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Monday 27 February 2012

On Ministerial Wages

There is no doubt that the issue of Ministerial Pay is an emotional one but in the midst of heated debate, it is still useful to reason with cool heads.
Firstly, not enough attention has been paid to the principle of “clean-wage”. This principle is not only at the heart of the Ee Report, it is also the premise on which the entire system of ministerial wages is based, from the beginning when Mr. Lee Kuan Yew implemented it, right up till now.
The wage that office-holders in Singapore get is the totality of the remuneration they get – there are no hidden perks like hospitalization benefits, housing benefits, tax exemptions etc. With the exception of the President, the Prime Minister and the Speaker of Parliament, no office-holder or Member of Parliament is given a car for personal use. And even then, the use of the car is a taxable benefit, rather than a perk. This is exceptional compared to most coutries, especially at the Ministerial level.
This point cannot be emphasized enough. Much has been said online, in the local press and in the international press about our leaders being the best-paid. The benchmark for of this is the salary, specifically the cash-component of an office holder’s income. This is not a fair comparison. The most quoted example one sees repeated ad nauseam is the President of the United States salary of US$400,000. However this does not include all his other benefits which include free accommodation in the White House and use of its army of servants and staff, official transport and a whole range of other perks and non-cash benefits. It is also interesting to note that the reported salary of the President of China is US$11,000. Without being facetious, one wonders how such a salary could possibly allow him any respectable accommodation of any sort, even if he were to just rent in Beijing. It was also the ‘benefits’ part of remuneration that led to the scandal involving expense-claims, specifically housing claims, of the Members of the UK Parliament.
The strength of our clean-wage system is also its weakness. The transparency of this system allows us to know exactly how much our political office holders get. However the difficulty is that we alone implement this system. When nobody else in the world has a clean-wage system, and all comparisons are made purely on cash-income, then our leaders will always look like the highest paid.
The crucial question then is whether it is fool-hardy for the Singapore government to stand alone in a world where nobody else offers a clean-wage system. As an emotive issue, and with continual unfair comparisons being made purely on cash-income, a good system has become a public relations disaster. No amount of explanation will defuse the issue when the stark contrast keeps getting emphasized in salary league tables. The Singaporean voter could in the end, be no different from, and no less human  than any voter or citizen anywhere else in the world, and a remuneration system with perks and benefits could prove more politically palatable than a clean-wage system.
Secondly, to poll the average man on the street on what he thinks of a million dollar salary is pointless. The problem is one of perspective and the perspective of the top income earners anywhere in the world is something no man on the street can empathize with; whatever method one uses to arrive at the pay is irrelevant, once that number is large enough. 
To the average man, a pay cut of 1/3 from 1.5 million to 1 million still leaves an unfathomable sum. But the 500,000 difference could lead to a real impact on the standard of life as it could mean the difference of meeting that mortgage payment on one’s house. We cannot possible expect our office-holders to sell their houses and downgrade in order to take up their appointment.  By the time some of these potential office holders have reached their 40's , they have settled into a certain lifestyle that requires a certain income to upkeep. To expect these people to sell their houses, their cars, or to forgo their children's education overseas is just an idealism that bears no relation to reality. In the end, we will only end up like other countries where only people who are financially independent and secure will enter politics seriously. 
Thirdly, while we appreciate and value the ethos of public service, it is unwise to over-play it. The generation of Lee Kuan Yew and Goh Keng Swee was borne in a time of chaos, revolution and change in a post-colonial world. Even then, it was pure luck that we got these people rather than the rapacious leaders that impoverished many countries that became independent the same time as Singapore.
We could thus pay low wages and hope that some able, altruistic men and women would step forward, or create a system that increases the chances that we will still get able leaders, altruistic or not. At the end of the day, we are not looking only for servants, but leaders with specific skill-sets to govern our country, manage our economy and make policies that would affect our country’s future. Beyond a calling, there is thus also a job to be done, and in order to get people with the right technocratic skills to get this job done well, there is no shame in paying for it. 

We must not confuse political governance with charity work.


  1. Your quote as a comparison with the United Sates of America's President of "However this does not include all his other benefits which include free accommodation in the White House and use of its army of servants and staff, official transport and a whole range of other perks and non-cash benefits" might mislead the reader as it may imply that the leaders of the Republic of Singapore (including the President and the Prime Minister) travel on their own account for official representations worldwide: is it really the case?

  2. Your comparison on clean wage versus entitled perks is flawed. The US president lives in the white house, but he does not own it. Nor can he, at the end of his term sell it as personal property to obtain any appreciated remuneration. Compare apples with apples. Paying a policy maker exorbitantly means he/she has the disposable income to indulge in areas of his/her influence. Whether thru self-participation or cronyism, these policy makers may effect policies that serve to further increase their direct/indirect investments. They may package it to be more palatable to the masses by doling out stipends from time to time, but ultimately, it's not an equitable trickle down system.

    Furthermore, Singapore ministers find gainful employment in stat board companies after their term in office. Failing that, the party coffers are also deep enough to maintain a retinue of ex ministers in advisor roles. All these, taken into account, does not point to an absolute clean nor proper wage system