Do away with variable bonuses in ministerial salaries

Singapore Democrats

How would you like to work one year and get paid three years’ wages? If you were to suggest that to your employer, your boss would either end up in a laughing fit (and thereafter throw you out of the building).

And yet, this is what the PAP ministers are paying themselves. In 2011, ministerial salaries ended up with bonus of an incredible 24 months. How did this come about?

There are two main features of the ministers’ pay: Fixed components and variable components. The latter category comprises of two major bonuses – the GDP Bonus and the Performance Bonus which can be up to 14 months.

Earlier this year before the GE, SDP Assistant Secretary-General John Tan took an in-depth look at the pay structure of ministers and found that ministers were paid approximately two years of bonuses (see here).

The Singapore Democrats have in our ministerial review paper Ethical Salaries for a Public Centred Government stated the these two bonuses should be done away with. Here’s why:

GDP Bonus (GB)

There is a misconception that the GDP measures how rich Singaporeans are and that an increase in the GDP in any one year indicates that Singaporeans are better off. This is completely false.

All the GDP measures is the amount of economic activity that took place in the year. Not all this activity is healthy for society or benefits the population equally. For example a company that pays handsome bonuses to its directors while dishing out painful retrenchment benefits to its workers is increasing the GDP in both exercises.

In Singapore, the GDP has risen dramatically because of the gigantic increases in foreign workers flooding the country. However, the increase has caused the suppression of wages among Singaporeans. In this scenario. how has the increase in GDP helped Singaporeans?

By paying themselves a GB, the ministers can make policy that causes the GDP to go up at the expense of the people. The immigration is a prime example.

Performance Bonus (PB)

Ministers are also paid a bonus based on their “performance”. How such performance is defined or measured is not publicly stated. The number of months of PB a minister receives is determined solely by the prime minister. Worse, it is kept secret.

Are all mnisters at the same level paid the same numbers of months of PB? Or does the prime minister have the power to reward different ministers with different amounts of the bonus. If it is latter, such a form of reward could be open to abuse. Could a minister who performs terribly still be rewarded handsomely if the prime minister defines loyalty as a measure of good performance?

Such opacity has no place in the modern, public-sector world. To ensure transparency and avoid the potential for abuse, the SDP’s paper recommends that such variable bonuses be abolished and the ministers be paid a fixed salary pegged to the poorest segment of our society.

Under our recommendation the prime minister would be paid $56,000 per month and a minister $42,000.

These are more than fair wages for the ministers and one would think that the ministers would, if they are genuinely concerned about the people’s anger, accept the SDP’s recommendations.

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