But PM Lee says he's open to refinements in benchmarks if necessary

Apr 12, 2007
AsiaOne

Prime Minister Lee Hsien Loong asks himself two questions when considering the reality of ministerial salaries: if there are really 206 private sector jobs that are more important than that of a minister, and how the benchmark salary compares against what the highest earners in top listed companies take home.

The former refers to the 'MR4' benchmark salary for ministers and top civil servants being ranked 206th among 1,000 top earners in 1999, which moved up to 201st last year.

Said Mr Lee, 'Are there 206 job in the private sector which are more important than being a minister and being a senior permanent secretary? Fifty maybe, 100 possibly, 200? I don't believe so.'

Comparing the median pay of $1.75 million a year for the top corporate earners to the $2.2 million that ministers receive, Mr Lee said: "I think we passed the sanity check."

This stems from the reasoning that an executive drawing that salary would be in charge of a company that was worth about $4 billion to $5 billion on the stock market - much smaller than the size of Singapore Inc.

"If Singapore Inc were a listed company, what would its market capitalisation be? Think about it... My GDP, which is the profit earned in a year by Singapore Inc, is $210 billion," said Mr Lee.

"The average price earnings ratio on the Singapore Exchange is now 20. So if I calculated a market capitalisation - if Singapore Inc went for IPO - this is a $4 trillion company."

In these terms, even Singapore's largest company in terms of market capitalisation - SingTel at $50 billion - is comparatively small. Said Mr Lee: "We are well within the right ball park for what these jobs are worth as ministers."

Mr Lee said that he was open to refining the benchmark if necessary, but any changes would be done incrementally. He also answered some of the many suggestions voiced by MPs thus far.

An idea suggested in a letter to The Straits Times said that ministers' pay should be benchmarked to that of their previous professions, with the example of Dr Lee Boon Yang who was trained as a veterinarian.

Said Mr Lee: "'But Dr Lee Boon Yang is not just a vet... He proved himself each step, steady, had judgment, can size up people, can get good people to work for him and get things done. So such a person can do many things whatever his original training.'

Mr Lee noted that other countries face similar problems over the pay of political leaders. However, "it's not true that low pay works better for them," he said. "The reality is that they can't muster the political consensus to pay more realistic salaries because the politicians are in low standing, the public will not support it."

Citing the United States as an example, the PM said it established a market-based framework in 1989 to adjust government salaries annually based on increases in private sector wages. However, the US Congress never carried out the yearly adjustments for fear of a public backlash. 'So now the whole system is stuck,' said Mr Lee.

A suggestion raised by MPs that an independent pay commission be set up to decide on public sector salaries was addressed by Mr Lee.

"I don't believe this will settle the matter because whatever the commission recommends, finally the responsibility comes back to the political leadership. The buck stops here," he said.

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