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4/02/2007

Singapore Event - Ministers' justifying pay rise

I have been out of touch with my blog for a while. Since the birth of my son, both my wife and I are too busy taking turn to build parental-child relationship. For a while,I thought that I could only touch on my blog again only after another six months. However, I am still quite active in the forum and it gives me a lot of news on current affairs.

I was reading the Sin Ming Re Bao ( a Chinese Newspaper ) in the evening while waiting for my wife when I stumble across this article, I nearly trip.



The same article was also reported on The Straits Times which I cut and paste from the Sammyboy Forum ( yes I am a regular there ):


April 2, 2007
Pay for ministers, civil servants: PSD responds
It addresses public's misperceptions of civil service salaries, perks and pensions

THE $1.2 million annual salary for ministers and top civil servants is an all-inclusive package covering bonuses.

About one-third of the annual pay package they receive currently is variable. This component is linked to their performance on the job and how the Singapore economy is doing, the Public Service Division (PSD) told The Straits Times.

It was responding to readers' letters to ST and online comments on the pay, perks and pensions of ministers and top civil servants.

The PSD said ministers receive no further payments beyond the $1.2 million annual salary package - which comprises monthly pay, public sector bonus payments in the middle and end of the year, allowances, and bonuses based on their performance and that of the economy.

On retirement pensions, it said those who have served at least eight years as an office holder - as a minister or minister of state, for example - qualify for a pension.

It added that the pensionable salary component at each grade has been frozen since 1994.

What this meant is that all subsequent salary increases - whether monthly adjustments or increases in the annual components - are non-pensionable.

Pensions are not calculated based on total annual salary packages, and the PSD said that currently, only about half the monthly salary of a minister is pensionable.

The views and comments by the public came after Prime Minister Lee Hsien Loong revealed, at the annual Administrative Service dinner on March 22, that public service salaries had fallen behind the private sector.

Salaries of ministers and top civil servants are pegged at two-thirds of the median income of the top eight earners in each of six professions.

Based on this formula, they should earn $2.2 million a year. But their actual salaries have fallen to 55 per cent of the benchmark, that is $1.2 million.

The gap needs to be closed to ensure the Government can attract and retain good talent to run the country, said Mr Lee.

Details of salary changes across the civil service will be announced in Parliament on April 9.

While some Singaporeans agree with and acknowledge the need to pay ministers and civil servants competitive salaries, others have questioned the benchmarks set, and wondered aloud about extra perks and other hidden benefits they receive.

In comments on the Stomp website, reader Chew Kum Fai, for instance, said that while salaries of administrative officers - the elite corps of the civil service - are pegged to the private sector, they also receive pension and medical benefits after retirement that private sector employees do not.

Mr Jacob Tan, in a letter to the ST Forum page last Thursday, said there is unhappiness with ministers and senior civil servants getting top pay because of the private-sector benchmarks used.

'Top lawyers and accountants are well paid because they are often major equity partners. They have risked their own capital and taken on personal liabilities to build up their businesses. Ministers and civil servants bear no such risks,' he wrote.

In its responses to comments like these, the PSD sought to clear the air on what it regarded as misperceptions the public have about the pay and perks of ministers and civil servants.

It pointed out, for instance, that their salaries also vary with the economic situation, like the rest of the civil service and private sector. Ministers, for instance, had wage cuts during the economic downturns in 1999, 2002 and 2003.

And contrary to the perceptions some people have, the PSD said ministers do not receive perks like free certificates of entitlement (COEs), or a waiver on maid levies or taxes.

Below are edited excerpts of the PSD's responses to questions on various issues.

sueann@sph.com.sg

The debate on the ministers' pay has been around for some time since SM Goh mentioned it after the election. It has been the talk of the town, in the kopi shop, on line and off line. Many people simply cannot comprehend ( a new word that I learned to use ) the true reason for the pay rise. The ministers' pay as compared to their counterpart in the world have been exceptionally high, even the President of the United State of America looks pale compare to Singapore.

The President of Singapore alone commands SGD2.6Mil per anum, and people really question what does he do? His duty other than hand shakes, attend ceremonies is to safe guard the monetary reserves of Singapore, I just wonder how he is going to do it, judging from his age of 85 and reports that it needs 52 man years to calculate the exact amount of reserves that Singapore has. So who know exactly how much he is guarding?

