500/mth.

Both accountant have 5 years of experience with universities degree. I tell you when it comes to labor, it's not cheaper,better,faster; it's the cheaper the better.

So the PAP will have my vote as long as they continue with the open-door policy.

Singapura Pundit said...

"So, you see, it is the quality, the mettle of a people which decides its future; not the size of the territory, the girth, the numbers."
- Lee Kuan Yew, Speech made at the Opening of the Agricultural Show at the Kallang park on 19th September 1965

Anonymous said...

"I am a SME owner and I fully support the PAP. The other day, I just replace my local-talented accountant which cost me $4,000/mth with a foreign-talented accountant that cost me $2,500/mth."
Die-hard PAP Supporter said...May 29, 2011 9:39 AM

I think you may be too satisfied too soon.

Remember, everything has a trade off.

Just like some of our not-so-rich old men getting pretty, young foreign brides.

If something is too good to be true, it usually is.

mr wang said...

I understand that reader's post. And I also understand why he would vote the way he votes.

However, to me, when I cast a vote, I cast a vote for the country. Not for his SME business.

There have also been PAP policies which personally worked in my favour. For instance, since I actually have plenty of excess cash to play with, a property market with less rules gives me the opportunity to speculate and make a quick buck.

Notwithstanding this, I think that the housing situation for Singaporeans in general is very bad, and has been very badly handled by the PAP. While I am personally not affected at all, I still think that Mah Bow Tan fully deserved to be booted out.

In fact, I suspect that the voter segment which gives the PAP the most support are in fact the segment which should give it the least. I suspect that most of the older-generation, poorly-educated, low-income Singaporeans still support the PAP strongly. And they support the PAP because they are poorly educated; don't understand the issues; have no access to the Internet; and zero idea what is a "Gini Coefficient".

I am not poor. I am not low-income. I am well-educated. Nevertheless when I vote against the PAP, my vote is at least partly driven by my concern for those segments of our population who are struggling the hardest and most disadvantaged by the PAP policies.

I cannot just be voting for my personal interests. Or my own "SME business". To me, that is just selfish and immoral.

Anonymous said...

I am also a die hard PAP supporter even though I am a foreign labour.

I support the PAP's foreign labour policies. I cant tolerate all these other first world countries well also developing countries like Thailand and China that put their citizens over foreign labout. I mean to keep on being told that i have to contribute to the country I work in. What's all this ryubbish. I work because I am doing you all a favour.

I mean Singapore is heaven on earth. I can;t be bothered over your security, your safety, your economy, your stupid HDB prices and your education (just to name a few). When I don;t like it I will go back to my own country and then tell all those foreign labour there to fall in line with my aspirations and demands.

But let me make it clear: PAP foreign laboue policy should be for Singaporeans (I mean you guys deserve it). I will never allow it in my own belover country.

Anonymous said...

Why do you continue to perpetuate the myth that 3 - 4 million dollars does not include bonuses? You portray yourself as well informed but provide disingenuous bits of mis-information to back your arguments. So below the belt.

FlyingBobo said...

Hi i recently chanced upon this website. While this issue is very contentious and my response is very late, I have decided to leave my comments here for what its worth.

A few main arguments brought up in the article:

1) Attracting the wrong ppl, ppl who would only care about the pay and might even misuse their power

I think that this argument is really flawed; the argument makes the false assumption that ppl motivated by monetary incentives ( to a large extent presumably) are not fit to be in the government. I believe many ppl would agree that we would want ppl with the ability and the moral bearings to be selected for the ministerial and sub ministerial posts. The criteria here is their ability and sensibilities. The fact that they are motivated by the money is not even the issue. If that can make right and good decisions and are capable (aka be the best at what they do), so what if they are motivated by the money? We should'nt be paying less so that we attract ppl who are indifferent to the pay, we should be paying to attract the best decision makers.

Implicit within society and the civil service as a whole is the principle that we have to pay ppl what they deserve. Do we not fear that our civil servants are not truly motivated by serving their country and benefiting their fellow countrymen? Should'nt we then pay our civil servants a salary that does not make monetary incentives the main motivation? If we cant accept these conclusions then why do we carve out a special exception for our political office holders?

Recognize that once we concede the principle that ppl who are supposed to be serving the nation should not be motivated by money and concede that this translates to paying them less competitively, then we are agreeing that civil servants can be paid less competitively. (At this juncture, I must state that im neither a civil servant nor a civil servant wannabe) The fact of the matter is that our government and its institutions are efficient and effective because of the ppl in it. If, as the article concedes, less competitive pay leads to a smaller talent pool then we have to settle for a less capable civil service if we stick with this principle.

Flyingbobo said...

While it is true that im making an argument based on principles, it proves that the assumption in this argument is untenable. The consequence i just illustrated is however real. If the public rallies behind this argument to champion lower pay for the minister and sub ministerial rank, civil servants and potential civil servants might think that the flood gates have opened and this would change their career choices. They may very well view that parliament would not likely approve a raise in civil servants pay to insulate their actual pay from inflationary pressures. Further if the reduction in ministerial pay is implemented, there is a reduction in the effective cap on the civil servants pay since a perm sec's pay have to be lower than that of a minister ( at least in singapore) and the ds lower than that of the ps, and the directors lower than that of the ds and on and on down the super scale ladder. You get the picture. The comparatively lower grade have to get lower so there is a incentive to progress up. The ministerial pay is the cap. Lowering the cap increases the attrition rate. [ This point holds because you cant just chose a point to break this inverted pyramid-like payment scheme as it induces ppl not to progress. The obvious point to break this scheme is where the political office starts and the administrative service ends. But this is the worst in practical terms since our government selects many many political office holders from the admin service. Many of these admin officers will have the choice to head gov linked companies ( better pay, no late nights at meet the ppl sessions, more stability) rather than entering the government.]

If the fear is that they would be easily bribed, this concern is misplaced. There has only been a few cases of corruption of high office holders ( at least ps and above) and these occurred ten to fifteen years back, before the competitive payment for ministerial pay was introduced. This shows 2 things: 1 the reality doesnt support the conjecture that our high office holders would more likely be bribed. 2 we have proper checks and balances on our government to weed out corruption. If you fear is corruption then strengthen these measure, not reduce the pay so that the talent pool contracts.

phew thats as much typing I can muster for now. I might find some time to rebut three other main thrusts sometime soon.