29 March 2007

Singapore government promotes obscenity

How else would one describe the proposal to raise already high ministerial salaries by a further 55 percent? Full essay.

42 comments:

Not a sycophant said...

Obscene is the word ! thank you for the homework done. For me, it's simply not on that a minister can reject a request for another $110 a month ($1320 a year) for a poor , elderly person to get just one more meal a day; while pages and pages of MSM and idiotic posts on young PAP website try to "justify" another $1,000,000 per minister per year so that they can stay together , move ahead while the rest of Singaporeans stay put or go downhill.....

hugewhaleshark said...

Alex, my bigger gripe is with the SR9 benchmark, since there is no two-thirds adjustment. Do civil servants take the same amount of career risk as workers in the benchmark professions? Do they work as hard?

One must also ask whether it is right to pay absolutely top-end salaries in an all-out bid to retain talent. After all, at this level, people are not motivated purely by money. Are there no other reasons why the government cannot retain talent, besides pay?

The "winner bias", where the benchmark is tagged to the winners of each year, is also easily mitigated, so one wonders why this is not done. My suggestion is to use a moving average of 3 years' income, which should dilute the impact of these one-year wonders.

KiWeTO said...

in the first 20 years,

the model worked. Everyone pulled together.

having tasted the fruits of success, the model required 'tweaking'. We have tweaked.

We thought we should retain talent in the civil service, and simplistically, we thought, an individual's only incentive towards public service is the size of his pay packet. So, therefore, the simplistic logic meant that we had to pay for the best. Not necessarily the object of the work, or the intrinsic value of patriotism, but just the size of the dollar value of their 'talent'.
(which also means, as a society, we also put dilly-squat on concepts such as "serving the country", since it doesn't require any form of 'sacrifice' at all!)

The best in any private industry are always paid the best salaries. Any lesser, and they can leave for somewhere better. (can, not WILL. we confused those 2 concepts somewhen back in the 80s).

In Singapore's Civil service, the "best" come from our scholastic training, graded by educators who apply a subjective assessment of an individual's ability that determines his starting position on the grid. There are no real market forces within the public service; it would take an act of gross stupidity and negligence for one to be fired in the civil service. Bright prospects are sent around the various departments, like pidgeons stopping briefly, before being shuttled on to their next position. (which could be a cause for the mismash of policies that didn't seem to make coherent sense, as each bright prospect attempted to make his/her own mark to add to their service docket before moving on to their next position)

Why then should we be benchmarking civil service pay rates to the best in the private sector when the "market forces" are different? In a civil service, one can easily rise up to a senior position by showing some level of competence, the ability to flow with the political wind, and to avoid being caught in mistakes or potholes.

In the private sector, you rise because you are deemed to be able to deal with bigger things (and the corresponding bigger pay packet, and accountability/responsibility that comes with it)

It cannot be that such salary structures are due to the concept of preventing corruption, since if that is the argument, then by extension, we are accusing the civil service in richer countries in the EU, and the US, and other countries ahead of us in GDP to be corrupt, since their ministers are insufficiently paid in relation to the 'wealth' they manage.

Can civil service salaries at the top level come down then?

Can we ever reverse the logically-flawed course we have taken?

Or is this the grand strategic path to make SG salaries (private and public) in general so attractive that the best talent rather work here than be working in NY or London?
(A case of building a better mousetrap, and hoping that they will come eat here?)


Did we even consider that besides the huge disparity in income, public servants in Singapore also generally pay less tax than their equivalents in other 1st-world countries? (which in turn, magnifies their income streams vis-a-vis international benchmarks even further?)

Will the illusion that Singapore is successful fail one day due to such little slip-ups in logic?

truly, a slippery slope we are sliding down on.

E.o.M.

Anonymous said...

for a small country, singapore has quite a big cabinet, and the members are very well paid

maybe there should be a senate to which retired ministers can be sent; then they dont need to be paid as much

Anonymous said...