Now back to the ministers' pay. The early justification ( somewhere in the 80s and 90s ) is that high pay to ministers will help reduce ( cannot eliminate ) corruption. Therefore it is justified for the high salaries. I am not sure why but people at that point of time are more obedient and agreed to the term, therefore there was no need to give any explanation from the Government.

Time 2007, the Government again raised the issue of pay rise, this time the rise is justified by its benchmark of the ministers and senior civil servants pay to the pay of the top professions in numerous fields. It is a shocking fact that the pay falls below the 55% mark!!!!!!! If the pay is not increased there will be outflow of talents to the private sector, leading to power vacuum in the public sector!!!!!!!!!!!!So pay rise is a must! The pay of the ministers is to be increased from SGD1.2Mil to SGD2.2Mil. to meet 75% mark.

This round of pay increment however, is questioned by the general people. Is comparison with the private sector a right mean to measure the pay of the ministers and the top civil servants? There are people (from Young PAP) who defended the move while many rised to the ocasion to object to this benchmark of measurement. Most including me have concluded that reference used is wrong and the comparison is flawed. The chart compares the pay of ministers to the pay of the CEOs, top lawyers, etc. This is a cross comparison which yield high inaccuracy. It is like comparing an engineer with an accountant. Different industries simply cannot compare with one another, especially in salaries.

Yet the event only caused me to be a little more active in the forums. What tick me off is the latest justification from PSD ( who knows what they do? ). Based on the article above. they claimed the followings:

  1. Total pay of the ministers per year inclusive of all renumerations are 1.2Mil regardless how many department they manage;
  2. They have no special hospitalization benefits and medical benefits tops at SGD350 per year;
  3. 1% of their pay will have to be contributed to Medisave to purchase medishield;
  4. If they are hospitalizaed, they need to pay 15% of the fee, 40% if their spouse is hospitalized;
  5. There is a pension but frozen at a certain levels since 1994, a minister can only get the pension benefit if and only if a minister manage to hold office for 8 years. 15 years for Civil servant;
  6. They need to pay for their own COE if they buy a car;
  7. They have to pay levy if they hire a maid;

The article draw a pitiful situation of the minsiters and civil servant, there are simply so many things that their pay will have to do. But wait, don't we need to contribute to Medisave and pay for Medishield, don't we too have to pay for hospitalization ( Medisave only covers a small amount )? Don't we all have to pay the COE if we buy a car? Don't we all have to pay the levy if we hire a maid (except of case where there are children between age 0-12 or parents of old age, criteria applies to all )? Don't we all have a cap on medical expenses by our company? Don't we all have the variable components in our pay?.........Worst of all we have to depend on our CPF to survive, even the CEO and top lawyers need to save for retirement. But for ministers and top civil servants, you only need to be there for 8 years and 15 years for a stable retirement, with monthly income, this is what I call passive income, ha! Ha! Ha! Ha!...

Come to think of it, the ministers and top civil servants are not worse of than us in paying for expenses. So can this be a justification for salaries increase for the top civil servants? The answer is "no!" regardless how you put it.

So if eventually the pay is not adjusted, what will happen? I find this question particularly interesting. So who will hire George Yeo whose special skill is foreign affairs ( which he has failed badly judging from recent events )? Or Wong Kan Seng who controls the police force? Vivien Balakhrisnan who specialied in education systems in Singapore? It is difficult to fit these people into the private sector. There is also no real case for us to study if a Minister joins the private sector, how would he flourish? Of course you can't use the case study from those jumping into the GICs, the environment afterall is the same.

I have also read about an article from Young PAP web-site ( introduced by Molly Meek ) regarding the Green Eyed Monster which the writer pointed to those opposing the pay rise. Yet, the only green eyed monster I can find are those asking for the pay rise, they have not justified it base on their performance, but the pay structure of others. If any minsters can come forth with their achievements and said that they deserve it, I don't think Singaporeans will object to that.

At the end, I just quote what my wife told me, " wow! it only takes one news article to make you write your blog again."

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