Posts Tagged ‘wages’


The issue of political remuneration is one of the latest hot potatoes to drop into the hands of the ruling People’s Action Party, and for all the efforts of the PAP to cool this potato, it appears that the potato has an internal combustion engine that keeps on spewing heat to keep the potato hot.

The top leaders of the PAP are most probably scratching their heads and wondering why, despite deep cuts to salaries of political appointees, Singaporeans are generally still not satisfied. The answer is relatively simple: the issue is not about the absolute dollars and cents, but about the perceived value the dollars and cents generate.

There is no problem paying a premium if the perceived value is greater than the premium paid, which explains why people are willing to pay extra for branded products. The astronomical salaries of political appointees didn’t attract so much firestorm until Lee Hsien Loong took over the reins of the PAP, so there is definitely some relationship between the quality of Lee’s leadership team and the amount of money they are getting.

Of course, alternative media such as The Online Citizen has helped fueled the debate, which might have been considered not suitable for public discussion and then quickly swept under the carpet in earlier years by the PAP government’s strong control of the traditional media, a point also noted by Cherian George. However, if the current PAP leadership team has indeed been perceived to have done a good job in governance by Singaporeans, there is no debate to be fueled.

The PAP can continue to trim and prune political salaries, but it will not placate many Singaporeans. Even if the current ministers volunteer to work for free, there will be a substantial number of Singaporeans baying for blood because there is no point in having something for free if it’s perceived as useless and being a deadweight.

Whether political ministers are paid $1 or $10 million a year doesn’t really matter; what matters is whether they are delivering the goods, and the PAP certainly has to do more to convince Singaporeans of its value. Cutting current salaries is not the solution.

That being said, the review of ministerial salaries did get one thing right, and that is the removal of the pension scheme for political appointees. For far too long has Singaporeans been told to accept the supposedly superior Central Provident Fund system while political appointees continued on the pension scheme. If the pension scheme was inferior, why did political appointees, with their high salaries, not switch to the CPF system for such a long time?

At least the hypocrisy of political appointees being on the pension system for retirement has been corrected.

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Minister of National Development Mah Bow Tan was quoted as saying in a Channel NewsAsia report that he’s proud of the PAP government’s asset enhancement policy.

Data from the Housing Development Board’s and the Ministry of Manpower’s websites showed that Mah was perhaps being too modest.

MOM’s website showed the annual rate of average earnings in Singapore generally rose by single digits since the last general elections, peaking at 6.2% in 2007. There was negative wage growth of -2.6% in 2009, most likely the result of the global financial turmoil that began late 2008.

Over on HDB’s website, the average annual flat prices since 2006 generally rose by double digits each year, even during the period of global financial turmoil. The only year in which the rate of increase of flat prices was a single digit was  in 2006, when prices increased by 1.8%.

To put things in clearer perspective, from 2006 to 2010, wages increased by 18.8% based on MOM’s data, while housing prices increased 70.2% in the same period based on HDB’s data. That means average housing prices have outpaced average wage growth by almost four times since the previous general elections.

Such figures suggest much more than enhancement of asset value; there is a strong hint of inflation of asset value.

If housing policy is a central plank of the PAP’s long term electoral strategy, then it has to explain why, in the period under its watch since the previous elections, housing prices skyrocketed relative to wages, as well as what the PAP intends to do about the situation. The argument that increase in public housing prices are due to strong economic fundamentals is a tough one to swallow when government data showed that wages had not increased at a similar pace.

Failure to address this issue adequately may, in the upcoming general elections, cost the PAP votes of younger Singaporeans who have either recently bought a flat or are trying to buy one.