Mentioned this in Mr Wang's blog but think it is relevant for your's as well. There is a fundamental problem with pegging the salaries to the top earners. This is effectively an incentive for the political leaders to ensure an economy to perpetuate huge income disparity, i.e. one that the rich gets richer (and usually the poor gets poorer). Not that that's what they are doing. Just if you think theoretically in a purely economic sense of how incentives drive behaviour.

Don said...

It sounds a little defeatist, but what the hell can we do about it, other than gripe and sulk about this issue. In the end, they'll do what they have set out to do.

Reading the papers is a depressing affair for me nowadays.

Love reading your articles as usual.

Anonymous said...

"Does anybody think that the UK and Australian civil services are far inferior to Singapore's? How is it that those countries can have an effective public service with negligible levels of corruption at less than half the cost we have to pay?"

IMHO, because these countries are truly a democracy whereby public service does mean serving the public & not the other way round. Also there is such a thing as the political parties actually having the freedom to run for real elections whatever their political agenda.

recruit ong said...

Being in public service is kind of like working in a charity. If one chooses to work in a charity bcos of high pay, then i say this person is not fit to be in charity of public service. His heart is not in the right place. The nkf is a classic case of this. If the PM complains his pay is low then he should f**k off and resign! Dun pretend pretend and still hang on to office! Shameful bast*rds!

Anonymous said...

Yeah. Another thing during bad economic times who decide which MP or Minister to be retrench. When citizens are jobless, poor gets poorer, foreign companies and investments moving out of S'pore. Who gets retrench?

Never happpen in Govt.

Therefore should not peg their pay to the commercial sector.

Anonymous said...

Yawning Bread, thank you so much for the in-depth research. I have always thought there was something innately wrong with the benchmarking model but what you have explained convinces me even more that whoever dreamt up this model in the first place must be either very self-serving or think the Singapore population is very stupid.

First, when you peg your salary to the top 25 earners, there will always be an upward bias. Year in, year out, boom year or recession, the top 25 earners will make more money compared to the rest of the population. If the top industry earners were to go down on year, the slack would be compensated by the top lawyers or the top doctors. Is it any wonder that with this model, ministers' salaries will always lag behind. In fact, this feature is purposely built in.

Second, the whole thing about raising Admin Service officers' pay is a red herring. It is only by saying that we need to raise civil service pay that ministers can with a straight face say their salaries also need to be jacked up.

Third, Singapore ministers don't change very often, unlike American CEOs who if they last 5 years on the job can be considered very good or very lucky. That's why if you look at lifetime earnings (permanent income hypothesis), a Singapore minister (some have been ministers for 15 years or more) would probably earn much more than your American CEO. What's more, their pension I believe is pegged to 2/3 of their last drawn pay.

Fourth, I suspect it's also a 'jealousy' thing for the Singapore ministers i.e they probably just can't stand the thought that the medical specialist they're seeing is earning more than them. They're probably thinking: I'm a minister, so I should earn as much as or more than you.

Five, last comment, I don't see why our President should be paid as much as our PM. The position is basically non-executive (bar guarding the reserves). If you say that he needs to be paid that much because he is higher in terms of protocol, then I think something is wrong somewhere.

kwayteowman said...

Hello YB,

I believe there are two factual errors in your article that you may wish to correct.

"Another criticism that has been aired by others is that the income of private sector individuals used for computation is their total income inclusive of bonus, etc, whereas the MR4 so computed establishes the basic salary for the public sector, on top of which the government pays a bonus (in 2006 it was equivalent to 2.2 months' salary)."

In HR, remuneration is taken on an annualized basis which means that the benchmark MR4 is not for basic salary. It is for WHOLE package. Includes basic salary + bonuses. You can see statement by Teo Chee Hean here.

"Taking the age-32 cohort alone, we will see something like this pattern, where there are 15 individuals in the private sector earning SR9 or more, and perhaps 8 in the public sector earning SR9 or more".

