Top govt salaries far behind private sector's

TOP private-sector salaries have surged ahead of those in the public sector and Prime Minister Lee Hsien Loong revealed last night just how far the pay of ministers and civil service leaders has fallen behind.

A minister should be drawing $2.2 million a year or more, according to benchmarks approved by Parliament in 1994 to ensure competitive salaries for a competent and honest government.

But their actual salaries have fallen to 55 per cent of the benchmark, that is $1.2 million, and 'we have to close this gap', Mr Lee said last night.

He did not say if ministers' pay will be raised fully to this amount, or when it will go up. Details of the salary changes across the civil service will be announced in Parliament on April 9 by Defence Minister Teo Chee Hean, who oversees the public service.

Speaking at the annual Administrative Service dinner, Mr Lee explained that salaries had to be reviewed so the public sector can keep its share of talented Singaporeans.

'This is an urgent problem. We have experienced on previous occasions the painful consequences of responding too slowly when the private sector surged ahead,' he said.

In the 1990s, this led to the Administrative Service, the key service from which most public sector leaders are drawn, losing entire cohorts of young and good officers.

Administrative Officers (AOs) in their early 30s are at a 'critical decision point' in their careers, and the Government must keep their salaries market competitive to retain the able ones.

Today, their salaries are in line with the private-sector benchmark created for this group. But with salaries for young professionals moving up, especially in the financial sector, Mr Lee expects salaries in this group to 'soon come under pressure'.

Fast-growing salaries explain why the Government has embarked on a review of civil service salaries covering all services where pay has fallen behind the private sector.

Also important is to review the salaries of ministers, judges and statutory appointment holders such as the Attorney-General and Auditor-General, said Mr Lee.

'It is even more critical for us to keep these salaries competitive, so as to be able to bring in a continuing flow of able and successful people to be ministers and judges.

'Unless there is a first-class political leadership and judiciary, the Civil Service, however capable and dedicated, will not be able to function properly,' he said.

Ministerial and top public sector salaries have been pegged to those of top private-sector earners since 1994, when Parliament debated and approved the use of benchmarks to ensure the public sector continued to attract its share of talent, and to provide for regular adjustments to keep pace with private-sector earnings.

There are two benchmarks or formulae spelling out how the salaries are to be pegged.

The first is the MR4 benchmark for ministers and senior permanent secretaries.

Yesterday, the Public Service Division released data on the median incomes of the top eight earners in the six professions to which MR4 salaries are pegged. Lawyers earned the most, with a median income among the top eight of $4.29 million.

The second benchmark is the SR9 benchmark for top AOs in their early 30s.

Mr Lee mapped out how in the years since 1994, the 'scramble for talent' has become a global phenomenon.

Talented Singaporeans are now being head-hunted by top global companies as well as by other governments keen to replicate the Singapore success story.

Top students are turning down government scholarships as their families or universities were willing to fund their education.

At the same time, the demands on high-quality governance have gone up, as a result of globalisation and a more advanced economy, he said.

With Singapore now operating near the 'leading edge' in public policy, public-sector leaders cannot rely on the best practices of other countries, but have to break new ground and find fresh solutions.

First-class people are therefore needed to anticipate problems, come up with creative solutions and lead teams.

He said 'first-class governance' which can be provided only by a top-grade public sector was a 'sustainable advantage' that Singapore should 'zealously uphold'.

While public officers must serve from a sense of idealism and duty and not be motivated mainly by financial reward, they should not be expected to make 'unreasonable financial sacrifices' to be in public service, he added.

lydia@sph.com.sg