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The Case for Higher Salaries for Government Ministers

Posted by theonlinecitizen on March 23, 2007

EXTRACT OF SPEECH BY MR LEE KUAN YEW, THEN SENIOR MINISTER, TO THE NATIONAL TRADE UNION CONGRESS AT THE SINGAPORE CONFERENCE HALL ON 19 JULY 1996.

Ministers who deal with billions of dollars cannot be paid low salaries without risking a system malfunction. Low salaries will not attract able men who are or can be successful in their professions or business. Low salaries will draw in the hypocrites who sweet talk their way into power in the name of public services, but once in charge will show their true colour, and ruin the country. This has happened in many countries.

We need dedicated and committed Ministers, but we cannot require them in today’s social climate to sacrifice like a Mother Theresa. Sacrifice for country must be within a realistic setting of present. It is like our National Day Parade. In the 1960’s we gave the marchers soft drinks and cakes. Now they are fitted out in the best T-shirts, jeans, and jogging shoes. Ministers’ wives and children are normal human beings, who have normal aspirations like the wives and children of their husband’s peers. We have to recognize the different social climate after many years of prosperity.

In the last 15 years as our economic circumstances improved and social attitudes changed. I moved ministerial salaries towards the market salaries for top executives and professionals to keep up with the times. The challenge of survival in the early revolutionary years, when it was do or die, has passed. It was impractical to depend solely on the spirit of national service to get good men and women to serve in government.

If Ministers were just ordinary people with average capabilities, Singapore would have failed. High performance in any organization depends on top class leaders. Microsoft came up from scratch in less than 20 years to become a multi-billion dollar business because it had a great entrepreneur with a top rate mind in Bill Gates. Chrysler Motors would have gone bankrupt had they not found Iacocca, a great corporate leader, who rescued Chrysler and turned it around.

It is better to work for a company with a top quality CEO than a mediocre one. So it is safer to be in a country with top quality men and women in charge. But amazingly throughout most of the contemporary western world, leaders in government require no special training or qualification. Many get elected because they sound and look good on television. The results have been unhappy for their voters.

In Singapore we have made sure that before Ministers are put in charge of the government, they are first trained and tested. This has ensured Singapore’s continued success. The second generation leaders had been tested and had proved themselves before they took charge. They had proved they were able to analyse problems, plan solutions and implement them. They have imbibed the experience of the first generation leaders and learned from past mistakes. Running a government is more difficult than running a company, because a Minister needs to be able to run a Ministry and to persuade people to support tough policies. Ministers who cannot persuade people to support their policies must fail.

For the past several years I have been urging the Prime Minister, Goh Chok Tong, to change from fixed salaries to a formula which pegs and links the salaries of Ministers, judges and civil servants in government to the private sector, to pay them 2/3 of the salaries of the private sector top executives according to income tax returns.

Editors in SPH who are in touch with public opinion told me that the people accept the principle of pegging Ministers’ salaries to the top men in the private sector, but to many people the top salaries are too large. So I called for the Income Tax figures, minus the names, but giving the occupations. The figures show how much Singapore has grown and how big Singapore salaries and incomes have become.

Therefore the pay of civil servants, the permanent secretaries and their deputies, judges, government engineers, doctors, have to go up. The total sum paid to Ministers and Ministers of State is still small money, $23 million for 1996. Bear in mind that our GDP for 1995 was $121 billion. Real growth this year is expected to be 8%, making for a GDP of more than $130 billion. When I first became Prime Minister in 1959, our GDP was $2 billion. My colleagues and I made it grow to more than $130 billion. After discounting for inflation, this is an increase of 20 times in real terms.

No lawyer complains about the pay of judges, which is 2/3 of what good lawyers earned two years ago. The Chief Justice gets $1.4 million. A top lawyer makes more than $2.5 million. The Chief Justice does work of more importance, and of greater value to the country than the best lawyer in town. The Prime Minister does more important work than the Chief Justice. He should not be the Prime Minister if he is not capable of doing the job, and that goes for the other ministers. As Singapore prospers, especially at a time when the whole region is booming, private sector salaries are going up for top men.

