Govt defends ministers' pay formula

Even after revision, leaders' annual salary is nowhere near what the top earner in private sector got last year



MISGIVINGS over the robustness of the private-sector benchmark for ministers' pay have festered and yesterday, the minister overseeing the matter sought to dispel them.

Mr Teo Chee Hean responded to the charge that ministers' pay was pegged to the extremely high salaries of a few outliers in the 'rarefied' zone of the income curve, thereby guaranteeing them rich rewards.

It was not true, he said.

Producing a graph that plotted the annual income of the top 1,000 earners among Singaporeans, permanent residents and Malaysians working here last year, he pointed out that neither the Prime Minister nor individual ministers' pay was on the steep part of the curve where salaries rose at an exponential rate.

Even after the pay increases announced on Monday, a minister's revised annual salary of $1.6 million, and the Prime Minister's revised pay of $3.1 million, were nowhere near the $18 million that the No. 1 earner took home last year.

Mr Teo said: 'We are not on the sharp part of the curve...where it shoots up very, very sharply. The benchmark indeed produces quite a stable result.'

Ministers' salaries are pegged at two-thirds the median income of the top 48 earners in six professions: lawyers, accountants, bankers, engineers and the top employees in multinational corporations and local manufacturers.

Mr Teo then turned to another criticism, that it was unfair that ministers continued to earn high salaries year in, year out, while private sector earners change top placings each year.

Not so, he said, as he produced tables to show that the incomes of the top private-sector earners were nowhere near as volatile as widely perceived.

Out of the 48 earners, an average of close to 40 per cent stayed at the top of the earnings game from one year to the next, in the six years from 2000 to 2006.

When narrowed down to just two professions, lawyers and accountants, about two-thirds stayed among the top eight in their category.

Mr Teo revealed these figures in Parliament after two days of debate on the latest pay hikes for top government officials.

While most of the 24 Members of Parliament who spoke on Monday and yesterday supported paying them competitive salaries, several objected to the benchmarking formula.

A number said it was 'unfair' as the top private-sector earners were likely to change each year as their incomes fluctuated, whereas ministers received their benchmark salaries without fail each year.

Mr Teo felt the 40-per-cent dwell rate - a term to refer to those who stay put in the league - was 'not unreasonable'.

He noted that if the same individuals stayed on the list every year, there would then be questions why it was that only these 48 who could earn such high incomes.

In any event, he added: 'We're not benchmarking against specific individuals. What we're benchmarking against is the typical salary that persons holding these types of jobs and holding these types of responsibilities do earn.'

As the Government moved to close the gap between ministers' salaries and the private-sector benchmarks to which they are pegged, Mr Teo said it would also relook how pensions could be factored into salaries during future adjustments.

The minister also took to task opposition MP for Hougang Low Thia Khiang for saying it was a waste of time to have a debate on ministers' salary revisions.

On the contrary, it showed that the Government was transparent in its dealings with the people, said the minister.

'We are even prepared to come forward...have it debated publicly, on a subject which can be as emotive and as personally discomforting as discussing salaries,' he said.

Labour chief Lim Swee Say also joined in the debate yesterday. He said it was vital to pay competitive salaries to ensure the leadership renewal that was key to Singapore's future success.

Prime Minister Lee Hsien Loong is expected to address the House when the debate resumes today.