How Are Singapore Politicians' Salaries Calculated?

The topic of Ministers’ salaries is always touchy.

It’s easy to find angry comments on GST and national reserves because Ministers in Singapore are known to take home an annual salary in the millions.

With companies reviewing their salaries and bonuses, because inflation is gnawing at our salaries, you might be wondering if a salary review for our Ministers is needed too?

Well, it’s been announced that the salaries of Political Office Holders (POHs) will be reviewed this year.

Regardless of where you’re standing on this topic, this is something that stays at the back of your mind and that’s why we’ll be sharing with you how our political leader earn their keep!

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.

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TL;DR: Salaries of Singapore’s Political Office Holders

Click here to jump:

• Understanding the relationship between the economy and political leaders
• How are Singapore Minister’s salaries calculated?
• Singapore Prime Minister’s salary
• Singapore President’s salary
• Speaker & Deputy Speaker’s salaries
• How are Members of Parliament and Non-Constituency Members of Parliament compensated?

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Relationship Between The Economy And The Performance of Political Leaders

GDP Per Capita Comparison

What: Gross Domestic Product per capita (GDP per capita) is the product divided by the midyear 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 the depreciation of fabricated assets or for the 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 2021 was $66,176.39 and this is 154 times from 1960 when GDP per capita was $428.

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% on a year-on-year basis in the first quarter of 2022, moderating from the 6.1% 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 and taxpayers’ contributions 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 four 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 neighbor
• 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

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

• Singapore Prime Minister (Lee Hsien Loong)
• Malaysia Prime Minister (Anwar Ibrahim)
• Hong Kong Chief Executive (John Lee)
• China President (Xi Jinping)
• USA President (Joe Biden)

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 12 Jan 2023.

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.

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

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 U.S. 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.”

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How Is a Singapore Minister’s Salary Calculated?

There is actually a 50-page White Paper on Salaries for a Capable and Committed Government detailing the full rationale of the compensation packages.

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

For the uninitiated, the salary of an entry-level Minister in Singapore (pegged at grade MR4) is benchmarked against the median income of the top 1,000 Singaporean income earns, with a 40 percent discount.

Who are the 1,000 top earners?

1. Senior management positions including Chief Executive Officers, Chief Operating Officers, Chief Financial Officers, Chief Information Officers, Presidents, Chairmen, Directors, and General Managers from a range of industries;
2. Representatives from the financial services including bankers, asset managers, traders, Managing Directors, Senior Vice Presidents; and
3. Professionals include lawyers, accountants, doctors, and engineers.

Starting at the lower end of the MR4 range, a minister may receive a monthly salary of $46,750 and this works out to an annual salary of $935,000, of which $607,750 is fixed and the rest is variable.

In total, a POH could receive about an annual salary of about 20 months.

At the benchmark level, the monthly salary is $55,000, which comes up to an annual salary of $1.1 million – the fixed component is $715,000 and the rest is variable.

The salary framework is reviewed every five years and there were no changes to the last round of review in 2017:

Similarly, the salaries of other POHs are determined based on ratios to the MR4.

The salary ratios reflect the roles and responsibilities of the different political appointment holders – the higher ratio will command heavier responsibilities.

Do Political Appointment Holders Get More Than One Pay For More Than One Portfolio?

Nope. Regardless of the number of appointments held, they will only receive one pay package.

Salary of Singapore’s Prime Minister

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.

For the Prime Minister, he receives a total annual salary package – inclusive of the 13th-month bonus, AVC, and National Bonus that is twice the MR4 benchmark, or $2.2 million.

Unlike ordinary salaried employees, the Prime Minister of Singapore does not receive a Performance Bonus as there is no one to assess his performance annually.

Instead, he receives the National Bonus. The National Bonus is based on four socioeconomic indicators:

• Real median income growth rate of the average Singaporean
• Real income growth rate of the lowest 20th percentile of Singaporean income earners
• Unemployment rate of Singaporeans
• Real GDP growth rate

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Salary of Singapore’s President

The Singapore President receives the same monthly salary, 13th month, and AVC as the Prime Minister, except that he or she does not receive any Performance or National Bonuses.

As the Public Service Division aptly puts it:

The President is Head of State and has significant custodial powers. However, unlike the Prime Minister, he/she does not set national policies and does not have direct executive responsibility for governing the country, except as it relates to his/her custodial role.

This gives the President a salary of $1.54 mil.

Salary of the Speaker and Deputy Speaker

The salary of a full-time Speaker is pegged to the MR4 benchmark which includes the 13-month bonus and AVC.

Similar to the President, a full-time Speaker does not take the Performance Bonus and National Bonus.

The Deputy Speaker’s salary is pegged to 15% of a full-time Speaker.

As both positions are not full-time positions, the Speaker’s annual salary package is about $550,000, whilst the Deputy Speaker’s allowance will be $82,500.

Salary of Members of Parliament & Non-Constituency Members of Parliament

Your Members of Parliament (MPs) and Non-Constituency Members of Parliament (NCMPs) are paid by allowance.

The main difference between an MP and NCMP is that MPs have a community-based role, i.e. looking after the needs of their constituents and raising their concerns in Parliament, and also a legislative role in Parliament where they can influence decisions on Government budgets, and enact or amend legislation, including the Constitution.

As they perform both political and community roles but do not have an executive function, they are given a monthly allowance (pegged to 17.5% of the MR4 benchmark), a 13th-month bonus, and AVC. The annual MP allowance is $192,500.

Contrastingly, NCMPs do not have a community role as they do not have constituents.

As such, their annual allowance is pegged to 15% of the MP’s annual allowance, at $28,900.

Read more:

• Highest Paying Jobs in Singapore 2022: Job Roles, Industries & Highest Paying Degrees
• Salary Guide Singapore Across Industries (2022): Are You Paid Enough?
• Uni Fresh Graduate Salary in Singapore 2022 Guide Based on Graduate Employment Survey (GES) 2021

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Afterthoughts

Taking in millions within a year seems really a lot for an ordinary Singaporean since the median income is $5,070.

In comparison with top CEOs of Fortune 500 companies, local banks, and STI companies, such as DBS CEO Piyush Gupta, who earned $13.6M, and UOB CEO Wee Ee Cheong, who received $10.9M, our ministers seem to be earning a lot lesser.

But, 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.

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