Variable part of their salary to go up from a third to nearly half

Apr 10, 2007
AsiaOne

A larger proportion of the government ministers' new wage packages will be linked to their performance.

Almost half of their salaries will be based on two variable components: performance on the job and how well the economy fares. This variable portion has risen from 34 per cent or one-third previously.

The pay package of ministers and senior civil servants at the grade known as MR4 and above will be restructured, Mr Teo Chee Hean, the minister-in-charge of the civil service said in Parliament yesterday.

He also said that the salary components that are no longer relevant will be removed and those portions linked to performance will be increased.

There are three core changes.

Firstly, the car allowance - a legacy from when the civil service ceased to provide senior officials with an official car, and substituted with an amount that was 2 1/2 times their monthly pay - is gone.

The allowance will be replaced with increases in the GDP (gross domestic product) and performance bonuses - which make up 20 per cent and 27 per cent of salaries respectively.

The GDP bonus is dependent on how well the economy fares.

Mr Teo explained that ultimately, "every senior civil servant and appointment holder plays a role in ensuring that Singapore continues to thrive and prosper".

Presently, the normal bonus payout is two months if the economy grows by 5 per cent but this will increase to three months.

However, if GDP growth reaches 10 per cent or more, they will only receive a maximum of eight months.

This is an increase from the maximum of four months previously if the economy expanded by 8 per cent or more.

It still remains the same that if the economy grows by 2 per cent or less, there will be no GDP bonus.

The performance bonus will be increased by two months, to a norm of seven months.

Mr Teo said that a quater of minister's salaries will be based on their performance and how much a minister receives will be decided by the Prime Minister.

The only exceptions are the President, the Prime Minister himself, and the judiciary and statutory appointment holders who receive a fixed service bonus. This will be increased from five to seven months.

Mr Teo added that these changes affect all appointment holders, the Administrative Service, and senior officers in all ministries and statutory boards.

Presently, salaries at the MR4 grade are at $1.2 million, the same as it was in 2001.

According to the benchmark against salaries of top jobs in the private sector, this is 55 per cent of what they should be earning.

However, since the gap is too big, Mr Teo said that "it is not realistic to close the gap fully in one go".

Thus, it will take place in two steps: to 77 per cent of the benchmark by the end of this year and then to 88 per cent by end of next year.

This will be started off with an increase of 33 per cent of their annual salaries - from $1.2 million to $1.6 million.

When asked about the move, Mr Teo responded that it was because those considering a political career were enjoying good prospects in the private sector.

"Some of those in their late 30s or 40s are at or near the top jobs in their companies or field of work," he said.

He also pointed out that the Govenment's philosophy was to pay competitive salaries to facilitate the recruitment and retention of talent needed for the government and public sector.

To carry this out, it had to benchmark salaries against similar jobs in the private sector, added Mr Teo.

He also understands that there is no perfect way to carry out such benchmarking.

However, he noted that the methodology for establishing the two market benchmarks in use, SR9 and MR4, had been set out in a 1994 White Paper on Competitive salaries for Competent and Honest Government.

"The White Paper was thoroughly debated in this House," he said.

Mr Teo also pointed out that in 2001, the Government had reviewed and made relevant changes to the benchmark for ministers' salaries to make it more robust.

The change came in the form of expanding the base of top private sector earners against which ministers' pay was pegged, from the top 24 earners in six specially chosen professions, to the top 48.

Instead of being set at the average, the benchmark was set at the median and stock option gains reduced by 50 per cent.

Mr Teo said that before this round of salary revisions, the Government studied the benchmarks once again.

'We have looked at the benchmarks again, and have found that they remain sound. They follow economic and employment market conditions up and down.'

In addition, the benchmark was checked against the incomes of top private sector earners and deemed to be stable with no wide fluctuations.

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