The adjustments will take effect from this month, with a second revision at year's end

April 9, 2007
AsiaOne

Singapore's government ministers will see their annual salaries go up by about 60 per cent by the end of 2008, while civil servants will have their pay raised by between 14 per cent and 33 per cent from this month in a major move to narrow the growing wage gap between the public and private sectors.

Announcing the widely-awaited and debated pay rise, Mr Teo Chee Hean, Minister in charge of Civil Service, said the salary adjustment will be in two steps - one now and another at the end of this year. The last adjustment was in 2000.

The first raise for ministers and senior permanent secretaries will kick in this month, with their pay going up from the current $1.2 million to $1.6 million a year, a 32.5 per cent jump. By end of 2008, it will rise by another 7.5 per cent to reach 40 per cent which is 88 per cent of the benchmark, or $1.9 million.

Under the revision, Prime Minister Lee Hsien Loong's pay will go up from $2.5 million to $3.1 million year, while that for President S.R. Nathan will be raised from $2.55 million to $3.187 million.

Mr Teo, who is also the Defence Minister, said these are benchmarked at two-thirds of the median salary among the top eight earners in six professions - bankers, lawyers, accountants, engineeers, employees of MNCs and local manufacturers.

All civil service officers will each get a basic payment amounting to 3 to 5 per cent increase in the annual salaries. This payment will be performance-based and will be in the range of 0.5 – 0.75 months. Good performers will receive up to 0.5 month while better performers will receive up to 0.75 month.

Fresh graduates with honours degrees will also get a starting pay of 10 per cents more in June, and the monthly allowance for Members of Parliament will be raised from the current $11,900 to $13,200. The GDP Bonus will also be extended to MPs, to link their annual package to the state of the economy.

The salary adjustments will push the government's wage bill by $214 million, or a 4.7 per cent increase, with that for political appointments holders going up by $10.5 million to $56 million.

Presenting his arguments for a pay revision, Mr Teo said the objective is to keep the civil service salary scheme competitive with that of the private sector.

He said the attrition rate in the government service has been rising and "we need to act before the situation becomes more serious."

"The Civil Service is experiencing the effects of the tightening labour market. Our overall resignation rate has increased from 4.8 per cent in 2005 to 5.7 per cent in 2006," he told the House.

"We are losing our lawyers, accountants and management executives. The resignation rate of the Management Executive Scheme, which employs graduate officers across the ministries, was 10.6 per cent, up from 7.4 per cent in 2005," he told the House.

"At some of our entry grades, the situation is quite serious, with resignation rates as high as 25 per cent. Members of the House would also have read from the newspapers that for our Home Team, there has been a 40 per cent increase in the resignation of junior officers in January and February this year, compared to the same period last year.

"The Government, as an employer, has to respond quickly and decisively to stay competitive and close the wage gaps. Otherwise, we will deplete the service of the able people we need, and the service level to the public will be affected. "

Stressing the need to pay competitive salaries, Mr Teo said that for the public service to remain an attractive employer, the terms must keep pace with the private sector where salaries have been moving rapidly, especially in the last two years.

"That is why our policy is to pay public officers competitive salaries, salaries that are commensurate with private sector earnings. We do not seek to lead the market, but to keep pace with it," he said.

He also pointed out that attracting and retaining able people to build a team, especially those who have the potential to take up top leadership positions in the public service is becoming more difficult.

"The competition for talent is not just within Singapore. Our people are being talent-hunted to work in Hong Kong, China or Vietnam and the Middle East. In February this year, a group of public officers attending one of the Civil Service College’s leadership training programmes, made a study trip to Dubai," he said.

"At a networking dinner, they met a fellow Singaporean who had been headhunted to take up a very senior position in a Dubai company. He told our officials that his chairman is very impressed with Singapore and the ability of Singaporeans. So, he promised his chairman that every time he is back in Singapore, he will speak with 2 to 3 Singaporeans to interest them in working for his company. I do not know how often he comes home, but we should be worried. "

Mr Teo pointed out that the civil service needs to have good people, with the right values and passion for public service - well-led, well-trained and well-motivated.

"We need good people and leaders to helm our various services – principals for our schools, commanders of our police divisions, managers of our various line departments and customer touch points. We also need the support of our rank and file officers who quietly do good work behind the scenes, or courteously at the counters, helping to implement and execute policies well," he said.

"To bring it all together, to provide vision and coherence, and set the tone and direction, we also need exceptional public service leadership. This means having strong and capable leaders who can anticipate challenges and change, take a long term strategic view, tackle the complex issues, and yet at the same time come up with workable solutions that are needed now.

"We need leaders who can energise, organise and galvanise the Public Service to move the agenda forward and ensure that implementation accords with intent."

The pay revision will not be across-the-board but will be adjusted according to the needs of the individual schemes and linked to performance.

He said that where the salaries are severely lagging the market, and there are high attrition rates, larger adjustments will be made.

Mr Teo added that the revision is to bring salary structures more in line with the government's philosophy of linking pay to performance.

Many of the adjustments will not be in the monthly salaries but in the form of performance-related payment.

"Only those civil servants who have performed beyond the satisfactory level will receive this performance-based payment, with those performing very well receiving a higher amount," said the minister.

"These payments allow us to close wage gaps quickly this year. For subsequent years, these payments are likely to be incorporated to the performance bonus structure of the officers, if the market salary levels are sustained, so that those who are consistently good performers will continue to enjoy the higher salaries."

Mr Teo then referred to the book, "Singapore's Success - Engineering Economic Growth" , by Dr Henri Ghesquire, who has worked in the International Monetary Fund for over 27 years advising and observing many countries, and who served in Singapore in 2004 and 2005 as Director of the IMF-Singapore Regional Training Institute.

The author said of Singapore's economic development: “Singapore succeeded because its leadership was assiduous, highly intelligent in a practical way, determined to achieve shared prosperity, and committed to act with integrity. Leading with vision and fortitude is possible. Its benefits can be invaluable. This is Singapore’s ultimate lesson."

Mr Teo acknolwedged that financial rewards cannot and should not be the main motivation of those in the public service, and there are many intrinsic rewards that come from working in the public sector.

"However, that does not mean that we do not need to pay them market-competitive salaries. We don’t want pay to be the reason for people to join us. But we also don’t want pay to be the reason for them not to join us, or to leave after joining us," he added.

"Few countries have implemented our philosophy and practice of benchmarking and paying public officers salaries that are pegged to the market, but this system has worked for us.

"Competitive wages have helped us bring in and retain able men and women in government and in the public service in Singapore. This policy has served us well. We must maintain this competitive advantage – a clean, effective and efficient public service."

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