While members of parliament debated the issue of ministerial pay, a group of 6 economists published a paper, "Inequality and the Need for a New Social Compact"[Link]. The paper discusses the causes of rising inequality and the need for govt to counter the effects of rising inequality in our society. It is a good summary of many issues discussed in this blog. Those who think about miniterial pay and income inequality more deeply will know that both issues are linked.
"You have to pay the market rate or the man will up stakes and join Morgan Stanley, Lehman Brothers or Goldman Sachs and you would have an incompetent man and you would have lost money by the billions" - Lee Kuan Yew, 2007
Here is a video of Warren Buffett explaining how CEOs and top executives have become over-compensated in the past 2 decades:
Instead of fixing the underlying problems in our society caused by income inequality which has resulted in a 3rd world wage structure, the PAP has been using the salaries of over-compensated executives to set their own pay. This wages of this segment of high income earners much faster than the rest of workforce. most of the time, for "wrong" reasons given by Warren Buffett in the above video. Singapore adopted American style executive compensation without the corresponding disclosure practices.
"And Singapore is just such an example, according to the CFA Institute. It says that prior to Singapore adopting the Code of Corporate Governance, the Singapore Exchange (SGX) acknowledged that disclosure on an individual basis should be in line with global best practice and that share owners should have the right to know how directors are compensated.
'This awareness, however, failed to translate into policy because of considerations for directors' personal privacy ....... " - [Link]
Singaporeans have generally been very patient with the PAP. In any other country, the leaders would have been voted out if they demand the same compensation as our leaders. However as the income of ordinary Singaporeans stagnate, this patience is running out. The new pay structure is not going to bring our leaders closer to ordinary folks. You peg it to the top 1000 earniers whose income in rising the fastest relative to everyone else/ PAP ministers' high compensation will rise much faster than the wages of ordinary folks.
Over time the PAP govt eliminated the benefits of rank and file civil servants while expanding pay packages of the people on top. The ordinary Singaporean is made to shoulder heavier burdens for healthcare, housing and transport and faced increasingly uncertain and unstable employment at a the same time the PAP implemented parachute systems for its elites dropping them from, say, high positions in the SAF to top positions in the GLCs & govt. If you listened to PM Lee's speech on the ministerial salary he said that the high salaries are necessary to "sustain the system". This system in which elitism is entrenched in not one that can take us forward to a good future for ordinary Singaporeans. Extreme distorted policies like having a foreign worker influx that is among the highest if not the highest per capita to maintain the already high profitability of govt linked companies with cheap labor and expanded demand for their services has hurt Singaporeans in particular those earning lower wages. Corporate profits which are now at a high as a % of GDP are attained by exploiting policies that keep wages down by importing foreign labor. These high profits are then used to justify high executive compensation along with factors mentioned by Warren Buffett.
Chen Show Mao said in his parliament speech that public service is a privilege. Every where else in the developed world good capable people would step forward to contribute regardless of pay and serve the people with passion. The PAP claims it is harder now to find good people - fewer and fewer people are willing to step forward to join the PAP. But that is not true if you look at the opposition, they now have more people joining them and quality has also improved.....why the sudden motivation for these people to join the opposition in recent years?
The PAP says it is being pragmatic and the Workers Party is too idealistic in its approach. But this is not true. It is not pragmatic to expect ordinary citizens to accept its extraordinary "highest in the world" compensation when the quality of life for many Singaporeans has fallen in many respects. The PAP govt says this pay structure is necessary to help it continue to recruit capable people into govt but the truth is they need to do this to sustain their system of govt - a system that has become disconnected with ordinary citizens and incapable of putting their interests ahead of those of the power elite. This system has concentrated the wealth generated by our society narrowly in a small segment of the populace and the new pay structure aligns leadership with this small segment. The PAP govt has had these high salaries for more than 2 decades...has this extremely high salaries resulted in a high quality of life for the ordinary citizens.? ....The man on the street is able to see it does not correlate and will not correlate.