Wednesday, January 11, 2012

On Ministers' Pay

This is sensitive topic that has angered many Singaporeans. Even with a 30% pay cut, people are not happy. So what if the Transport Minister gets paid $1mn instead of $2mn? The train is still breaking down and the taxi fares just went up damnit.

At the risk of getting flamed and BBQ-ed on skewers alive, I would like to chip in my two cents from an economic viewpoint.

There are perhaps 30+ Ministers and high ranking Govt officials that receive on average, say S$2mn in annual package. Let's throw in a generous bonus of another $1mn. So in total, we pay out $100mn to our Ministers plus high ranking officials like Permanent Secretaries, Head of Civil Service, etc.

But our annual Budget is over $30 Billion and our Economy is over $200 Billion. $100mn is a mere 0.3% of the Budget and 0.05% of the Economy. Does it really impact the big picture? In fact it makes perfect sense to pay the best minds to do the job well.

Of course, we can argue if they did the job well. The short conclusion is they did relatively well against most other nations, but not so well against their own track records. Also the benchmark has to be set properly, if they fail to meet - pay cut! Haha! That should satisfy the public.

Yes, our Ministers are the best paid in the world. Much more than the President of the United States, arguably the most powerful person on the planet. So it really doesn't make sense why a PM of a Little Red Dot should be paid more.

My argument here would be that most top officials globally are too lowly paid. It then also says that these people are truly noble, accepting such meagre sums to do such difficult tasks. It then also says that perhaps our leaders are not noble enough.

Of course the other argument would be that Clinton or Reagan can always publish books and give speeches after their term and earn much more. Or retire into a better paying job as advisers, spokespersons etc. And Singapore's leaders can't really do that bcos bestsellers in Singapore at best hit a few hundred thousand copies, maybe over a few years. Not really enough to buy even a cheap condo unit.

And Singapore cannot really afford to wait for noble souls to step up to the task. We need to attract the best talents to do the job. Already being a politician is such a sacrifice (no weekends, no private life, no time for family) that most smart people would shun away, let alone volunteer to step up the plate.

Not to mention, this is a thankless job. How many Singaporeans made the effort to pay their last respects to the late Dr Goh Keng Swee, one of the most important persons that built Singapore to what it is today. A mere 18,000 or so Singaporeans, out of the 3+ million. That's probably lower than the Disney on Ice @ Indoor Stadium ticket sales last year.

Perhaps a better solution would be to provide these Ministers more benefits rather than to give them an enormous paycheck at the start. Say we lower all their salaries to a few hundred thousand SGD, less than the all-important million dollar mark. But they do not need to pay taxes ever. Their healthcare and insurance are taken care of for life. Needless to say, pension would also continue, perhaps sweeten it a little as well.

It might also be useful to simply give retired politicians peace and freedom since monetary benefits wouldn't really matter much for many of them when they are out of office. The late President Dr Wee Kim Wee was happy to revert back as an ordinary citizen and travel with his wife to see the world. Perhaps that was what truly made him happy than all the benefits and huge paychecks.


  1. Hi 8%,

    I think there's a conflict between these two themes when discussing minister's pay: First is the idea that ministers need to be paid very well so that the best talents are attracted to it. That's arguing based on practicability. Second is the idea that ministers need to be paid lower, almost to that of the general population, so that they can empathize with those they are trying to represent. That's appealing on empathy.

    I think both camps are right. You can't have someone who can represent the general population if they have a different lifestyle from them. Yet you also can't attract the best talents if you pay them to be like the general population.

    I think how we resolve these seemingly conflicting ideas will be how we should pay our ministers. You can see which value system our govt prefers just from the pay. Even the changes in pay now reflects a change in value system that is taking place by the political party.

    Interesting post, bro :)

  2. What an insightful comment, nail in the coffin. Yes it's an oxymoron, contradiction and unresolvable issue.

    Glad that you find my post interesting!

    Happy CNY!

  3. Just pay the person the same salary as what he was earning previously. If the person salary is very high, then maybe limit that to 1 or 2 terms after which revert to something comparable with his peers.

    The current system actually rewards people with huge salary jump when they join politics.