A Young Man’s Thoughts on Ministerial Salaries

Kudos should be given to the salary review committee for having the courage to propose cuts of around 35% for minister’s pay, and openly explaining the whole eventual review to the public, which potentially could have led to much grief to the members of the committee.

It is in itself a step ahead for the governance process in Singapore and hopefully a herald of things to come.

These are some observations that struck me as I watched the news reported on Channel News Asia. These represent the views of a young Singaporean who a)is basing his questions only on what has been reported in the news services, b) is not affiliated to any political party.

1. In the current ministerial salary review, members of the cabinet will be paid a basic salary similar to those of the top 1000 corporate earners.

Assumption 1: The skill sets of the office-holders are similar to the top corporate earners in office.

Question 1a: It is arguable that the minister requires a skill set different from those of the top corporate earners because political office is not the same as corporate position. It is the fundamental role of a corporate member to generate profit for his company; this may or may not be the key role of a minister. How does one justify the comparability in skill sets?

Question 1b: Assuming an initial similarity of skill sets, noting that a political office holder is not the same as a top corporate honcho, are the top corporate earner’s really transferable to the skill sets of a good political office holder. Is a top grossing medical doctor necessarily the best candidate for political office? Is a A million-dollar churning entrepreneur may possibly be a brilliant Trade Minister, but is this person going to be a top Education Minister if the Prime Minister so decides?

Assumption 2: The capabilities of the office-holders are similar to the top corporate earners in office.

Question 2a: With full respect to all office holders (this is not a questioning of capability) how many of the current ministers had actually taken a previous pay-cut from their top corporate sector jobs to assume political office?

Question 2b: How does one prove that the office holder is of a similar or equivalent capability to the top corporate earners if Question 2a is not answered in the affirmative?

Assumption 3: The responsibilities of the office-holders are similar to the top corporate earners.

Questions 3a: The stakeholders in a corporate firm (board of governors, clients, staff, shareholders etc.) are a subset of the stakeholders in a political setting (voters, investors, political players etc.). How does one prove that the responsibilities of the office-holders are similar to those of top corporate earners?

Question 3b: Assuming that the responsibilities of both are similar, how far does the extension of responsibility stretch? If a top corporate earner performs a major gaffe he will be punished by his stakeholders with penalties stretching as far as the potential removal from his position. If a political office holder makes a similarly major mistake, will he be punished by the stakeholders in a manner similar and going possibly as far as those of the top corporate earner?

Assumption 4: The top of the cut-throat corporate world are what are needed to run a country.

Question 4a: If memory serves right, Dr Goh Keng Swee, Dr Toh Chin Chye, Mr S Rajaratnam, Mr K M Bryne, Mr Lee Kwan Yew, Mr Ong Pang Boon, Mr Jek Yuen Thong, Mr Ahmad Mattar and Mr Othman Wok were not necessarily top corporate leaders, however this did not stop them from becoming effective political leaders. While it may be argued that the stage of political development in Singapore requires a different kind of political leader, who may be one that is successful in the private world, it is also arguable that the nitty-gritty details are not planned by a politician and that a top corporate earner may not be the much sought-after visionary. Is this assumption therefore justifiable?

2. There is a seeming fear that potentially successful corporate earners would be deterred from public service because of the pay cuts.

Question 1: If a potential politician, who is a corporate success, becomes reluctant to serve his nation because of a salary that is not as large as his current pay check, is this really a person suitable for political office? Would this corporate talent still be considered a “political talent that was lost”, or would this corporate talent be considered a “brilliant person who should stay in the corporate world”?

Question 2: The ruling party current faces what seems to be a dearth of corporate talent in its ranks. It draws its main leaders from the ranks of the public service. If the current pay is insufficient to draw top corporate talent, it is obvious that a pay cut would not reverse the situation. The question should hence be, is this paradigm the right one in drawing out potential office holders from the private sector?

Question 3: The alternative political parties have in their ranks more members from the private sector. While it is apparent that these are not the top 1000 salary earning members of the corporate world, it does show that there may not be a lack of interested potential politicians from the private sector. One may even go as far as to argue that some of the people in the ranks of the alternative parties are successful to varying degrees in the corporate world. Is the problem of drawing corporate talent (and top corporate talent at that) necessarily a Singaporean issue or is this an problem endemic to the ruling political party

3. There is a fear that ministers now go to work directing civil servants who could possibly earn more than the minister, which hence is wrong.

Point: While this is a potentially true fact, it is also fallacious. The simple fallacy of appealing to emotions, red herring has occurred. The authority of a minister, minister of state and parliamentary secretary is derived not from his salary but from his position as a member of the ruling party given a political appointment. The civil servant has an obligation to work under the governance of the politician because Singapore is a democracy where politicians (not bureaucrats) run government. It is the voting public and appointment that give the minister his authority. A civil servant promises to work under the ruling government of the day, for the good of the society. This is implicit when the civil servant signs on the dotted line of the job contract. There is nothing wrong with political office holders earning less than civil servants.

4. The salary of a political office holder includes a 12 month basic pay and an 8 month potential bonus including a 1 month annual variable component, 3 month performance bonus, 3 month national bonus (including 4 equal portions of real GDP, real median income growth, real growth of lowest 20^th percentile, unemployment rate).

Question 1: While GDP is a good and important economic indicator of economic progress, what is the justification for including in both the AVC and National bonus in the computation of real GDP for the year?

Question 2: Would the establishment of various specific KPIs as set by Parliament for various Ministries, be a better gauge of the performance of individual ministers be a more accurate assessment of the performance of each minister. As it stands (please correct me here), there is a possibility that some ministers whose job performance may not be up to par may coast along and get a good bonus package because of good performance by those in other ministries.

Question 3: While not begrudging ministers of a potential 8 month bonus for a very well performed job, might the ideals of service to the public be compromised to an extent with good service equated to with more money.

Point 1: The replacement of GDP bonus with a national bonus would be a more justifiable policy to most Singaporeans. However, while unemployment rates should necessarily be kept low (give and take for structural unemployment), society must careful that the quality of jobs is not compromised for the sake of the quantity of jobs on offer.

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