Wednesday, April 25, 2007

Arguments for and against the pay hikes

This is work in progress and not even a beta version. The issue is complex and there are many arguments to examine. I have put up the outline/incomplete draft so that the readers can know what to expect (roughly) of the final version.


The government recently announced its decision to increase the pay of civil servants after conducting a major review of its wage system for the entire civil service. The decision to increase the already high pay of senior civil servants and ministers has caused an uproar in Singapore, especially with the pay hike coming so soon after the decision to impose the 2 percent GST hike. Evidently, most Singaporeans are against the pay hike for ministers and senior civil servants. Many Singaporean bloggers have railed against the pay hike, presenting a myriad of arguments against the pay hike. The objections are many and you can find some of the more prominent ones here, here, here and here. It is clearly evident that the popular opinion is against the pay hike.

The purpose of this post is to examine some of the arguments for and against the pay hike.

Arguments for the pay hike

1. Part of general salary review/revision in the civil service (which includes firemen, teachers, clerks, engineers, lawyers, etc). Big lag between current salaries and benchmark for ministers and senior civil servants.
2. Benchmark was decided in 1994. Why dispute it 13 years later?
3. Need decrease attrition rate. Private sector has become relatively more attractive.
4. Cost of ministerial pay hike is insignificant to the size of the government budget/GDP.
5. Composition of public sector salary has been changed with more MVC. Pay is linked with performance.
6. Public sector in Singapore has to take a more pro-active role compared to other countries. Hence, constant need to attract talents.
7. Having public sector talents is important to Singapore's survival or else our women will become maids in other countries.
8. Cannot have revolving door government. Need for experienced leaders.
9. It's tough being a minister - they deserve their high salaries.

Arguments against the pay hike

1. Bad timing given the recent GST hike. Ministerial salaries are always an unpopular issue. Costs too much political capital in light of the widerning income gap.
2. Unnecessary given that the pay of ministers and senior civil servants are already so high. Too high according to some. Issue of greed.
3. Hike does not address issue why young Administrative Officers (AO) are leaving public service. No clear proof that people are leaving because of low pay.
4. Main beneficiaries are ministers and senior civil servants on and above the MR4 level. Almost everyone else only see modest increase in pay.
5. Not evident that ministers and senior civil servants are worth their salaries or being properly scrutinised or assessed. Insufficient checks and balances. Ministers may not get so much in the private sector.
6. Reduces moral authority of our political leaders. Political leaders are expected to do their 'national service' by bearing some financial sacrifice..
7. Why should public sector salaries be indexed to private sector salaries?
8. No good KPI's. Salaries should be benchmarked to something else, e.g. GDP growth or GDP.
9. Civil service salaries should not be conflated with those of political leaders.
10. MR4 benchmark is wrong/unfair since it is only linked to top earners.
11. Other countries pay their leaders much much less. Why can't we do the same with ours especially since they are much bigger?
12. Before 1994, we had ministers and senior civil servants who earned much less and did a good job. Why should we have the benchmark? Civil servants =/= CFO's, CEO's, lawyers, doctors, accountants, etc.

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