20140921 Singapore PM’s salary increased by 5,200% since independence

For a country which is only 49 years old, the central message of PAP leaders is ‘greed is good for Singapore’. Just take a look at how political salaries have been increasing like ‘nobody’s business’.

In 2007, 42 years after independence, the PAP had already increased the PM’s pay by 7,300% to $3,090,000. When Singapore gained independence in 1965, our PM’s salary was $42,000 ($3500 X12). It was only after huge election losses in 2011 that political salaries were reviewed. Althouth citizens were given a ‘discount’, our PM’s salary is still 5,200% ($2,200,000 / $42,000) higher since independence.

Contrary to public perception, the PAP did not peg political salaries to the private sector in 1994 but had already been doing so since 1970. In 1970, Lee Kuan Yew, then PM, told Parliament that Law Minister E.W. Barker had wanted to leave politics because “he could not afford his mortgage” which was based on Barker’s former income as a lawyer (private sector).

Lee also wanted to “appoint Hon Sui Sen as Finance Minister”. Hon Sui Sen, a Hakka who had studied at Raffles, used to head the DBS bank.

The reasons given by Lee – it was “not fair” and “unrealistic” to be earning low political salaries when compared to the private sector. Lee also claimed that “family needs are also pressing”.

Parliament agreed to raise the pay of ministers by 80% (from $2,500 to $4,500) to align it closer with the private sector. Of the 64 MPs in Parliament, 62 were from the PAP.

What’s more shocking was the PM’s pay had been increasing at a faster clip than ministers’ pay. For a factual historical account of ministers’ salaries, read Andrea Ong’s “What price a minister? 42 years of controversy”.

Chronology of our PM’s salary increase since 1970 (from 1970 to 1994 monthly salary)

1970 – Ministers’ salary increases by 80% from $2,500 to $4,500. PM’s salary remains at $3500 to “demonstrate his commitment to the policy of no wage increases without productivity growth”. (note our productivity growth has been dismal during the last 3 decades but PM’s salary went up almost 1000% since 1984)

1972 – NWC is formed, recommends ‘13th month bonus’. (Adopted by the public sector, ministers’ salary effectively increases by 8.3%.)

1973 – PM’s salary increases by 170% from $3,500 to $9,500. (ministers’ increase by 55% from $4,500 to $7,000)

1981 – PM’s pay increases by 79% to $16500. (ministers’ by 79% to $11500)

1985 – Lee offers another reason – “to keep political leaders clean and corruption-free”.

1989 – PM’s salary increases by another 200% to $49,608. (ministers’ by 149% to $28,644)

1994 – PM’s salary increases by 94% to $96,000. (ministers’ by 123% to $64,000)

(yearly salary from 1995)

1995 – PM Goh’s increases by 39%, or $450,000, to $1,600,000.

2000 – PM’s salary increases by 23%, or $364,000, to $$1,940,000.

2007 – PM’s salary increases by 59%, or $1,150,000, to $3,090,000.

2011 – PM’s salary reduces by 29%**, or $890,000, to $2,200,000.

The table below is a summary of PM’s salary since independence.

1970 $3,500 $42,000 0 0
1973 $9,500 $123,500* $81,500 170%
1981 $16,500 $214,500 $91,000 79%
1989 $49,608 $644,904 $430,404 200%
1994 $96,000 $1,150,000 $505,096 94%
1995 NA $1,600,000 $450,000 39%
2000 NA $1,940,000 $364,000 23%
2010 NA $3,072,000 $1,132,000 58%
2011 NA $2,200,000 ($872,000) (28%)**

* Salary from 1973 includes “13th month bonus” implemented in 1972. ** Figure of 36% reduction in the press includes pension. PM’s total pay in 2010 was therefore much higher than $3,072,000 because pension was not included. Including PM’s pension, his total salary in 2010 was $3,305,920. (36% X $3,072,000 = $1,105,920. $1,105,920 + $2,200,000 (new salary) = $3,305,920)

PAP became more brazen with each unopposed PM’s salary increase ie with each successful increase, the absolute amount increased. PM Goh’s annual salary jumped by $450,000 from 1994 to 1995 for no rhyme or reason. After the increase of 39% within a year, Goh said he would forgo “any salary increase for himself for five years”. This is nonsense.

Let’s put the salary increase in perspective. In the 1970’s, a new HDB 3-room, 4-room and 5-room flat in Marine Parade cost $17,000, $20,000 and $35,000 respectively. PM’s salary increase of $81,000 could buy two 5-room flats, with some furnishing thrown in, or even a landed property in some areas. Ordinary citizens had to take 30-year mortgages so where was PAP’s sense of proportion?

Lee Kuan Yew ‘invented’ many ridiculous justifications for each salary increase. Lee told Parliament in 1970 that his pay would “remain at $3,500 to demonstrate his commitment to the policy of no wage increases without productivity growth”.

In 1973, without a corresponding increase in productivity, Lee’s pay increased by 170%. In 1981, Lee’s justification for the humongous pay increase (ministers’ and his) was “times have changed since the revolutionary conditions of the 1950’s and 1960’s”. In 1985, Lee introduced yet another reason – “to keep Singapore’s political leaders clean and corruption-free”. In any true democracy, this would never have happened.

