WP Low Thia Kiang made a speech in the 2007 Parliamentary debate
on the "Civil Servant's wage increase" that remains relevant to
this date:-
‘Parliamentary Speech’
9
April 2007
By Low Thia Khiang
Speaker Sir, When this topic on market benchmarking of
ministerial and civil service salaries against the top private
sector earners was first debated in Parliament in 1994, I spoke
against it.
13 years after Parliament agreed to the salary benchmarks, the
debate continues over whether ministers are being paid too much.
The issues I spoke on at the debate remain relevant to date. This
is blatant evidence that the public, like me, was not and is not
convinced that the salary benchmark is fair and just! I see no
point in wasting public resources debating on this salary issue
every few years if the sole purpose of having this supposedly
“debate” is just to pacify the people that the government has given
it fair thought before approving the high salaries.
While the government can claim to have secured the mandate of the
people at the recent election last year and therefore has the right
to pay itself based on the terms the government deem most suitable,
I wish to remind the government that I do not think Singaporeans
have given the government a blank cheque.
Given the public disquiet and debate outside this house after the
intended salary revision was announced, the government should
seriously consider setting up a panel for public consultation and
coming up with a remuneration formula for the public service that
can be adhered to, is practical, and deemed reasonable by the
public.
Many people are not convinced of the rationale of benchmarking the
current salaries for the Administrative Service, including the
Ministers, against the top earners in the private sector.
One concern is that it is volatile - this is inevitable when the
variable component of private sector wages such as bonuses and
stock option gains are taken into account in the setting of annual
wages. In addition, the benchmark not only considers the earnings
of Singaporeans, but also those of Malaysians and Permanent
Residents.
While most of the individuals in the benchmark change every year,
the level of wages taken into consideration will most likely
increase over the years. This is largely due to two factors.
Firstly, a larger income gap due to globalization will result in
more outliers earning very high incomes. Secondly, the embrace of
foreign talents in Singapore will result in a greater pool of high
wage earners that will qualify under the benchmark criteria,
alongside potentially increased wages. Even if the government takes
an average from the range within the benchmark, it may not be
representative of the general trend of income earned by
Singaporeans. In a worse scenario, such a benchmark may even
encourage money-minded civil servants to focus on policies that
ensure the existence of a pool of top earners that satisfy the
benchmark criteria.
Apart from the potential embarrassment from an escalating benchmark
that is headed for alarmingly high levels, it is also highly
ludicrous that senior civil servants are consistently one of the
highest paid in the workforce. Remuneration in the private sector
is volatile and employees are subject to stringent performance
reviews. For instance, stock option gains are possible only when
the individual made a correct investment decision. More often than
not, such individuals have also helped to improve the value of the
company. However, human beings do not always make the right
decisions throughout their entire life. By benchmarking civil
servants’ annual pay against individuals who have performed well
during that year, there is an implicit assumption that civil
servants and Ministers never make incorrect decisions - but are
they truly super human beings forever error-free?
In addition, is there any job in the private sector that can
guarantee that an employee will always be amongst the highest paid
in that sector regardless of the performance of that employee?
There is much less job security in the private sector, and even top
performers face continual and fierce competition.
Civil servants have an advantage as they are shielded from
competition by foreign talent. Ministers, too, are guaranteed at
least 5 years of job security from one election to the next.
Moreover, for the ruling party, there is also the flexibility of
changing election rules in their favor to significantly increase
job security for their Ministers. After all, didn’t SM Goh and MM
Lee previously admit that the GRC enables them to bring in
Ministerial material?
It is also ironic that we are consuming taxpayers’ money and
resources discussing how much more of a fraction of a million to
pay civil servants and Ministers, while we haggle over additional
tens of dollars to hand out to our needy and disadvantaged
citizens.
According to a 2005 report by the Department of Economic and Social
Affairs, United Nations, the Singapore civil service has some of
the highest paid civil servants in the world. Our government holds
the view that this will ensure a clean, competent and effective
civil service. However, the facts show that other countries with
lower paid civil servants are also able to enjoy such
qualities.
Based on the Corruption Perceptions Index (CPI) and Global
Competitiveness Index (GPI), Singapore ranks below Finland and
Denmark for 2005 and 2006. However, the governing of a country
should not only take into account these 2 factors. A more important
factor that directly affects the lives of every Singaporean living
here is the quality of life. A survey that evaluates 39 quality of
living criteria, including political, social, economic and
environmental factors, personal safety and health, education,
transport and other public services, found in 2006 that Swiss
cities have topped the annual survey again, while Singapore, with
its highly paid and thus highly competent and clean government,
ranked best only among Asian cities but was 34th in the world (ST 2
April 2007).
Based on the above facts, it would be interesting to know how much
the civil servants are paid in countries such as Denmark, Finland
and Switzerland, just to name a few. According to a United Nations
report, the Switzerland Federal Office of Personnel revealed that
the basic remuneration of civil servants range from 55,000 Swiss
Franc to 321,000 Swiss Franc in 2006, which based on an exchange
rate of 1.25, is about S$69,000 to S$402,000. Good performers
receive merit increments of up to 6%, while worst-performing staff
may get a decrease in salary. Although bonuses can reach 12% of
salary for outstanding performance, and residence and overtime
allowances are paid, it still seems that the highest paid Swiss
civil servants receive a lower salary than what Singapore civil
servants and Ministers receive. (Note: they have neither a prime
minister nor a president)
To cite another example, a 2006 United Nations report listed that
the lowest monthly civil service salaries in Finland are 1,200
euros, while the average is 2,600 euros for all wage earners. Even
if the purchasing power parity is taken into account, it is highly
likely that our civil servants here have a much better deal. Based
on such evidence, we believe that there is no need for enormously
large salaries to attract and retain the right talent to run a
country in an efficient and corrupt-free manner.