This statement is in error. The benchmark is pegged to the annual salary of the 15th top earner aged 32 years among the six professions.

This means that there are 6 x 15 = 90 people aged 32 who are earning at least as much as the SR9 benchmark and not 15.

The KTM is not making any comments on the salary revision yet 'cos the actual numbers have no been announced yet and so dun have to be too kuncheong. The KTM also doesn't have anything smart to say. :-) His gut feeling is that SR9 is actually okay. MR4 is a bit on the high side.

Your point about SR9 stagnating and MR4 rising over the years is actually not surprising. We all know that's how globalization works. The rich gets richer, the poor gets poorer and somewhere along the spectrum, they just stay the same. Perhaps the stagnation point is SR9, which if true, is a bit scary.

Yawning Bread Sampler said...

Kwayteowman,

While I agree that details are hazy (now, is that deliberate?), based on what we do know at the present moment, I would disagree with your interpretation.

Regarding the question of whether the benchmarks MR4 and SR9 are meant to determine basic salaries or total emoluments, Siew Kum Hong, in my view and Aaron Ng's, never got a clear reply from Teo Chee Hean.

In practical terms it would seem really difficult to use the benchmarks for a senior civil servant's salary+bonus, since bonus is not determined until the end of the year, so on a month by month basis, how much would the SR9 Admin Officer be paid? It cannot be known in advance then.

Until the government says clearly how exactly it is computed, logic tells us they're using SR9 for basic salary alone.

The Straits Times, in their feature dated 23 March 2007, consistently used the word "salary", not "total remuneration". If the ST was wrong, we would most certainly have seen a correction by now. Such a major error by ST cannot be allowed to stand. But we haven't seen a correction.

On your second point, I will append below the Straits Times article dated 23 March 2007 that explained exactly the same thing. You will see that it said "First, the Government looks at the income data for top earners aged 32 in six professions.... No. 15 on this list is identified. His or her annual salary will be that of an SR9 officer."

The six professions are not considered separately. What it meant was the top 15 individuals in ANY of these 6 professions. Not top 90.

Yawning Bread Sampler said...

23 March 2007
Straits Times

Headline: What a top Admin officer gets

Salaries of top earners in six key professions determine the pay packets of elite officers

TOP-PERFORMING Administrative Service officers at age 32 can expect a pay packet of $361,000 a year. These officers - the elite of the civil service - are on a grade known as SR9, which is the first superscale grade.
Good performers in the Administrative Service can reach that grade in their early- or mid-30s, when they could be directors in ministries. Their pay packet of $361,000 a year is calculated using a formula pegged to top earners aged 32 in the private sector.


See Chart 1
The formula was devised in 1994, and updated in 2000.

Based on the 1999 income data, the salary benchmark was $363,000 in 2000. But in practice, officers at SR9 level got less than that, as their wages were frozen or cut following an economic downturn in the late 1990s.


See Charts 2, 3 and 4
In 2000, their salaries were $242,000, or 67 per cent of the benchmark.

That year, a decision was made to raise their salaries to the benchmark level of $363,000.

As the benchmark is pegged to top earners' pay each year, the actual amount varies from year to year.

It now stands at $361,000, based on income data for 2006.

Actual salaries at SR9 level are now $372,000 - 103 per cent of the benchmark.

It exceeds 100 per cent because of individual performance-related bonuses that are tied to the economy's performance.

As per the formula in Chart 1, the salary for SR9 officers is determined thus:

First, the Government looks at the income data for top earners aged 32 in six professions. The professions are: bankers, lawyers, accountants, engineers, employees of multi-national corporations and local manufacturers.

The income taken into account includes monthly salaries, bonuses, partnership fees and commissions, and half of stock option gains.

These top 32-year-old earners are then ranked according to their income, from the highest to the lowest.

No. 15 on this list is identified. His or her annual salary will be that of an SR9 officer.

