How are Singapore politicians' salaries calculated?

The Prime Minister’s Office (PMO) had just announced that Finance Minister Lawrence Wong has been selected to be the leader of the ruling People’s Action Party’s (PAP) fourth-generation (4G) team, paving the way for him to be Singapore’s next prime minister.

What is 4G and why is he called the Leader of the 4G, instead of saying he’s the next Prime Minister or Deputy Prime Minister? You ask?

Well, 4G means the ruling People Action Party’s fourth-generation (4G) team; think of it as political leaders who are in the same batch.

Being the Leader of 4G means that he is likely to be the next PM – Not confirmed plus chop because Deputy Prime Minister Heng Swee Keat was also the previous 4G leader, but announced he was stepping aside a year ago.

Considering the multiple changes to the Cabinet roles (and we will be expecting changes to Cabinet appointments again), we thought it might be interesting to revisit our growth as a nation especially after being hit hard by the pandemic and highlight some figures that might be of interest to you.

You may already know that high-paying jobs usually lie in the law, medical and finance industries, but do you know anything about how our politicians are paid?

Using that data, we’ll also be comparing the compensation package of Singapore’s leader vs that of the leaders from the five selected countries to find out how we view the salary of our Nation’s Leader, the Prime Minister.

Whether you’re in the camp of “Nah, they are earning too much”, “They deserve to command the high salary ” or simply just a neutral party enjoying the debate of the two camps, we’ll be presenting the facts, figures, and statistics of Singapore, one of the world’s fastest-growing economies vs the economies of five other countries.

Disclaimer: We have no political affiliations and just want to share with you insights through good ol’ fashion research and the use of facts and figures from official sources.

TL;DR: A top-performing CEO commanding top dollar for his or her work?

• The Prime Minister of Singapore is earning $2.2 million a year (including bonuses);
• The norm salary is set at two times that of an MR4 Minister (an entry-level minister in Singapore);
• The Prime Minister does not receive a Performance Bonus as there is no one to assess his performance annually. However, he still receives the National Bonus;
• The National Bonus replaces the GDP Bonus as a direct link to the socio-economic outcomes of Singaporeans and includes four indicators beyond GDP growth:
  (i) real median income growth rate of the average
  (ii) real income growth rate of the lowest 20th percentile of Singaporean income earners
  (iii) unemployment rate of Singaporeans
  (iv) real GDP growth rate
• The Singapore Prime Minister earns almost two times more than his counterpart in Hong Kong, Carrie Lam, who comes in second place at HK$5.2 million (S$911,000);
• In comparison, some top CEOs earned at least four times more in 2021: DBS CEO Piyush Gupta earned $13.58 million, and UOB CEO Wee Ee Cheong received $10.9 million.

GDP Per Capita comparison

What: Gross Domestic Product per capita (GDP per capita) is the product divided by the mid-year population. GDP is the sum of gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the value of the products.  It is calculated without making deductions for depreciation of fabricated assets or for depletion and degradation of natural resources.

Although it is expressed as a dollar amount, GDP per capita is not a measure of average or median personal income. Rather, it is a measure of the relative health of that country’s overall economy and industry.

Why: It gives a good indication of how the economies have been growing by taking the overall economic value that has been created by the country over its population figures.

Findings: Singapore’s GDP per capita is ranked fourth globally, which is a massive feat, surging ahead of many other countries since independence.

Singapore’s GDP per capita for 2020 was $59,797.75, an 8.9 per cent decline from 2019, but it increased by 139 times from 1960, when GDP per capita was $428.

This is understandable, as the Covid-19 pandemic hit the world by storm in 2020, and almost every country has experienced slow or slower economic growth.

When we compare economic trends, Singapore is picking up, and the Ministry of Trade and Industry announced that Singapore’s economy grew by 3.4 per cent on a year-on-year basis in the first quarter of 2022, moderating from the 6.1 per cent growth in the preceding quarter.

Population comparison

What: Midyear estimates of the resident population.

Why: It gives a good indication of the number of people our leaders have to manage. It is also a good indication of the income taxpayers who contribute to the country’s national reserves.

Findings: We have removed China (1.3 Billion) and the USA (327 Million) so you can observe the differences between the other 4 countries since the two are comparatively bigger nations. Singapore has a 5.6 Million population, which is the smallest population. This indicates a smaller population and taxpayer base.

What do the numbers mean?

You would have noticed by now that we’re making comparisons to countries including Malaysia, Hong Kong, China, the USA and the UK.

