Tuesday, April 10, 2007

Pay Me Well

In 1996, Lee Kuan Yew said that low salaries will not attract able men who are or can be successful in their professions or business. Now they will be upping the peg of ministerial pay in Singapore to the top private sector earners again. Currently ministers earn just S$1.2m (US$1.836m) per year, and the repeg will put them at S$2.2m (US$3.36m) or higher if you are more "senior". Since 1994, the salaries of Singapore ministers have been set at two-thirds the median pay of the 48 best-paid bankers, lawyers, accountants, engineers, and executives in multi-nationals and manufacturing firms.

Naturally, there is a big outcry from the general public in Singapore. Bulk of who survive on a household monthly income of between S$2,000-S$6,000. Here are some thoughts:

a) Nobody is really deriding the repeg, just the quantum I guess. To peg to the TOP private sector earners is to imply that the ministers are also the top quartile. Is that the reality?

b) Another reason is that they are clean and the salaries are needed to eliminate corruption or the need to be corrupt. Doesn't that say something inherent with the mentality of a normal person: that a person will be more likely to be corrupt if he is paid below average. Hmmm... does that mean that the majority of people in prison now may not need to be there if they were paid well enough in the first place???

c) If you are paying for being "efficient", "competitive nation building" and "corruption-free"... Singapore ranks #5 in the world, Norway ranks #2 and their ministers get about 20%-25% what their Singapore counterparts are getting. I thought Norway has a higher cost of living index than Singapore. Hmmm... maybe Singapore can outsource for cheaper and better performing ministers from Norway. Even at half the new package, Norway ministers would jump at the offer.., plus now no need to pay foreigners CPF right??!!

d) Actually I do agree that salary plays a big part in nurturing the right behaviour. Most Asian nations pay their ministers pittance (let's not single out specific countries, you-know-I-know lah), and those countries that do so have also the highest incidence of corruption. These are smart people (most anyway), these are also people being given immense power, and the likelihood for abuse is also high: if you pay them pittance, the attraction and need to find extra sources of income are very high.

e) You have to pay well if you want to eliminate the distractions of wanting to feather one's nest or to accumulate for a sufficiently nice retirement income. Hence you will find many politicians thinking and finding ways to benefit themselves instead of doing nation building stuff. I think Lee & Lee have a strong argument here. You don't want ministers spending half their time having meetings about "special projects", "specially awarded jobs", "meeting important and connected people for the wrong reasons", etc...

f) The angst among the public is when they compare with what the general public is getting, or rather what they themselves are getting. Its a bit like begrudging the MNCs CEO pay packages. US listed companies regularly pay their CEOs between US$5-50m a year all in (basic, options and bonuses) - of course, the companies have a pretty big market cap to contend with. Even smaller US companies (those with market caps of US$1-5bn will pay between US$1-10m. OK, let's bring it back to listed Singapore companies as a better yardstick, the top CEOs of the top 50 firms should be getting packages of S$1.5m to S$5m easy, no questions asked. Why is it so difficult for the public to accept that their ministers are paid like the CEOs of the top 100 companies in Singapore?? Surely the way they have been handpicked, proven themselves continuously, and before that having to accumulate top notch degrees and recognised academic excellence - all must count for something. These are the people leading the nation. I would be proud that they get what they are getting, and they deserve it too. Is it easier to run a nation than a big company? Like I have said before, Singapore is a very well run company.

g) Plus, we are not talking about 1,000 or 2,000 ministers... its just a select bunch. You pay S$600,000 a year and get dubious characters like TT Durai (the NKF scandal). So, obviously S$600,000 is way, way, not enough. Look at the new apartment launches, you have to make it affordable for the ministers as well. If ministers have problem buying, who else can buy?

h) Sure, the comparisons with US, UK and Japan ministers will be a sore point. Maybe Singapore is doing it correctly, and the rest are doing it wrong. Must remember that ministers in those countries are also known to "need to pave the way later" when they get out of office - not to say they are corrupt but they do "plan" to have other sources of income later in life.

i) The one thing which the senior government must rein in is the way retired/former ministers get on a lot of important boards, and gets paid very well. In order to maintain better integrity, maybe retired/former ministers should NOT be sitting on more than 2 boards (either private or public) because they way it is now, the retired ministers could get paid even more than the ones in service now in some cases!!! For example, ex-Foreign Affairs minister S Dhanabalan is now the Exec Chairman of DBS Group, Chairman of Temasek and Director of GIC. (like they say in Singapore... "walau-wey"). The ex minister for Defence Yeo Ning Hong is the Exec Chairman of PSA, Director of DBS Group and Director of Singapore Press. There's another very busy ex-minister Lim Chee Onn (ex-minister without Portfolio, my my... look at his portfolio now) - the Exec Chairman of Keppel Corp, Chairman of Keppel Capital, Chairman of Keppel Land, Chairman of MobileOne, Director of Temasek, Director of k1 Ventures, Director of Singapore Airlines, and Director of Natsteel (where got time , man!?). Then there is Goh Yong Hong the ex-Commissioner of Police. He is the Exec Deputy Chairman of Singapore Turf Club, Chairman of Singapore Pools (not the swimming type OK), Director of Dragon Land, and Director of Premas (a unit of Capitaland).

j) The ministers are mostly picked from the business sectors and their evolutionary process are quite different from politicians of other countries. Few are the grassroots types or cikgus/teachers/municipal leaders/etc... Hence the yardstick for apples to oranges applies here.

k) What about working for the benefit of the nation? Let sleeping dogs lie, its tough enough to remember the Singapore anthem in Malay-man, one thing at a time lah. Like I say, the way Singapore is run, its like a corporation, hence the pragmatism. Live with it, its good for the country.

1 comment:

DanielXX said...

There was a huge amount of debate in parliament about this salary revision issue. I think the ministers found it difficult to put forward their points because a lot of it tends to be difficult to espouse --- for example, how do you explain that low salaries tend to lead to distractions that could lead to people in power abusing their authority (like you said, special projects etc). But these are valid points ..... we have to recongise that human nature is such. Salary hikes are always difficult to put through when it is under such public scrutiny; the furore only slightly died down when our PM said he was going to donate his own increment to charity for 5 years, to attain "moral authority".

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