The incomes of very successful Singaporeans, those with top professional skills, managerial ability, business acumen and drive, will rise much more. This group are the 5% to 10% of the population that are well trained, professionally qualified or resourceful. Not all Singaporeans can become entrepreneurs or professionals. But given the proper training and education, nearly all can become skilled technicians or workers. Although not doing as well as the entrepreneurs and top professionals, they too will be in demand in the global economy and will do well.

Pegging salary scales to the market means that when the market turns down during a recession, and the salaries of top men in the private sector go down, so will those of the Ministers, with a two-year time lag. And every year the Prime Minister has to make an appraisal of the work of his Ministers to decide the performance bonus. He has to judge their standard of work, he consults his inner team to cross check on the quality of their work. He has to monitor their work. It is quality control.

In the end, after all the arguments, you have to go by the person whose judgment you can trust. You know my judgment has been tested time and again in the last 37 years since 1959. I know Singapore as it was in 1950’s, and how it got from riots, disorder and heavy unemployment, to what it is today, stable and prosperous with full employment and high wages. I know what it needed to move Singapore ahead in the way it has progressed.

The crux of the problem is an emotional one. People in Singapore have got so accustomed in the last 30 years to Ministers being paid well below their private sector pay and having to sacrifice to take office, the thought that a Minister is paid 2/3 of the best 24 in the private sector arouses unhappiness, even envy.

I cannot solve these emotional reactions by argument. In my judgment, the long term consequences of continuing with the old system will be a lowering of the quality of people entering politics and taking office, and gradual but inevitable corruption that will creep in as mediocrities as Ministers exercise immense powers over our resources of $127 billion increasing at 8% every year.

They will end up with side benefits, as happens in nearly all countries in Asia. (Compare our MRT with Taiwan’s and Thailand’s)*

I have bucked and gone against popular sentiments and conventional wisdom on several major issues in the past and been proved right. For example I decided that individual accounts (CPF) for retirement was right and rejected the buffet or collective pension fund which has got the advanced countries into grave financial difficulties.

I have also instituted individual accounts for Medisave, plus insurance cover for Medishield against catastrophic illnesses. It has proved right as against the problems which free medical service like the National Health Service in Britain, France, Germany has brought them, or the open system of private insurance in America. (Lancet praised our Medisave)

What I did was against popular thinking in Singapore at the time, thinking which was influenced by what Britain and Europe were doing then. Time has proved me right.

Time will prove that I am right that Ministers should be paid 2/3 of their private sector counterparts’ salaries of two years ago. This is the way to ensure that our government and system stay clean and honest, with able and dedicated men, who can stay in office for several terms, and develop the judgment that comes with experience. You need Ministers who will work for the public benefit, without having to worry about their families, or worse put aside a private pension for them.

If salaries pegged to the market do not work, then not much will be lost, except a few million dollars. Singapore can always go back to the old system of paying Ministers much lower than the market rate, and hoping for the best. World-wide, this has been shown not to have drawn in the best into government.

The best in America become corporate chiefs, CEO’s of top corporations, each an empire. The same thing is happening in Europeand in Japan. In Asia, becoming ministers has become big business. Businessmen supported by racketeers and with large funds, get elected. Then they have to repay their friends with lucrative contracts and also recoup their expenditures. Seldom do they have the ability to run the economy. The results for the economy and for the people have been dismal. If in spite of market pegged salaries we get mediocrities in government, then Singapore can go back to mediocre wages for mediocre Ministers.

At a next election, the opposition can offer to be the government for onehalf or one-quarter of the price. But ask them to name their would be Prime Minister for Finance and minister for Defense. Singaporeans can then choose.

I have gone through many difficulties and crises and taken Singapore to where it is today. This pay is realistic and necessary to keep honest and able Ministers in office for several terms. This is the way to ensure that your properties will double in value in the next 10 years, with the main and interim upgrading programmes, with better infrastructure in an extended MRT, the North East line, with light rail systems in more new towns, with tunnels to allow more cars on the road, and ERP.

