Wednesday, April 11, 2007

Post No. 106: Random Thoughts About The Proposed (?) Increases In Public Sector Salaries...

Just some random thoughts about the current Parliamentary debates over the "proposed" increases in salaries for senior civil servants and ministers before I return back to my exam revision...

Before I move on, let me first explain the reason why I inserted a question mark behind the word "proposed" in the title of this post and inverted commas around the word "proposed" in the paragraph preceding this one. The reason is that, in my opinion, it is ironic to note that despite all the debate about them in Parliament these few days, it is quite clear that the proposed increases in salaries will still go through in the same form as proposed by the Government; that the debates are perhaps for, for lack of a better word, "wayang" only: to show the people that they are at least being open and transparent about it.

That aside, if you all have read today's Straits Times ("Govt defends ministers' pay formula", ST,11/4/2007), you all would surely read that Mr. Teo Chee Hean, the minister in charge of the Civil Service, in response to the charge that ministerial salaries are "pegged to the extremely high salaries of a few outliers in the 'rarefied' zone of the income curve", produced a graph (see below) showing the annual income of the top 1000 earners among Singaporeans, permanent residents and Malaysians working here in 2006.

Referring to the graph, Mr. Teo then claimed that ministerial salaries are "not on the steep part of the curve where salaries rose at an exponential rate".

On the surface, this claim does sound reasonable. However, if one take a closer look at it, one will notice something most strange. And that is why use only a sample population of the top 1000 earners of 2006 when there are, according to statistics from the Ministry of Manpower, 2,594,100 people in the labour force (i.e. people aged 15 and above) of which 2,505,800 are employed in 2006? By sampling only the top 1000 earners, only the top 0.04% (to 2 decimal places) of the entire employed labour force in 2006 are sampled.

This makes me wonder: if, instead of plotting the ministerial salaries along a curve of the top 1000 earners in 2006, we plot them along a curve of the entire employed labour force, where on the curve would they end up at? Hmm... I would guess that it is highly likely that they will end up on the high extreme of this hypothetical curve.

For those who cannot really fathom the point I am trying to make, allow me to illustrate with this simple example. Suppose I get a CAP score of 4.5 (no, I am not getting a CAP score of anywhere near 4.5; if only I could) and my CAP score is plotted along a curve of those who have gotten CAP scores of from 4.0 to 5.0, my CAP score would most likely end up somewhere in the middle. But if my CAP score is plotted along a curve of the entire range of CAP scores from 0.0 to 5.0, my CAP score will then end up on the high extreme of the curve.

Hence, it seems strange that Mr. Teo would claim that ministerial salaries are not on the high extreme when using a curve that only shows the top 1000 earners.

Also, if you all have read yesterday's Straits Times ("MM to Low: Is comparison valid?", ST, 10/4/2007), you all would read that, in response to Mr. Low Thia Khiang's, the Opposition MP from Hougang SMC, comparison of the systems in countries such as Finland, Denmark & Switzerland with that found in Singapore, MM Lee said that Mr. Low was not making a valid comparison, that he was not comparing apples with apples and that the situation & circumstances found in the countries referred to by Mr. Low is vastly different from those found in Singapore. (Too bad I left too early on Monday to see them in action)

Well, while I do somewhat understand MM Lee's arguments, I would really like to ask him, in all his wisdom, this question: "Which country do you then think Singapore can be compared to?". I mean, MM Lee, in his debate with Mr. Low, has set the parameters so restrictive and exclusive, I cannot really think of any country that can fit the parameters he has set and be compared with Singapore. Hmm... Perhaps only Israel can come close but then I suppose MM Lee will dispute this, saying that Israel could have counted on support from the U.S. and from the extensive Jewish Diaspora. With such restrictive parameters, any country would seem like an "orange" beside the Singaporean "apple".

It also struck me as strange that MM Lee, and other members of the PAP Goverment, have no qualms comparing Singapore with countries that are not as corruption-free as Singapore to bolster the argument that Singapore need to pay its senior civil servants and ministers competitive salaries to guard against potential corruption. At the same time, members of the PAP Government also have no qualms citing international reports about Singapore is highly ranked, in terms of economic performance and living standards, in comparison with other countries, to substantiate the argument that the Civil Service and political leadership in Singapore are strong and effective. So they are comparing "apples" with "apples"?

Moving on, since I am also revising for my exams, I may as well apply what I have learnt this semester to the debate over the proposed increases in public sector salaries.

Well, from what I have learnt in SC1101E (Making Sense of Society), there is a sociological theory called Functionalism that, in trying to account for why certain professions earn much more than others, claims that those working in these professions earn much more than others because they contribute more to the functioning of society. In other words, those working in these professions are "functionally" more important to society. Hence, in accordance to this theory, lawyers earn more than roadsweepers & garbage collectors because the former is "functionally" more important than the latter.

Yet, this school of thought is not without its critics. For one, how is "functional importance" determined and measured? Also, are road sweepers and garbage collectors really "functionally" unimportant to society? Well, for those who think they are, let them try living in a society without these people, they would soon realise the importance of these people.

Hence, my point is that, yes, I do not deny that our senior civil servants and political leaders have contributed much to the success of Singapore but I do not think this success is only and entirely due to them. I mean, they may be good leaders but without good followers, good leaders are nothing. Thus, we need to also acknowledge the contributions made by the ordinary people of Singapore and favourable external economic circumstances to the success of Singapore (though, of course, Mr. Andy Ho of the Straits Times would argue that this opinion of mine is coloured by a psychological bias). In the end, as the late S. Rajanatnam have said in a speech, Singapore is not a society in which rabbits are led by lions nor one in which lions are led by rabbits but one consisting of lions led by lions.

Furthermore, from what I have learnt in my A-level Economics and have recently re-visited in EC1101E (Introduction to Economic Analysis), in trying to account for differences in wages amongst different professions, economists have come up with a theory they termed "compensating differential". This theory claims that certain professions have higher wages because these professions require those working in them to have a high level of specific skills and/or face a lot of stress on the job and thus the higher wages are there to "compensate" them. Thus, according to this theory, lawyers, accountants and doctors would gain much higher wages than the ordinary factory worker.

So, if we look at this theory, we would agree with the need to pay our senior civil servants and ministers competitive salaries to "compensate" them for their sacrifices and hardship.

Yet, at the same time, this theory (together with another economic theory which tries to explain the supply of labour for different professions) also states that there exists non-monetary incentives such as status, privilege and power that "compensate" people who work in professions with lower wages and other non-monetary disincentives. Specifically, my A-level economics notes cited the example of those working in governmental positions.

So, bearing in mind that our senior civil servants and ministers do enjoy a certain level of non-monetary incentives in their jobs e.g. status, power and satisfication from knowing that they are contributing towards the betterment of Singapore and those living here, it strikes me as strange that high salaries should be paid to them to "compensate" them for their sacrifices and hardship.

Okay, that's all I have to say for now... Back to my exam revision! Wish me luck!


yuemin said...

Hey LCC, just wanna encourage u to write on... you analyse issues really well i must admit... :D

LCC said...

Thanks for the encouragement, Yuemin!

Anyway, about me analysing issues really well, haa, I must say that there are many people out there who are much better analysts of issues than me... And I am not being humble/modest here...

If you're interested, go look at these 2 pages and you will understand what I mean:

i) Intelligent Singaporean

ii) Singapore Angle

Oh yeah, lest I forget... Good luck for your exams! Tough times don't last but tough people do...

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