Monday, May 23, 2011

Ministers' salaries - what's up for review is the mechanism - not the fundamentals

There's been a great rah-rah about Prime Minister Lee Hsien Loong's recent announcement about salary revision to the Preseident's, Ministers' and top civil servants salaries lately.

But if we pay close attention to what is actually being said:

"Whatever we work out, the final answer must include a substantial discount on comparable salaries in the private sector..." 

we can deduce that what's being reviewed is the mechanism for the calculation of the salaries; but not the fundamentals.

In 1994, the former Prime Minister Lee Kuan Yew proposed that salaries of Ministers, judges and top civil servants be linked to the salaries of top professionals in private sector, saying that Ministers should be well paid so that a clean and honest government can be maintained. He also argued that such pegging of salaries would help recruit and retain talent in the public sector.

This fundamental IS NOT UP FOR REVIEW.

What's being revised is the mechanism of the pegging of the salaries to the public sector. Currently,income benchmark for ministers and top civil servants is pegged at 2/3 the median income of all the top 8 earners in the 6 professions of lawyer, accountant, banker, MNC executive, local manufacturer and engineer.


And there is absolutely no disclosure about how much each Minister is paid. But in 2009, the Public Service Division released some statistics, and according to that data, the President's paid $3.14m, the Prime Minister $3.04m and the Ministers and Senior Parliamentary Secretaries $1.57m.

Because the fundamentals are not being re-looked the peg is still to the private sector and will not be to the public sector anywhere else in the world. Hence, the "substantial discount" Gerard Ee spoke about becomes very, very subjective.

The team led by Gerard Ee who is reviewing the salaries, will probably not question Lee Kuan Yew's logic for the peg; that such a linking will draw the wrong type of people into the public sector. Without this logic review the team reviewing the salaries may decide that the Presidents, Ministers and top civil servants salaries could be pegged to four-ninths of the median income of all the top 8 earners in the 6 professions of lawyer, accountant, banker, MNC executive, local manufacturer and engineer; and even though the the salaries of the public sector employees will still be in the $2m range, it can be considered a 'substantial discount'.

Why must the salary of Ministers and top civil servants be linked to the salaries of top professionals in private sector? Why can't the salary be pegged to the average salary of the top 20th percentile and bottom 20th percentile of income?

What do I think is a fair amount for public servants holding high office?  Although I think that the range should be between $750,000 to $1.2m, what's more important in my opinion is that the fundamentals for the peg must be re-looked.

1 comment:

Jean said...

I agree. They peg their salaries to these top earners during the bull run but never reduce it during gfc. So selective. Lots of these top earners carries with them huge accountabilities. If they fail, they maybe removed from office or worse jailed. Our ministers work in a risk free environment, all is require is for them to listen to the citizens and device good polcies.