Monday, March 26, 2007

The Ministers' Salary Brouhaha

Ministerial salaries are in the news again. The PAP government has the practical problem of paying (themselves) enough to attract the best talent without (further) removing themselves from the plight of the everyman. The Opposition can be expected to (again) take advantage of the situation to accrue some political mileage and pour a little cold water on the PAP’s fire of popularity.

After all, to the Singaporean resident who earned a *median* monthly income of $2,410 in 2005, the amount a Minister gets is simply mind-boggling, and probably contributed to pushing the *average* income to $3,500. (The gap between the average and median incomes illustrates the income gap, which is a topic for another day).

A recent ST article pointed out a suggestion from Workers Party’s Low Thia Kiang (prior to 2006 GE if I recall correctly) that ministers be paid a multiplier of 100 times the average income of the lowest 20%. The idea was that this was approximately already what Ministers were making, but would motivate them to ensure that the poorest 20% did not get left behind.

Politically, this was a very astute move. With one fell swoop, Low made himself the champion of the poor while clearly illustrating the wide gap between the (PAP) ministers and the lower classes.

Politics aside, this idea of pegging Ministers’ salaries to the income of the everyman does merit consideration. The current formula pegs Ministers’ salaries to the top earners in various professions like law and banking.

Fair enough, one can buy the argument that Ministers should be well paid. Using either staff strength or budget as a guide, a typical Minister would bear responsibilities greater than most CEOs and managing directors.

We can contest, however, what Minister’s salaries should be pegged against. Top earners have income from various sources – aside from earned income, most would have stock gains & dividends, overseas assets, rental income and other financial instruments etc. PM Lee has taken some pains to explain clearly how the formula has been adjusted to deal with some of these elements. The fact remains, however, that the average Singaporean enjoys a far less exciting remuneration package, but one that can go up and down nonetheless.

My suggestion is this: To motivate our Ministers to work the best interests (financially anyway) of the people, we should consider pegging their salaries – not to the top few or the bottom 20%, but to the median or average wage earners in Singapore. It would be a fairer approach.

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