Good government will make your shares and stocks double and treble in numbers and in value. Your incomes will double in 10 years, and the Singapore dollar will increase in value and make your holidays and our imports cheaper. Our asset -enhancement programmes – Edusave, Share Ownership Top-ups (SOTUS), and HDB upgrading – have increased your security against future contingencies. On the contrary, a corrupt and incompetent government will destroy everything we have built in the last thirty-seven years. Everything will go down: the value of your Singapore dollar, the value of your properties, your stocks, your savings, your jobs, and your children’s future.

Please do not forget, we are not an ordinary country. Ordinary men cannot run Singapore. If my old guard colleagues were ordinary men, there would not be today’s Singapore. The key leaders in this present government are not ordinary men. The old guard had spent many years to select, train, test and prepare them for the job. And they have shown their ability to adapt and make the system work under changed conditions.

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34 Responses to “The Case for Higher Salaries for Government Ministers”

  1. 2 cents said

    if we get people who only take up the responsibility because they want to be paid a certain way, then, i think it is fair to conclude that these people are probably working more for money than for your total interests( these people possess the wrong kind of spirit – it is as simple as that). and when i say total, i mean all that you were meant to be not just about the superficialities that money can buy you. because, what can be bought, it can also enslave and exploit and you can’t be free to become the kind of people you meant to be – a mulitude of voices!

    i dont know about you, i have problem with people who tell me you can only get good people if you pay them right. that makes them very special,very exclusive and highly valuable isn’t ? wouldn’t that give them undue power over your lives too?

    next, surely the people understand that money chase can only be bad for society? if that’s true, why do we want to subscribe to that kind of philosophy?
    nope, we need to look for good people who do not believe in serving mammon. we need to look for people who will find a better way in motivating citizens towards living rewarding lives apart from monetary incentives or rewards.
    failing, the social divide will widen and the social economic costs will be high.

    lastly,if you are incorruptible, you are incorruptible with or without money. money never comes into the equation for such people so the spin by the veteran is just simply laughable.

  2. Young PAP said

    http://youngpapblog.blogspot.com/2007/03/bill-gatesgeorge-sorosmother-theresa.html

    24 March 2007
    Bill Gates+George Soros+Mother Theresa – How Much $$
    Posted by elaina olivia chong at 4:56 PM

    Money is the proverbial carrot. No matter how many people put themselves on the moral high ground, Money still talks for most others. If you want to get a job done you can’t do well yourself, pay some one well to do it well. If you want to get a job superbly well done, pay superbly more. Similarly, if we want Singapore to stay on the “Best Of” world list for a lot of things, we jolly well got to pay top dollar for the best people who can keep us right up there.

    I can’t see why some forumers in our local chatrooms are questioning Ministerial pay rises and pegging our Minister’s pay to those in other countries. Spore isn’t like many other economies like the States, Britain or even Hong Kong where their economies can still remain alive even if their politicians are not making the best decisions. Not only are these economies self sufficient, they have people resources – to the extent where Supply far Exceeds Demand for geniuses at the top.

    In many of these first world nations (whose Ministers’ pays have been “pegged” to ours), their economic engines are matured and almost self-piloting. These governments have inherited the fruits of their political forefathers and are now able to concentrate on improving the social and non-economic welfares of its peoples and say, spend time to build international relations with countries like us.

    This government put Singapore, a country with no resources, with no historical ties or allies to begin with, on the world map in less than half a century. But will this last forever?

    It takes more than a few good men to make a tiny red dot like Singapore a shining star it is today. Not an easy feat, and is not a task that every man on the street can do. Only the very best in the 4-5million we have, can.

    Everyday is a new challenge for Singapore to stay competitive and ahead of economies thousands of times our size. If Ministers at the top stop what their doing; or aren’t clever enough to devise policies to keep us ahead of the global league, our economy will crumble. There’s no two ways about it. Some one has got to do it and able to do it very well.

    Today, we have the PAP with a number of good men. Will we have the same people tomorrow and always? I’m not sure. I find it rather myopic and sadly presumptuous for so many of these forumers to assume that Singapore is forever going to be where it is, and that we will forever have exceptional geniuses willing to throw their lives to keep Singapore on its feet.

    How many of our capable Singaporeans are willing to turn away high paying expatriate positions overseas? And choose instead, to stay home in Singapore, hold arms to protect and ensure the economic comforts for our families and posterity?