In 2000, this was $363,000, based on income data for the year before. Now, it is $361,000, based on income data from last year.

Anonymous said...

Some years ago, the ST has a front page news profiling two individuals of similar age and their salaries. One is a super scale G civil servant, the other is private entrepreneur Dinesh Bhatiar. Both are said to earn $300k plus then. Look where is Bhatiar now? His business has folded, and he has gone on to other things. Look where is the civil servant now?? Probably safe in his cozy job. Until civil servants assume financial risk of their own, instead of taking public funds only accountable to other civil servants above them, they should never be paid or even come near the salaries of the private sector. There is no lack of local talents, and most who are worth their salt wouldn't wan to be yes-men and sycophants.

Anonymous said...

hmm, since it is cheaper using foreign talent and corrupt indicator is not too bad, we should hire them instead of using local talents, just like in the private practice, since private sector is always used as their benchmark. Not a bad idea to have a UK Education Minister and an Austrailian Finance Minister.

Anonymous said...

XCS says:

Great blog!

One cannot fail to note that the adjustment come when factors favourable to its agenda are in place. Bet 'top notch' civil servants must have been monitoring pte sector salaries for many many months to pick the opportune time.

No better example of a shamefully opportunistic behaviour than this.

Also, what is our so-called post-65 MPs doing about it, given the sort of things they put out in their blogs? Their silence and lack of any significant symbolic actions to show their disapproval (like a mass walkout or boycott of parliament) only serve to highlight how phoney they are.

Anonymous said...

ha! you think it is easy to be yesmen and sycophants? have some sympathy for their plight and dont grudge them a few dollars more

as someone once said "even paranoids have real enemies"... there is a place in the world for yesmen and sycophants...

Anonymous said...

This may be futile or symbolic (as it was with the IR saga), but here is an online petition anyway:

http://www.petitiononline.com/paypap1/petition.html

I really wish we, Singaporeans will one day be like Hong Kong citizens who took to the streets in peaceful protest, to stand up for issues close to their hearts

As a civil servant myself (a scholar, but not an AO), knowing what goes on in the inside makes it far worse, and I cannot agree anymore with you on how much they do not deserve this pay rise above their already bursting coffers.

Singaporeans, unite over this please!

MM (Movie Monster) said...

The mere use of word "Bench Mark" in the government case is questionable. Bench mark is used to compare performance of an organisation against others in the similar field so as to identify weaknesses and strengths. There are numerous books/papers in the literature on bench marking. Bench marking an entity to those from a totally different field is not a credible idea. The more sensible bench marking exercise for the Singapore govenrmnet is to bench mark themselves to other governments!

We can see why they won't do it - they are grossly over pair!

Anonymous said...

I was wondering why there is little talk about linking their pay to performance. Isn't the government always asking the private sector to do precisely that? Some KPIs (which may differ for different ministries) could include relations with neighbouring countries (Thailand, Indonesia), waiting time for buses and deaths at MRT stations, citizents' income growth and disparity, number of old folks who have to continue to work or sell tissue papers to feed themselves (while retired civil servants are collecting generous pensions), and I'm sure you can name more. Since the government is supposed to work for the people (and indeed is paid by the people), shouldn't it demonstrate how these KPIs have improved in justifying any pay changes, rather than just because the top earners in the country are now earning more?

Anonymous said...

"These 48 individuals' incomes are then laid out on a linear scale and the mean is computed. The mean would be the midpoint between the income of the 24th and 25th persons in the range."

That's the median, not the mean. The mean is the sum of all these 48 individuals' income divided by 48.

Anonymous said...

By the way, let me add that they are shrewd to have chosen to use the median instead of the mean.

Suppose in a certain year, because of some catastrophic policy failure of the PAP, the individuals in the bottom 23 professions have their incomes reduced to zero. As long as the 24th-ranked individual is unaffected, the ministers will still take home the same big fat paycheck.

kwayteowman said...

