Will high salaries really attract the right people?

Next Monday (9 April), Prime Minister Lee Hsien Loong will announce in Parliament the salary revisions for himself and his ministers. There is little doubt that we will be seeing a whopping increase in their salaries, perhaps by as much as $1 million a year (which is the current shortfall from the so-called “benchmark” against the 48 top earners in Singapore).


I highly recommend reading a Straits Times forum letter by Ng Kok Lim (2 April 2007), titled “Strength of S’pore rests on people not just govt”. Amidst all the self-congratulatory statements to justify the high salaries, Ng pointed out that the commendable achievement of bringing Singapore from “Third World to First” was done by the previous generation of leaders, not the present politicians who are benefiting from the million dollar salaries (with the exception of MM Lee, of course). He added that “paying my politician top dollar may not dent my pocket, but it angers many ordinary Singaporeans who have to pay more for everything without having the freedom to write their own paycheck”.


I do not oppose high salaries for ministers, senior civil servants, or even heads of charities and religious organisations. I think all of the aforementioned generally make a very valuable contribution to our nation, and they should be rewarded for their hard work and, in many cases, sacrifices.


However, we need to distinguish between acceptably high salaries, and extravagant salaries. I concede that the US$170,000 salary that the British prime minister draws is slightly on the low side, given the tremendous weight of responsibility that a leader of a country needs to bear. But I would say anything beyond S$500,000 a year is not fitting for a public servant whose salaries are drawn from taxpayers’ hard-earned money.


The government’s public line for paying its leaders such high salaries is two-fold:

1. To prevent corruption

2. To retain talent


I won’t elaborate further. The SPH and MediaCorp newspapers do a commendable job explaining the official reasons for the wage hikes.


I have a slightly different take about the reasons for the extravagant salaries that our leaders pay themselves:


Firstly, it’s an issue of status. In our East Asian culture and particularly among the ministers’ generation, your status in society is — rightly or wrongly — determined primarily by the salaries you draw. If you are drawing a high salary, you must be very important, and vice-versa.


Our political leaders’ paramount concern is how Singaporeans view them. This explains why they do not tolerate any slights against their integrity and their right to rule by opposition politicians, political commentators or the media, as this, in their view, will lower the esteem that Singaporeans have for them. Therefore, paying themselves salaries that are benchmarked against the top earners in Singapore reinforces their status at the pinnacle of society.


Secondly, the PAP is “looking for love in all the wrong places”. It’s definition of “talent” is extremely narrow. PAP grassroots activists, no matter how loyal and passionate, almost never make it into the ministerial ranks nowadays, because political savvy and familiarity with the ground are not considered to be as important than technocratic know-how. In our political leaders’ eyes, “talent” is broadly defined as people who have successfully helmed huge organisations, be it listed companies or government ministries (as reflected in the qualifying criteria for the presidency).


For high-flying civil servants, political office is simply the next step in one’s career progression in the public service. It is not hard for them to make that transition, even if the money is not fantastic. But for private sector head honchos, it is a different issue altogether. They may not have that same passion for public service and common citizens, nor the experience in dealing with the government bureaucracy. They are usually already earning very high salaries, which they see as their right given their contribution to their companies’ profits. So in order to woo these corporate high-flying millionaires, the PAP government is trying to lower the opportunity costs for them. It is no secret that many of today’s PAP MPs are reluctant politicians.


It baffles me how someone would need to see a $2 million dollar carrot before accepting a call to lead one’s nation. Are these the kind of leaders we want leading our country? I sure hope that none of our current batch of ministers made their decision to enter politics based on the salary that was offered. And if they didn’t, what makes them so sure that they need to hike ministerial salaries even more to attract the next generation of leaders?

Author: Gerald Giam

Gerald Giam is the Member of Parliament for Aljunied GRC. He is a member of the Workers' Party of Singapore. The opinions expressed on this page are his alone.

7 thoughts on “Will high salaries really attract the right people?”

  1. Gerald, i just like to re-iterate some of the points i’ve made earlier on this subject:

    – Its fine to increase the pay of ministers to whatever amount the Govt deems so. Compare and peg it with top professionals, or 1st World leaders…whatever…

    All I ask in return then is transparency.

