theonlinecitizen

a community of singaporeans

Danger when simplistic benchmarks influence the wrong behaviours

Posted by theonlinecitizen on April 12, 2007

This is filed under “Letters to TOC”.

From “boboshooter”

I would like to add to the discussions and debates regarding the latest round of ministerial and civil service pay increases.

Firstly I applaud our Prime Minister for taking the lead and donating his increments to charity. I hope the other ministers will follow suit. However, even if they do so, what they do only masks the symptoms but do not solve the root cause of the problem that caused the public’s anger in the first place.

Benchmarks are supposed to be external indicators which people measure themselves against. They are supposed to be independent and immovable numbers that people (at least individually) cannot influence or change. Hence when a law firm pays a top lawyer a remuneration package based on law industry benchmarks, the lawyer is just a “taker” – he cannot engineer changes in the industry to increase the benchmark so he gets a higher pay.

Influence over benchmarks

However, the same cannot be said of the collective efforts of the entire top echelon of the civil service in Singapore. By the force of the laws, the rules and the policies they formulate, their pervasiveness in all aspects of Singapore life, I would argue they have considerable, if not an all-encompassing influence over the benchmarks that they use to measure themselves against. So in other words, the “benchmark” has instead become some sort of collective “performance indicator” for top civil servants and it is one that potentially rewards the wrong performance targets.

Any basic management text would tell you that people are influenced to behave in a certain way through incentives and disincentives given to them. In the case of our top civil servants, their pay is directly linked to the pay of a small group of top private sector earners in Singapore. As such, if top earners earn more, they earn more too. Is this not a clear cut incentive for our top civil servants, ministers included, to collectively ensure that the group whose pay that they are benchmarked against, do even better?

An “elitist” malaise

Many people feel that our national policies are increasingly “elitist” – designed to nurture few “winners” that “take all”. Better still, why not just import a number of highly paid “foreign talents” and make them Singaporeans or PRs? This will have immediate impact on (their) bottom lines. Therefore is there any wonder why, in the period of a few years, the benchmark figure gone up while everybody else is scratching their heads and asking ” I where got increment“?

This is precisely the malaise that has affected our country – In the recent years since this benchmark has been in place, top salaries in Singapore have sky rocketed, while middle incomes have stagnated, and bottom incomes have fallen off. We see more Ferraris on the street nowadays just as we see more homeless people. Is this inevitable with globalisation?

Yes, I agree globalisation is an undeniable trend and we must play by the circumstances the world throws at us. But surely, by paying top dollars for our much vaunted turbo-charged civil service and “specially constructed” government, we should expect them to come up with the very best policies that enable us to enjoy the fruits of globalisation and the best measures to buffer away some of globalisation’s worst effects, to take special care of the lowly educated and elderly, who make find it difficult to catch up with the times.

Certainly we do not need to be rocket scientists to note that the exponential increase of “blind” tissue paper sellers at the hawker centre is not due to effects of watching too much TV on their latest 50-inch HD plasma screens at home.

The poor in a “special” Singapore

If the poor continue to wash plates, collect cans and sell tissue to continue life on a subsistence basis, with little savings to fall back on, and a State makes it difficult for them to get help, sooner or later these people are going to ask, what so “Special” about our “Special Red Dot”? And to these people, is it any better (or worse) to live in wealthy Singapore, as compared with the poor “neighbourhood around us” that we like to despise?

They say: “Salaries have to be raised in good times”. I ask: “Good times for who”? How can the main beneficiaries of increasing doses of “globalisation” understand the plight of those whose lives have deteriorated because of it? The people who run this country need to take a very hard look at themselves and ask if this benchmarking of salaries over the years has, in any way, coloured the way they determine what is “good” for the country.

Underlying perception of injustice

Our multi-cultural social fabric is thin and fragile. While our top leaders like to tell us and the rest of the world how superbly they have handled sensitive topics like race and religion, they have lost sight of the fact that the greatest cause of social strife and conflict in the last century was not race and religion per se, but the underlying perception of injustice, that feeling of “unfairness” that caused millions of seemingly rational and civilised people to commit abhorrent acts against their neighbours in the name of fascism, communism and other dubious ideologies.

I feel this benchmark formula for our top civil servants that has resulted in the poor becoming poorer, the rich becoming richer and the even richer (and often dodgy) coming over here. The rising income disparity will heighten feelings of “unfairness” in those left out. If this is not a “time bomb”, I don’t know what is.

“Millionsters”, for the sake of the country, please take note.

Rgds

Boboshooter

Anyhow shoot, sure to hit a bird


PS: And in the unlikely event they really do relook at the benchmarks they use, I would implore them to, please, also take and second look at the bonuses pegged to GDP. Want to raise the GDP and earn big bonus$$? Very easy, just bring in another 2 million rich foreigners to work here to increase the population from 4.5 million to 6.5 million over 5 years (each foreigner must command at least the average salary of a Singaporean) – There, assuming there are enough jobs to go round, you’ll have at least minimum of 7.6% compounded growth every year for the next five years without doing anything else. Our little red dot is already a very small pie to divide between 4.5 million people, let alone 6.5 million or 8.0 million. Whatever “land optimisation” management they can think of, there is only one East Coast Park, one Newton Hawker Centre, one PIE or one Raffles Institution etc. to divide among so many people. Some things just cannot be substituted and some things will just get more expensive. Not everyone may feel this way but from where I stand now, if my “pie” gets cut in half, even if my wealth doubles., I would feel that as a whole my quality of life has regressed.

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2 Responses to “Danger when simplistic benchmarks influence the wrong behaviours”

  1. Joshy said

    This has many aspects similar to the time during the Late Qing Dynasty when peasants were getting restless,foreigners were looking down on the nation and when the Qing officials were getting corrupt. That was also when the new western educated people rose up against a corrupt government.

    Benchmarks which are elitist will not bring positive impact to Singapore and instead would breed negative feelings amongst ourselves and from our neighbours abroad

  2. leo said

    This is similar to Mr Leong Sze Hian’s April 9 entry (“Minister’s Salary – is the govt losing touch”) where he proposed that Minister’s salary be pegged to say 135 times that of say the 20th percentile income. So if a Minister’s salary is pegged to the 100 highest income earners, wouldn’t their decisions be coloured by whether they can enrich these 100 or better yet encourage even higher income earners to come to Singapore?

    But I would argue that it is easier to raise the income of the low wage worker than to raise the income of the high-earners. High income earners are also highly mobile. To raise the salaries of the low wage workers, the government can just introduce a slew of measures like minimum wage, protect jobs, subsidise manufacturing or jobs that would otherwise have left our shores, prevent retrenchment.

    But these measures may not be in the long term best interests of our country. These measures would in effect mean that our leaders are using taxes to unduly support economically unviable practices in order to shore up the wages of the low income and because their salaries are tied to the lowest wages, ultimately to enrich themselves at the expense of the country.

    The road to hell is paved with good intentions. The road to disaster may also be similarly paved. The obvious answers are not always the right answers. Obvious answers like subsidies, welfare, minimum wages, affirmative action, protection of labour, etc.

    If these were the right answers, lots of countries would have got in right and would be in a better position than us.

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