Alex,

I hope you understand that the KTM isn't trying to defend the PAP or pay hike here.

The KTM believes in journalistic integrity and respects you tremendously for the thoroughness of your research.

The KTM has done his own research on these numbers and he is reasonable sure that he is correct on two points he highlighted above. No haziness whatsoever.

From where the KTM is standing, it's not an interpretation, it's a matter of fact.

On your question of how do people know the bonuses in advance, the answer is: you cannot. However, from the HR perspective, there is always the need to do budgeting, so people will put in a "reasonable" number based on past trends and work out a monthly salary from the annual package. Tends to work out okay in practice.

This is the fact: SPH reporters are usually not trained in HR. This means that are as hazy as you are when given the figures. They just anyhow humtum loh.

You may ask: why PSD didn't come forward to clarify? Perhaps they were sleeping, or perhaps they didn't think that it's something worth clarifying. May looking like making a fuss out of nothing. Also, the KTM believes that the Ministers don't exactly want to draw more attention to their salaries than necessary. Dunno lah, this is all speculative.

You are welcome to keep your article as is. The KTM was simply trying to help. :-)

Warmest Regards.

Anonymous said...

The prime minister cum finance minister is acting blur or what. This clown who try to act as if he is those charismatic type of leader whenever he appear on tv in front of the pple is getting a pension and now he wants a 2 million dollar salary for himself and his ministers.

Pensions scheme had long ceased to exist in Sg except for the ministers, how fair and uncorrupted is that?

And no one is complaining??? and still vote for them...hahaha..

k. said...

what da f***! when you can't even shoot,you want to become a genaral.now work like a clown,go everywhere an embarrass s'poreans! you & your bunch of gundoos need someone to mentor, but still dare to ask for universal class pay?!! WHAT? only asking for a couple of peanuts??? F**** YOU!!!

Yawning Bread Sampler said...

To anonymous, 31 March 18:37

Yes, you are right. The Straits Times used the word "mean" which was where I got it from. I was vaguely aware that "median" might be the accurate word, but my Statistics is more than 20 years old, and rusty. I felt I had to check; then forgot to do so. Thanks for pointing it out.

Anonymous said...

Don't anyone realise that the poor-rich divide in Singapore has become wider and wider every year?

Not sure how a public servant who is earning that kind of money understand the majority of his or her electorate who earns MUCH MUCH less...

How can they understand the pain and agony of their electorate who has to spebng his or her life paying a HDB mortagage? These public servants can afford a few HDB units within their one year's remuneration!

For me, the best test is ask the private sector (non Temasek linked companies) if they are willing to pay (1.2 million per year) for these ministers to join them.

My guess is NO. So, there is not even a need to discuss an increment!

Anonymous said...

I totally agree with the comment above. Those ministers and MPs are always mentioning about how much they forego as a civil servant when they can earn much more in the private sector. I really doubt any company other than GLC are willing to pay them that much. They are just living in their own la la land. Get real...

Anonymous said...

Anyway, Singaporean has no one to blame except for themselves.

YOU VOTE FOR THEM, REMEMBER?

so bite the bullet and get on with life... cos they are gonna increase their salaries no matter how much you complain.

Anonymous said...

This is a fantastic article! And I don't think you have been paid a million dollars for it!

I wrote to the press and even the PM that why should the top civil servants and ministers, who oversee Singapore, which is plainly speaking the easiest to manage and govern in the planet, be given the highest salaries in the world?? They are not administrering Mexico City or Kabul.

I never got any answer from the PM's Officer nor was my letter published in the papers.
Kai Khiun

Shawshank said...

I always love Orwell's Animal Farm.

And this fiasco reminds me of the good story I have read many years back.

http://ayehope.blogspot.com/2007/04/some-sacrifices-are-more-equal-than.html

Anonymous said...

