What’s in a Pay Cut?

Singapore Leaders Cut Pay, But Win Few Hearts

Singapore leaders may be slashing sizeable chunks off their world-beating salaries, but it appears they aren’t winning the hearts of the many critics who want their government to do more to honor its promises of change.

The ruling People’s Action Party this week accepted proposals to slash ministers’ million-dollar wages by about 30% annually from 2010 levels, hoping to placate residents who accuse Singapore’s longtime political masters of shortchanging taxpayers on the quality of governance – especially in the face of a widening gap between rich and poor, rising living costs, and immigration pressures in the city-state.

But the move, the latest in a series of PAP remedies aimed at recouping support lost in a bruising general election last May, has attracted more brickbats than plaudits so far. Many citizens have expressed reservations, even derision, about the depth of Prime Minister Lee Hsien Loong’s reform pledges, saying the PAP hasn’t departed from its philosophy of elite governance, in which it emphasizes paying top dollar for top talent.

Opposition parties led the rhetorical assault. The Reform Party pulled no punches, saying the government “may be in danger of scoring an own goal,” as the proposed pay structure still offers “obscene” wages and could “entrench the public view of ministers as overpaid and the PAP leadership as an uncaring elite, out of touch with the needs of the majority of Singaporeans.”

After the cuts, Prime Minister Lee would get about US$1.7 million a year – about 40 times Singapore’s gross domestic product per capita in real terms. U.S. President Barack Obama earns US$400,000 a year, less than nine times his country’s GDP per capita in real terms.

Observers also criticized the government’s approach to reviewing political salaries for being too narrow in scope. By asking how ministerial salaries can be more appropriately linked to corporate pay, instead of formulating a remuneration policy that can win citizens’ support by framing public service as a calling, the government was seeking “technical” answers to a “political” question, former nominated lawmaker Siew Kum Hong wrote in his blog.

Singapore officials have defended the salaries as a way to attract strong candidates and deter graft.

Some residents fear that since ministers’ salaries are still being pegged to incomes of Singapore’s richest – the new benchmark being the median income of the 1,000 top-earning citizens, with a 40% discount applied – the pay system could incentivize policy-making that widens an already yawning income gap, even though attempts were made to link ministers’ bonuses to improvements to the well-being of lower-income citizens.

Local bloggers too joined the chorus of unconvinced voices, mocking the cuts as gratuitous gestures that still preserve the place of Singapore leaders among the world’s best-paid politicians.

“With the proposed ministerial pay cuts, our leaders have gone from obscenely well-paid to damn well-paid,” said Singapore’s most-read blogger, known as “Mr. Brown.”

Singapore began pegging ministers’ pay to incomes of top corporate earners in 1994, on the insistence of former Prime Minister Lee Kuan Yew, who believed the policy would draw the best and brightest into politics and cut risks of government corruption. Many supporters of the policy – including some foreign investors – believe it has played a key role in promoting a clean and efficient government, especially compared to many other Asian nations. Transparency International consistently ranks Singapore as one of the least-corrupt nations in the world.

Some PAP politicians have warned against further pay cuts, including junior minister Grace Fu, who said on her Facebook page: “It may not be wise to call for the tradeoffs to be tilted further to an extent that it dissuades good people from coming forward in future.” But her views, following earlier comments on her decision to join politics, drew hundreds of critical responses; some alleged her views betray ignorance of the concerns of lower-income Singaporeans, and show that the PAP hasn’t truly embraced calls for change.

Such public shows of discontent, analysts say, stem mostly from widening perceptions of subpar governance by the party, and a push for greater political accountability here, rather than the baser impulse of envy.

“Singaporeans didn’t express huge objections to the salaries, which have been around for about twenty years,” said Manu Bhaskaran, an academic at the Lee Kuan Yew School of Public Policy. “One suspects that the real issue is not high salaries per se, which practical-minded Singaporeans didn’t begrudge for so long, but issues related to the delivery of the ‘goods’ Singaporeans desired,” Mr. Bhaskaran added.

Chun Han Wong and Shibani Mahtani of the Wall Street Journal (link here)

What are your own thoughts on the proposed pay cuts? Are the opposition and the wider populace too demanding or has the technocratic leadership already sacrificed enough?  

Why do you think Singaporenas are seemingly so obsessed with its reform? What does it say about Singaporean society?

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