Comparison of new salaries of Singapore politicians

The new salary structure recommended by the ministerial pay review committee headed by Gerard Ee has been accepted by the PAP Govt. The ministerial pay review report will be debated in Parliament later when it opens. The report is expected to breeze through the PAP dominated-Parliament without any changes.

So, how do the recommended new salaries (after pay cut) for our Singapore political leaders compare with salaries of the first world politicians? Some TRE readers sent us the link to The Economist article ‘Leaders of the fee world’, published fairly recently 1.5 years ago (Jul 2010), detailing the salaries of the various political leaders in the world:

New salaries of Singapore political leaders after pay cut

Singapore Prime Minister	US$ 1.7 million (S$ 2.2 million)
Singapore President	US$ 1.2 million (S$ 1.54 million)
Singapore Minister	US$ 855K (S$ 1.1 million)

First World Politicians’ salaries (source: The Economist)
http://www.economist.com/node/16525240

CE of Hong Kong	US$ 513K
President of US	US$ 400K
President of France	US$ 302K
Prime Minister of Canada	US$ 296K
Prime Minister of Ireland	US$ 288K
Prime Minister of Australia	US$ 287K
Chancellor of Germany	US$ 284K
Prime Minister of Japan	US$ 274K
Prime Minister of NZ	US$ 272K
Prime Minister of UK	US$ 215K

From the above data, we can calculate that the average annual salary of these other 10 first world leaders is US$ 313K. This means, PM Lee’s new salary even after suffering a cut is, on average, 5.4 times the salaries of other first world leaders. Does it imply that Singaporeans, on average, are living 5.4 times better off than the citizens of other first world countries, since our PM earning much higher than the rest presumably is doing a much better job than the rest for the citizens?

Of course not. The high salary of our Prime Minister stems from the fact that it is pegged to the income of top Singaporean income earners. It was recommended by the committee that the starting salary of an entry-level minister will be based on the median income of the top 1,000 Singaporean income earners, with a 40% discount. Based on 2011 income data from the IRA of Singapore, the new benchmark figure for a Singapore Minister has been calculated to be S$1.1 million. From the committee’s recommendation, it appears that the Prime Minister’s pay is about 2 times that of a Minister.

Now, imagine President Obama decides to do the same. There is no public data available for the top 1000 income earners in US but the IRS does publish income information of top 400 taxpayers in US. And according to Nobel Laureate, Paul Krugman, the average wage income among the top 400 taxpayers (i.e, discounting incomes from capital gain) is US$29.4 million [Link]. So, assuming the median income is not too far off from the average income and taking 40% discount before multiply by 2, we get US$35.3 million, based on top 400 US income earners.

Can you imagine President Obama proposing to the American public that he is going to use this formula which pegs against top private sector pays in order to determine his salary and as such, he should be paid US$35.3 million a year? I think the American public will be out for his blood! But in Singapore, there is no such political fallout. PM Lee must be very relief…