The Workers’ Party is of the view that the government should
consider modifying the current benchmarks in place of a more
equitable and sustainable one. We suggest that the benchmark should
take into account international practices. In particular, countries
that could be taken into consideration will be those just cited
such as Switzerland, Denmark and Finland.
Denmark, like Singapore, employs a pay adjustment scheme to ensure
that the pay of state employees in general and over a long period
of time develops in parallel with the wages and salaries in the
private sector. For the Danish, their pay adjustment scheme
automatically adjusts the central government pay development to the
private sector pay development, but subject to a certain time
lag.
Hong Kong also tried to maintain their civil service pay level with
the private sector, but they only maintain the “broad
comparability” and not any explicit link. Unlike Singapore, they
all do not have a sure-win formula that ensures civil servants
always have the best deal by benchmarking specifically to the top
few earners.
While we accept that Basic salaries may be benchmarked broadly with
the private sector in line with international best practice, we
believe that Performance Pay should also be introduced to establish
a visible correlation between performance and pay. Currently, the
civil service has no financial bottom line in ensuring good
outcomes, although part of the senior officers’ salaries is linked
to GDP growth. (Defence Minister Teo Chee Hean - ST 3 March
2007)
Sir, whilst it is necessary to link a percentage of salaries to
performance, it is also imperative to provide a performance regime
whereby it is possible to discriminate performers from
non-performers or under-performers, and to reward them accordingly.
In this respect, I welcome the adjustments in civil service pay
structure just announced by the minister. A performance-related pay
system requires a comprehensive and objective system of
measurement. In particular, performance appraisals have to be more
vigorous and transparent to the public - something that the public
can identify with. Variable bonuses should only be given to
involved civil servants and ministers if the key performance
indicators (KPIs) of the respective ministries have been met.
We recommend having different KPIs for different ministries from
time to time so that Ministers and civil servants can concentrate
their efforts in deriving the right policies for Singapore in their
respective areas. For instance, some possible KPIs that the
government can consider adopting at this point in time are:
By linking variable bonuses to clear and objective KPIs, the
government can concentrate on making the right policies for
Singapore rather than spending valuable resources and time tracking
how much the private sector’s top earners have made each year and
how the government should therefore be paid. Such objective
short-term goals also track the success and ensure that long-term
policies can be gradually attained. In addition, this system will
ensure that public officers are both accountable and responsible
for the outcome of their formulated policies, and keep the
government transparent to the public in terms of its achievements,
capability and accountability.
Sir, I would now like to move on to the issue of recruiting and
retaining talent within the Civil Service.
MM Lee said that it is not possible to hire a foreign talent to run
this country because political leaders must have the passion, the
commitment and must share the dreams of the people (ST 4 November
2006).
Likewise, such qualities are essential in each and every one of our
civil servants. Not everyone is cut out for a career in the civil
service, and the loss of able people who lack such qualities is not
a loss for our country. In fact, I believe that civil servants with
such qualities will never be induced by the attractions of a
private career and a private life no matter how great the financial
rewards offered by the private sector. More importantly, it is
common knowledge that the senior civil servants and Ministers in
Singapore are hardly paid peanuts.
Although statistics show that officers aged between 28 and 33 made
up more than 80% of resignations in the past 5 years, it is not
unexpected that officers will review their options when the
scholarship bonds end, the alarmingly high percentage speaks of a
bigger problem - that scholarships funded out of taxpayers monies
did not attract the right mix of people. According to one such
ex-civil servant, the Admin Service was not the best fit for him
(ST 31 March 2007). In fact, some who left say they were drawn by
the different challenges and new experiences, more so than by the
money. The earlier the government comes to terms with this, the
better for the people of Singapore.
If the original intention for the scholarship holders to serve as
civil servants is not met and the government continues to invest
more resources in the same process in the hope for a reverse trend,
the government could be wasting precious resources for the wrong
reason and expectation. In view of the above, I think more effort
should be made to explore other recruitment and screening methods
to attract and retain the right fit.
Sir, we agree that public servants should not be expected to make
unreasonable financial sacrifices to be in the public sector.
However, neither should they be seen being paid unreasonable wages
for their contributions. According to the Department of Statistics,
the bottom- and top-ten decile of employed households registered an
average monthly income of $300 and $6,990 respectively in 2006.
Given such statistics, the argument that civil servants make
unreasonable financial sacrifices is not convincing.
Even in the private sector, no organization can afford to keep
paying increasingly higher salaries just to retain and attract top
performers since resources are inevitably limited. Moreover, in the
case of public service, we need a different breed of people to come
forward to serve; there is simply no point in offering high
remuneration just to entice people to serve if what they are
interested in is to make more and more money for himself and his
family in pursuit of material interests in life. Sir, don’t forget
that even if you don’t pay peanuts but pay with a bigger piece, say
a banana instead, you can still get a monkey.
In conclusion, sir, the real issue is how to find the right leaders
to run Singapore and to ensure that Singapore continues to succeed.
Benchmarking the civil service and Ministers salary to the crème
the private sector income earners who may or may not be at the same
top all the time is controversial and distracting.
I would like to end this speech by quoting what Chua Lee Hoong said
in the Straits Times that (ST 31 March 2007) “How much they are
paid is secondary. Pay them well, but don’t let pay drive the
search for leaders.” 