    One of the ways and I’m not saying it is the only way, is to pay for them and pay them very well . To help keep them in Singapore, attract them into civil service or the PAP where they will join the “economic militia” and keep the Singapore flag flying high for a very long time

    The life of a Minister is not attractive. How many are willing to sacrifice every evening either at Meet the People Sessions, chairing Review Committees and carrying another baby in a HDB kopitiam even on precious weekends?

    A platoon with the acumen of Bill Gates, risk appetite of George Soros and the heart of Mother Theresa, I would think. And the compensation? Priceless. Haven’t we all heard this all too often, “Pay Peanuts Get Monkeys”.

    All that matters to me is for Singapore to stay ahead of the game becuase I choose to stay here. We sorely need more than a few Good Men to continue serving at the top so that our economy will continue its bull run. With a flourishing economy, Ministerial pay increments will pale in comparison to the prosperities and fortunes Singapore will be able to bring to its people. Because then, the man on their street will get his pay raise too.

  3. Joo Wohn said

    SDP cutting and pasting a YP article and posting it on a website run by WP member. A rare sight?

  4. peasantJUDGE said

    To Joo Wohn:
    Just curious – how do you know it’s SDP’s handiwork? Of course, it would be an unexpected surprise if it is indeed a fact…

  5. Hi YoungPAP,

    Thanks for visiting theonlinecitizen. Although we appreciate you leaving your comments, and we fully welcome it, would it be possible to not post an entire blog entry in the comment section?

    Alternatively, you could send us the article and we will see if we can publish it as an article on theonlinecitizen.

    We can be reached at theonlinecitizen@gmail.com

    We apologise for this request. We hope you understand.

    Thank you.

    Regards,
    theonlinecitizen.

  6. It’s all about the ideology, that drives this belief. The challenge is to neutralise the reach of this ideology and present an alternative narrative, because there will always be competing schools of thought.

    Just that, I do not believe, and neither convinced that rewarding civil servants with private sector perks and wage scales is equitable to actual talent staying put. Are there statistics to show this?

    What I fear is that this will only engender a value system that does not promote the values of public service first and foremost, but rather, equality of income. We’ve got enough economic flavour in the discourse, let’s not add on to it.

  7. Dear YoungPAP,

    Perhaps you’d like to read this blog entry by Die neue Welle who has replied to your blog post.

    Regards,
    theonlinecitizen

  8. I love PAP said

    Hey Elaina Olivia Chong is the Vice Chairperson of Young PAP Women committee ok!

    Dun play play.

    http://www.youngpap.org.sg/abt_ypw2.shtml

  9. louis said

    It’s time for the Ministers to justify their high salaries. Tell us what do they do everyday. Provide a glimpse of what they do. Meet the people sessions and gracing functions for a million dollars each month?!

    What difference have they made?

  10. That’s why I refuse to consider their justification for higher salaries as fair and reasonable. Our nation is small, her policies are not hard to filter downstream through the state apparatus. Our foreign policies are based on insitutionalised pragmatism.

    How hard can it be to run a Ministry in a nation smaller than New York State, and without the daily challenges faced by Rudy Guiliani or Michael Bloomberg? JPL rocketry? Please..

    Ideology has no place in the discourse of finance and fair remuneration.

  11. Not to mention that the reasons for using the private sector as a benchmark may cause offence to many Singaporeans who consider it a slap to be labelled by association, people who only produce results according to their paycheck.

    Not helping much in engendering vocational passion there, I’m afraid.

  12. […] pay hike, and I say this knowing that on the online world this bring flak, only one voice resonates both strongly and reasonably. I think that anyone who opposed the pay hike should read that article and look at the reasons […]

  13. shoestring said

    Not everyone is attracted soley by the money. That is why the government doesn’t seem to be able to keep their talents. Because those who are attracted solely by money will eventually go once they have a better deal elsewhere, which is the root of the problem. To keep these money-minded talents, we have to pay them more and more.

  14. Hi shoestring,

    It’s sort of like the bottomless pit – in reverse. There is no limit, it seems, to how much they are to be paid. Perhaps this is because we are constantly told that we are “uniquely singapore” and that our leaders somehow are also “unique”.

