Apr 11, 2007
AsiaOne

The formula for calculating the salaries of ministers and top civil servants has been described by MPs as being "too narrow and skewed".

Currently, the formula pegs salaries at two-thirds the median income of the top eight earners in six areas: accounting, law, banking, engineering, multinational companies and local manufacturing.

But Nominated MP Loo Choon Yong said "the top eight are actually extreme outliers".

"They actually constitute the top 0.04 per cent of accountants, top 0.12 per cent of engineers and top 0.24 per cent of lawyers," said Dr Loo, adding that compensation experts advise firms that chief executives should be paid what the top 25 per cent of people with the same responsibility in the industry get.

MP Hri Kumar (Bishan-Toa Payoh GRC), a lawyer, said the formula is "not a reflection of what the market pays a successful professional".

Citing the legal profession as an example, Mr Kumar said the difference in salary between the top and eighth-highest earners was $1.2 million. Today, the difference may be more than $5 million.

He also said the earnings of the top 48 are "not really salaries", since these people are likely to be senior partners or sole proprietors and their income represents a return on their risk and enterprise.

Dr Loo suggested that it would be fairer to benchmark ministerial pay to the median salary of what the top 5 per cent gets in the six professions. The one-third discount can be removed as the salary thus derived may be lower than it is now.

"Such a benchmark should be more acceptable to the public," said Dr Loo.

Also questioning the usefulness of the current formula was Mr Sin Boon Ann (Tampines GRC), who asked if it has achieved its goal of attracting talent from the private sector.

He said that only one minister in the current Cabinet, Transport Minister Raymond Lim, came from the banking sector. Mr Sin added that there is no evidence that pegging the minister's salary will bring more people into public service.

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