I am afraid your point was misdirected: precisely because SG is not poor or chaotic like some other places, the officials feel they deserve credit in making the place advanced and orderly; you can disagree, but not with your line or argument

(BTW, I am not a PAP member - in fact not even singaporean; you can check my comments on issues at the websites asiayouthmedia.com and yeophilip.com)

Anonymous said...

PM has emphasised the sheer difference between $2.2 million and $1.2 million, but hasn't given any hint of the proportion of MR4 salary adjustment. I believe the communication strategy may well be to raise the top salary scales by a small percentage that while significant, will still appear far lower than the so-called benchmark of $2.2 million. Thus making it appear that the public should swallow its recent vitriolic remarks. What does everyone think of such a possibility?

kwayteowman said...

Alex,

"Things are rather confused here and I may be way off base. The Straits Times reported 230 Administrative Officers (AO's). But from the grade chart, not all AO's are superscale, some are timescale. Yet the newspaper said that a departmental Director is a superscale post. And from the ministries' organisational charts, it does look as if there are some 200 directors and higher. Can someone clarify this with more reliable information?"

Explanation is simple. Some directors are not AOs.

Also, PSD has come out to clarify that the benchmarked salaries include bonuses.

Yawning Bread Sampler said...

kwayteowman,

You said, "Also, PSD has come out to clarify that the benchmarked salaries include bonuses."

Can you give a source reference please?

kwayteowman said...

Alex,

PSD has a letter in the Forum Page slightly more than a week ago. You can try searching the archives.

PokKaiLiao said...

Didn't GCT say a few years back we aim to be Switzerland of Asia. Care to see how much Swiss Civil Servants, public officials make? One cannot aim for one aspect and clse eyes to another.
How about pegging Minister and Perm Sec pay to GNP growth. Boom year they take home anhpow, recession year, they dig the millions out of pocket to pay back the people.

Anonymous said...

Great post. But I'm not sure what all this ranting by us non-AO types will amount to.

Anonymous said...

How do you expect the "have-nots" poor to think, understand or comprehend the pay rise for the ministers and civil servants? They have use only their "stomach" to think not their "head".

Anonymous said...

A large number of Directors are not AOs. Ask any insider and you will know.

Furthermore, many Directors who are AOs are NOT at the benchmark MR-9 salary scale. Many of them are MR-10 or even MR-11. Ask any insider again and you'll find out.

Anonymous said...

1) KTM is correct, the benchmark includes bonuses which are mostly, though not completely predictable.

2) Quite a number of Director positions are not AO posts. There is quite a wide range in the seniority of Director establishment positions. I'm not sure but I doubt the information is classified - you could try asking a Ministry for the information?

3) The logical basis (without prejudice to its validity) originally used for the benchmark was that civil service are basically competing within the same talent pool.

4) For the record, I think the current MR4 benchmark is too high, and I also disagree with the president's salary because I think it is not comensurate with his responsibilities. However, the SR9 benchmark does look realistic to me, however obscene it looks to people making 2k a month.

5) All of these decisions come not unexpectedly from the globalisation paradigm, which we can automatically assume comes with greater income disparity. Personally, I don't think it is useful to talk about fairness.

6) I think the subtext of many of the complaints is risk exposure. While non-performing AOs do exit the service, this is not particularly volatile a mechanism and cannot be equated to private sector risk. However, if we do see huge turnovers in AOs, isn't that quite an indictment of the initial selection and grooming process? Looks like no win either way...

7) For the Ministers that did, in fact, take a significant pay cut to enter political service, would the complaints be any less? Also, should we then only hire from private sector individuals who already earn more than they would make in office?

8) Very few AOs make it to SR9 at 32. Try asking PSD for the stats, I don't think these should be confidential.

Kenneth

Kings said...

It would be very interesting to find out exactly who are the 48 top wage earners in the 6 industries. Could they be companies under Temasek Holdings, GLCs, NTUC, Singapore Technologies, DBS, POSB, Singtel? If the majority of them are from these places, then there arose a doubt as to whether their salaries be manipulated?