    Regards,
    theonlinecitizen

  15. shoestring said

    theonlinecitizen,

    Yes, looks like we are stuck with skyrocketing ministerial pay unless there is a paradigm shift in leadership thought. Our country needs to replace the upper echelons of money-minded individuals or risk being enslaved by their demands.

    One wonders, though, whether our leaders really want that shift. But then again, looking at the attitude of bond-breaking scholars and many of our bright youngsters, perhaps the government has unwittingly enslaved themselves (and us) with the system they have created.

  16. ZS said

    I don’t know what the arguments here are for… Do they serve any purpose? Does arguing in this virtual world change anything? Nope. Definitely not. The “people-at-the-top” will still get their pay increments.

    So, what’s practical?? Think about what happens every 5 years…

  17. Noah said

    Are the minister the only talent in Singapore ? Will the country die without having greedy ministers ? Are the minister really that good as they claim themselves to be ?

    Aren’t we Singaporean is as talented in our own ways ? Some of them make bread, make mee siam bai hum, some of them make roti prata better than our president etc.

    Why are these talented ppl pay peanut compare to ministers and gahmen who show their tired face ? Are they tired because they are old or has just attend another routine people session or elite session ? So what if these ministers has degree from Harvard and Stanford ? They still can’t make good laksa and mee siah, can’t build building, the only thing they can do is confined within protection of the gahmen’s world to make money. Ask them to step out of office and into world and what we see is just loss of money to other country.

    Can you say our ministers are good without competition ? HOw can someone say they are number one whether they are the only person in a class ? That’s so shameful and insulting to the highly educated Singaporean. No wonder, the youth today deteriote because gov deliver those crappy message to these ppl by not setting an example.

  18. Young PAP said

    I have a lot of empathy for our Ministers. They do a job that very few people can do and they deserve to be paid accordingly. The question to be asked by the critics of their proposed pay increase is this- are you criticizing because you honestly do not believe that the Ministers are entitled to a pay increase or is it because you are simply envious?

    http://youngpapblog.blogspot.com/2007/03/green-eyed-monster.html

  19. Hi Young PAP,

    Perhaps you’d like to read Aaron’s blog post in response to one of your articles. Aaron’s post is here: Why I Swear Never To Join Young PAP

    Regards,
    theonlinecitizen

  20. shoestring said

    YPAP,

    Honestly, what I feel is not envy, but pity for those who claim they are envied. Because they think they are the only ones who can lead, which is highly debatable given the kind of election system we have.

    Really capable people do not have to resort to inappropriate use of power and access to funds to force the votes out of the people. So, there, it is not envy. I would be too happy to have the best leaders and pay top dollar for them. But I am just not convinced they are the best and therefore deserve to be paid exhorbitant salaries.

  21. Noah said

    If they are the best ministers, let them pit against the leaders of the world, George Bush, China president, India president and etc. These excellent leader get fraction of pay from what local ministers are getting and yet willing to serve the people and country. What more, they govern huge area, not tiny red dot and peanut here. In here, we have cronies who tries to increase their own salary to match the private sector and lament that their sacifice is of higher calling !! Our god must have die laughing.

    When transport fare increase, they pit it against other world transport fare. When come to salary, they pit it against local job market. And even then the statistic of those paid for top professional see to be those of only ELITE !. This tell me that our ministers and gahmen are damn ELITE. To hell with elite, we welcome idiot instead !

    YOung pappies, how much they paid you per month that you sell your soul, dignity, morality to the white devil ? Oh, I forget, you probably get pay rise soon. No wonder, cronies of the cronies flock together.

  22. YPAP,

    This is not about the politics of envy. It is the principle of it that we are highly opposed to. We do not believe that ministerial pay is grounded in the discourse of inordinately high remuneration in comparison to other legislators and cabinet members in other nations that have to face challenges e.g taking the flak for declaring war, large-scale regional politicking and worrying their heads full of OECD, G-8 and other mechanisms of governance of the North.

    Who’s going to be envious of a Minister in Singapore anyway? Definitely not me. I don’t think I construct a basis of existence and self-worth based on others’ presumed opinion that we all yearn for their pay. Money is not the endgame option, and it should never be.