The PAP was emboldened by its ‘success’ in getting the salary it had demanded; in 1989, it attempted to introduce “make up pay” to attract ‘talent from the private sector. ‘Make up pay’ was a maximum of 90% difference between the old wage of PAP’s new-found ‘talent’ from the private sector, payable for up to “two terms of office”, eg minister’s salary of $1 million and PAP’s ‘talent’ old wage in private sector $3 million, taxpayers would need to pay an additional $2 million ($3 million minus $1 million) per minister per year or up to $20 million (2 terms = 10 years, 10 X $2 million) for 2 terms.

The PAP did not have in mind just 1 such ‘talent’ from the private sector. It could have cost taxpayers hundreds of millions of dollars for just 1 term in office. The proposed policy was, fortunately, not implemented.

As the leader of the country, Lee shocked the country by claiming he was “a ‘kept man’ all his years in public service, with his wife and three brothers in the private sector earning more than he does”. Lee’s wife had a successful law firm, Lee and Lee, and with Lee’s pay, it was sufficient for a lavish lifestyle for his family. Greed had overwhelmed Lee and he seemed to have this sense of entitlement to an increasing amount of tax dollars while exhorting citizens to be self reliant.

No citizen had forced Lee to accept a will-never-be-sufficient salary and nobody ‘kept’ him in office. Lee was free to leave but he had deemed himself to be able to “govern much more effectively”. Lee could have joined his wife and three brothers to earn more but had chosen to stay in politics. In truth, nobody can be certain about the future. Whether Lee could have been successful without having the tremendous power he wielded as PM is really anybody’s guess. Businesses do flop so one should not simply assume a rosy scenario if Lee had gone into the private sector. What we do know is Lee had been dependent on the goodwill of Singaporeans and has earned more than $50 million in tax dollars.

Lee Kuan Yew’s salary, 47 years in cabinet.

1965 $42,000 8 $336,000
1973 $123,500 8 $988,000
1981 $214,500 10 $2,145,000
1990 $2,000,000* 21 $42,000,000*
Total N.A. 47 $45,649,000

* From 1990 to 2011, Lee was SM and MM. $2 million is a conservative estimate of Lee’s pay.

As an MP for 49 years, Lee’s MP allowance amounted to about $5 million (conservatively using 1995 MP allowance of $100,500). What about Lee’s pension? The PM salary has been heading into the stratosphere shortly after the PAP came into power.

To claim that high salaries justify competent leadership has proven to be a stretch of the imagination. Unless the PAP can provide a logical explanation for all the epic screw ups in public housing, public transportation, education and healthcare. On an annual basis, the PM’s salary has been increasing at an average of at least 10%. Even after the ‘discount’ from $3.07 million to $2.2 million, Singapore PM’s salary increase is about 5,200% ($2,200,000 divide by $42,000) since independence.

If our leader has been exemplary, the median income should be above $5,000 (assuming $100 in 1965) and $3,000 would probably be considered low wages. As the leader of Singapore, the PM must not encourage greed and be exemplary to citizens. PM’s salary increase of 5,200% is out of all proportion to the task of running a politically stable, 716 sq km island with no natural catastrophe.

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3 Responses to 20140921 Singapore PM’s salary increased by 5,200% since independence

  1. Xmen says:

    You need to use inflation adjusted numbers to paint a more accurate picture. For example, Lee Kuan Yew’s total salary could well be in excess of 100 million dollars in today’s dollars.

    Alternatively, you can compare the income of the political class to the median salary of Singapore (private sector?) workers.

    You should also include the extra (8 month?) bonuses given out freely in most years. Then there are pension costs and other benefits.

    The reason that Lee’s spouse, brothers, and relatives are making as much as they did and still do may have to do with Lee’s position as the head of state**. For example, his sons had/have taken top posts in government and its related entities.

    If you add up all the Lee clan’s incomes over the past 50 years, you are easily into hundreds of millions, if not billion, in today’s dollars.

    ** Obviously that is my speculation. (Did I read about the condo discounts enjoyed by some?…)

  2. phillip ang says:

    Agree on the inflation adjusted number.
    LKY wants us to be dependent but his entire family relies on tax dollars. Since independence, Lee’s family probably earned hundreds of millions in tax dollars. Would be fine if they have done a good job but …. 😦
    That will be for another article, time permitting, after one on ministerial salaries.

  3. The real xmen says:

    Xmen made a really stupid remark. If yiu want to adjust for inflation for the leader’s salary, then what about the man in the street? Do you mean inflation only affects to the leaders and the common folk are exempted? We have to bear the brunt of it when the prices of a cup of coffee is now $1 at least and eggs are $2 at least. Our salaries have not even doubled.
    And since he was on the topic of inflation, then what about the other world leaders? Are their countries exempted from inflation? Why does the US president get only usd$400k? Are things one quarter the cost of things in singapore? Please talk with your eyes and heart opened.

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