Reasons being:

• Malaysia: Singapore’s closest geographical neighbour
• Hong Kong: One of the Asian tigers, and also another strong financial hub in Asia
• China: A developing/developed country with a massive economy and population, that has plenty of room to grow
• USA: An established leading economy and also known to be a Big Brother to many countries across the world
• UK: One of the earliest and strongest economies, which has strong ties with Singapore before the 1960s

And here are the leaders of the various countries we selected, whose salaries we listed:

• Singapore Prime Minister (Lee Hsien Loong)
• Malaysia Prime Minister (Ismail Sabri Yaakob)
• Hong Kong Chief Executive (Carrie Lam)
• China President (Xi Jinping)
• USA President (Joe Biden)
• UK Prime Minister (Boris Johnson)

Note: the variables are pegged to the position and not necessarily the current leader, who is the incumbent.

The salaries are found on the country’s respective government websites (SG, MY, HK, China, USA, UK) and through various official news sources.

For the sake of this comparison, all annual salaries were converted to SGD$ at exchange rates that are correct as of 15 April 2022.

And just to give you a better feel of the scale of responsibility of each leader, we chose the following variables:

• GDP per capita (and growth);
• Population.

Plus, see how the respective country’s economy has progressed vs its population growth under the charge of the respective country’s leader.

PM Lee: Competitive ministerial pay in Singapore is one of the factors that help deal with the problem of corruption in the country

In 2020, PM Lee shared his response to American billionaire and philanthropist David Rubenstein at an online dialogue held by the US think tank Atlantic Council.

Singapore was ranked the fourth least corrupt country globally out of 180 countries in 2019 by Transparency International and the only Asian country ranked in the top 10, alongside Denmark, New Zealand and Finland.

To quote his reply:

“If you don’t do that, either you compromise on the quality of your civil service, or people will find ways to make up and compensate, camouflage forms of compensation, or you have a revolving door, and you have something when you go out, after you retire, and that will lead to other kinds of big problems.”

How is a Singapore Minister’s salary calculated?

As with any organisation or Multinational Corporation (MNC), the Salary structure of Ministers is modelled closely.

There is actually a 50 page white paper by the Public Service Division (PSD) detailing the full rationale of the compensation packages.

A Singapore Minister’s salary is made up of a fixed component and a variable one.

Minister's Annual Salary
Fixed Component	Monthly Pay
	13th Month Bonus
Variable Pay	Performance Bonus (Determined by the Prime Minister)
	Annual Variable Component (Based on Singapore's economic performance)
	National Bonus (Based on the real median income growth rate, real growth rate of lowest 20th percentile income, unemployment rate and real GDP growth rate)

A Minister may start at the lower end of the MR4 range with a monthly salary of $46,750. This works out to an annual salary of $935,000, of which $607,750 is fixed and the rest is variable.

However, for the Prime Minister, he receives a total annual salary package (inclusive of the 13th-month bonus, Annual Variable Component and National Bonus) that is twice the MR4 benchmark, or $2.2 million.

He does not receive a Performance Bonus because there is no one to assess his performance annually.

In fact, after some debates in 2012, there was a revision in salaries from 2010, which was also detailed here. The salary framework is reviewed every five years (likely this year given that the last review was in 2017).

The breakdown can be seen via the chart below.

Conclusion

All of us in Singapore know that in 57 years, our country has grown leaps and bounds.

The idea that Singapore is in fact not just another country and has to be structured differently doesn’t seem obvious to us when we are busy surviving and coping with life.

Objectively if we compare PM Lee Hsien Loong’s salary to other leaders worldwide, it is clear that he is earning more.

However, in comparison with top CEOs of Fortune 500 companies, local banks, and STI companies, such as DBS CEO Piyush Gupta, who earned $13.58 million and UOB CEO Wee Ee Cheong, who received $10.9 million, he is earning a lot less.

Ultimately, who doesn’t want to be paid well and fair at work?

On a side note, if you’re just fresh out of school or plan to find a job soon, make sure to check the average salary of the industry you’re applying for.

You can optimise your job search using recruitment portals or job recruitment agencies!

Employers want specific qualities, and you should try to display these qualities in your applications. If finances are tight, consider looking for other jobs while you wait for the offer.

Make sure that you are prepared for your interview. There will be hits and misses, but that is not the end.

ALSO READ: PM Lee shares how Lawrence Wong was chosen as PAP 4G leader

This article was first published in Seedly.