  23. Leong Sze Hian said

    Business Times – 27 Mar 2007

    LETTER TO THE EDITOR
    Time to temper focus on monetary rewards

    I REFER to the report, ‘Govt must close pay gap to retain talent: PM Lee – Pay for staff Grade 1 has slipped to 55% of benchmark’ (BT, March 23).

    While it is important to retain talent, we may need to temper the focus on monetary rewards. Otherwise, we may inadvertently be setting an unhealthy example for Singaporeans in general and sending an undesirable message to our children – that money is everything.

    In this connection, Singapore has been ranked 130th out of 178 countries for happiness, 40th out of 41 countries for libido, 30th out of 35 countries for courtesy, fifth in the world for prisoners per capita and 105th in the world for income equality.

    Has our over-emphasis on monetary rewards led to us being unhappy because we spend too much time and effort chasing more and more things and money – at a cost of having little time or energy to have sex, an uncaring attitude towards others and an inclination to commit illegal acts to get rich quick, resulting in many offenders?

    Recent remarks by the Dean of the Lee Kuan Yew School of Public Policy – that ‘Singapore should stop trying so hard to be world class, simply because it already is’ – may be instructive. We may need to pay more attention to trying to improve those ‘soft’ areas in which we are far from world class – like happiness, libido and courtesy.

    Singapore seems to be particularly good in the economic arena, but Third World in the non-economic arena.

    Perpetuating the strategy of paying more and more to keep civil servants may be self-defeating. As a small country, we will find it increasingly difficult to compete with bigger, more developed countries that can offer higher pay, perks – and a better lifestyle to boot.

    Perhaps we should shift some of the emphasis to the honour and duty of public service, contribution to our country and the pride and joy such service brings – which no amount of money can buy.

    Our founding ministers, like our Minister Mentor, worked tirelessly for very little pay to take Singapore from Third World to First World status.

    If the most senior civil servants who are now earning $1.21 million a year need to be paid $2.2 million to want to stay, I think there may be something wrong with the values we are teaching in our schools, our homes and our society at large.

    Furthermore, benchmarking pay to the top echelons of private sector professions may not be appropriate, because civil servants do not have to face market competition, technological obsolescence, shareholders, investors, etc.

    Finally, as long as our parents tell their children to aspire to be scholars and civil servants, entrepreneurship may never flourish in Singapore, no matter how hard we try to promote it.

    Leong Sze Hian
    Singapore

    Copyright © 2005 Singapore Press Holdings Ltd. All rights reserved.

  24. Too bad Mr Leong failed to mention our hideously low press freedom index. Haha.

  25. Paul said

    Young PAP Says:
    March 28th, 2007 at 3:41 pm

    [SPAM removed]

    Wah, these fellas have gone from spamming to having a no-spam policy. Dun understand leh. Anybody know where the spam came from originally?

  26. Lai CF said

    After 3 generation of social conditioning, we still need money as an icnentive to serve the Nation?

    Noblesse Oblige anyone?

  27. Paul,

    It’s known as being “touche”.

  28. shoestring said

    Paul,

    Denial is an often employed strategy.

  29. rudeshock said

    Once again, Lee Kuan Yew is trying to spread FUD when he claimed that “your security will be at risk and our women will become maids in other people’s countries” if Singaporeans quarrel about ministerial pay and if the government could not pay competitive salaries. Utter bullshit.

  30. shoestring said

    Did the MM really say “…your security..our women…”? From “your” to “our”. Was it a Freudian slip made right or am reading too much into it?

  31. Hi Shoestring,

    Yes, he said “your….our”.

    You can see it here.

    Whether it’s a slip, I’m not sure. 🙂

    Regards,
    Andrew
    theonlinecitizen

  32. Singaporean said

    It is absurd for Singaporeans to quarrel about ministerial pay.

  33. Singaporean said

    any other comments since now the news is out?

  34. shoestring said

    Singaporean,

    Mr Low Thia Khiang’s peanut-banana example says it all for me. It best illustrates the so-called absurdity you were referring to with regard to the rationale for raising ministerial pay. Like you said, not point quarrelling over such absurdities. You should have been here before the “official” announcement.

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