    – What then are their KPIs, benchmarks, targets, goals?
    – We, the people, the taxpayers, also have a say as to what these KPIs are (much like shareholders of public-listed company).
    – What are the timelines upon which they have to deliver on those KPIs?
    – What happens if they do meet their agreed KPIs? What happens if they dont?

    A lot of bitterness and complaints have been raised about increasing their salaries without having control. So here’s a suggestion: Instead of INCREASING their salary, why not an average base salary (based on standard civil service rates) and a huge bonus if they meet their KPIs (which is made public to everyone)? If everything is open and transparent, i dont think many people will complain.

    aygee

  2. Rewarding based on performance is certainly a good idea to be explored. It would be interesting to see what kind of KPIs can be set for govt leaders. The country’s GDP growth rate is one performance measure that is currently being used to determine year-end bonuses for civil servants. Maybe the govt should practice what it preaches about performance based salaries.

    Nevertheless, I wouldn’t think it appropriate for a govt leader to earn the 45 million pounds that that Barclays investment banker earned last year because of good performance.

  3. it takes a minister with a very strong sense of entitlement to go up to the PM and ask for more money; is it a good to leave behind? to be remembered for that?

    asiayouthmedia.com

  4. It seems to me that people are talking at cross purposes most of the time. It is an emotional issue. So it is understandable that emotions tend to run all over the place and confuse the issue.

    If I understand the argument, a Minister’s salary is more to offset the opportunity cost of being a minister rather than any arguable value of a minister’s work or contribution. In other words, if a minister was not being a minister, he could have been a doctor earning $4m a year. So it is not a $2m carrot, but an opportunity cost.

    If we understand this, then questions about KPIs, benchmarks and targets and goals become less relevant, especially if we understand that many of the critical issues that the govt is trying to address are not easy to pre-define in terms of success, or even if success is possible.

    Take the fertility rate for example. Personally, I don’t think we will ever see the TFR above 1.4 ever again. If any Minister’s performance (and salary) is to be pegged to raising the TFR, that Minister will probably say, I think I’ll go back to being an eye surgeon.

    The art of government is not always well defined. Solutions may not always be obvious or straight forward. If for example we had decided that the Foreign Minister’s deliverable was to hammer out a water agreement with Malaysia in order for a good performance rating, then does that mean that the Minister will agree to any conditions in order to achieve that? So we end up with a water agreement where we pay M’sia $2 per cubic metre? But the Foreign Minister delivered!

    The value of the Ministers is probably not going to be easily defined or measured.

    Yes, we are heavy on measuring performance, but as some wise guy once said, not everything that counts can be counted. And not everything that can be counted, counts.

    Anyway, even with pegging performance to GDP, there are disagreements. So, what now?

  5. Please pay attention to per capita (per head from Latin) numbers as they are more meaningful.
    2007 popn lineup:
    China (1.3b); US (0.3b); Sin (4.5m).
    China/Sin: 286x; China/US: 4.33x; US/Sin: 65.9x;
    GDP/PCAP: China: US$8,928; USA: US$45,144; Sin: $35,817
    PMSin pay US$2.5m; US$percap: 0.55; PMSin gets this pay per year from everyone in Singapore.
    USPresident pay US$0.4m; US$percap: 0.0013; USPr gets this pay from everyone in USA.
    SinPM gross pay: 6.26x USPr
    SinPM pay per capita: 411.8x USPr.
    China GLC per cap: US$1,000;
    Sin GLC per cap: US$28,552;
    Sin GLC per cap: 28.55x of China.
    GLC: Govt linked company
    Interpretation: Based on per cap income, USPr will need to work 411.8 years for one year SinPM worked. Conversely, since in one year everyman has 24/7 x 52wks; USPr is stressed out 411.8 times that compared with Sin PM.
    If SinPM were to get his pay per cap as that of USPr, Sin PM will receive: US$6,070.
    Conversely, if USPr were to get Sin PM pay; US Pr will receive US$164,726, 553 a year. To do this a plebscite will be called.
    Pay/GDP/CAP: US Pr: 8.86x; Sin PM: 69.8x. This means USPr makes 8.86 times GDP/CAP(USA); SinPM makes 69.8 times GDP/CAP(Sin).
    2007/1959: GDP/CAP Sin :US$35817/$400= 89.5425 times Sin PM: 69.8X OR 78%!
    That’s how Sin PM salary is arrived at!

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