Established in 1999

Continued from FrontPage of Article

Full Text of Speech    Annexes

Starting salary revisions

As I mentioned earlier, at the entry level, the competition for fresh university graduates is getting more intense.  The recent surveys by SMU, and preliminary indications for NUS and NTU show that pay offers for fresh graduates have been rising. For example, the average salary offer for a SMU graduate is about $2,800. One graduate reportedly received a $12,000 salary offer!

The Civil Service has adjusted starting salaries annually to keep in step with the market, both upwards and downwards.  We dropped starting salaries by 10% during the recession years, and increased them when the economy recovered in recent years.

With effect from June this year, we will raise starting salaries to keep pace with the market.  For a graduate with a Good Honours degree who is appointed to the Management Executive Scheme, the starting salary will be raised by about 10%.  Starting salaries of other graduate schemes will be adjusted according to their market benchmarks. 

We will also adjust the salaries of officers who have been appointed recently, to maintain relativities with the incoming batch of fresh graduates. We will continue to monitor our salaries at the entry grades and make adjustments as necessary to maintain competitiveness.
 
Schemes with In-Built Market Adjustment Components

Some Civil Service professional schemes such as accountants, economists and statisticians have an in-built “market adjustment component”. The market salaries of these professions tend to be volatile – with large bonuses in boom times, but falling sharply during a recession.   The market adjustment component allows the annual salaries of these schemes to be adjusted rapidly, up or down, without affecting the monthly salaries.

We will raise the market adjustment components of these schemes according to their individual benchmarks.  There is no further need to make other forms of adjustment for this group.
 
Schemes which are at or close to market -  “Basic tier payment” 

According to Mercer HR Consulting, private sector salaries are projected to increase by 4% in 2007. For the officers in the Civil Service, we will make a basic payment amounting to 3-5% increase in the annual salaries. This payment will be performance-based. and will be in the range of 0.5 – 0.75 months.  Good performers will receive up to 0.5 month whilst better performers will receive up to 0.75 month.

This payment will apply to schemes which are currently at or close to their market benchmarks.  It will ensure civil service salaries are competitive.  On top of this payment, civil servants will continue to receive their annual increment and the mid year annual variable payment. Like other Singaporeans, they will also enjoy the 1.5% increase in the employer CPF contribution from July this year.

The payment will apply to the Education Service, the Corporate Support Scheme and the Operations Support Scheme.

The Education Service completed its review last year, but there are still issues to be addressed.  MOE will be adjusting starting salaries, and making corresponding adjustments for teachers who were recently appointed. We must also identify high-calibre teachers who have the potential to make it as our future leaders in education and develop and reward them in a timely manner.

Corporate Support Officers and Operations Support Officers will also receive this basic tier. The payments will be made next month, in May. If the economy continues to do well and the higher market salaries are sustained, these payments will be incorporated into the annual performance bonuses of these officers.

We will also be looking into re-designing the jobs and upgrading the skills of our officers in the Corporate Support, Operations Support and similar schemes. Traditionally, these schemes have been designed with rather narrow job scopes. We will work together with the public sector unions to prepare our officers to take on a wider scope of work and responsibilities, and provide more opportunities for progression.

These schemes of service, which will receive the basic tier for officers who have shown more than satisfactory performance, account for approximately two thirds of the officers in the civil service.
 
Schemes which are lagging the market

There is a group of schemes which is lagging the market, for which we will make larger increases than the basic tier to close the gap. I will highlight the key services, namely the Management Executive Scheme, the Management Support scheme, the Home Uniformed Services, and the Foreign Service. Collectively, these schemes account for almost one-third of the officers in the civil service.

Graduate officers on the Management Executive scheme work across all ministries performing a wide range of jobs, including policy development and implementation, corporate services and operations work.  Salaries for this group of officers have fallen behind the market.  We need to make an upward adjustment of 16% this year in order to level up. As a first step, we will halve the gap through a 5-8% adjustment. This will be in the form of a performance-based payment of 0.75-1.25 months of salary. Good performers will receive up to 0.75 month, which is equivalent to a 5% increase, and the better performers will receive up to 1.25 months. 

A more fundamental review of the Management Executive scheme is also ongoing. The review will look into all aspects, including pay, career advancement and progression, job challenges as well as training and development of officers. We want to make the scheme more attractive, both to fresh graduates, as well as to mid-career entrants to the Civil Service. In particular, we will need to identify, develop, and reward more substantially, those among the Management Executive officers who are performing very well and have demonstrated the capability to take on greater responsibilities. The review will be completed in the second half of 2007.  There will be a second round of adjustment later this year when the review is completed.  The form of the adjustment will depend on the findings of the review.

In the same vein, we are making changes to the Management Support Scheme and Technical Support Scheme, which employ officers with diploma qualifications.  These schemes are also lagging their benchmarks, and we will make a performance-based payment of 0.5 – 1 month. Good performers will receive up to 0.5 month, and the better ones, up to 1 month.  Similarly, a more fundamental review of the Management Support Scheme is ongoing, and we will make a further adjustment before the end of the year. 

The Home Affairs Uniformed Services, comprising the Police, Prisons, Civil Defence and Narcotics services, are lagging their benchmarks by up to 26% in certain grades. As the gap is large, these services require major adjustments. These services are now dealing with more complex and challenging tasks given the threat of terrorism and the increased security measures required.  We need to pay our home team officers competitively, so that the uniformed services will be well-staffed, and able to address any emergency.  The first step of this adjustment will be carried out now, amounting to 10-13%.

Senior officers in the Home Uniformed Services will receive a performance-based payment of 1 – 1.5 months, with the higher quantum going to better performers.  Junior officers will also receive performance-based payments ranging between 0.75 to 1.5 months.  In addition, to address the market pay gap, we will increase their monthly salaries by 4% - 5%.

Beyond pay, the Ministry of Home Affairs will also be looking at other aspects to better attract and retain their officers.  There will be more opportunities for junior officers to progress into the senior ranks. The Ministry is also streamlining its promotion and ranking process, and reviewing benefits and other terms, to make the Home Uniformed Services a more attractive career.  After the review is completed, a second adjustment will be made later this year to close the remaining gap.

The Singapore Armed Forces will make similar salary adjustments.

The Foreign Service is also lagging the market substantially. Our diplomats are a small but critical group of officers who promote and safeguard Singapore’s interests in the international arena.

Foreign Service officers will receive a market adjustment of 0.75 months. In addition, the performance bonus structure has been revised to identify and reward the top performers better.  Annual increments have also been increased and tied to performance.  Other adjustments include a revision of the monthly salaries at the entry grades and a revamp of the retention bonus framework. On average, Foreign Service officers can expect an 8% salary increase.
 
Administrative Service and P/J/S Appointment Holders
Administrative Service

Let me now move on to the salary adjustments for the Administrative Service, and Political, Judicial and Statutory Appointment Holders. 

The Administrative Service is at the core of the Public Service.  Administrative Officers serve in many of the top Public Service leadership posts.  We set very high standards for admission into the Administrative Service. Officers with high ability and potential from all schemes in the Public Sector, as well as  private sector candidates are welcome, regardless of whether they had previously received scholarships or not. They are brought into the Administrative Service so long as they meet the stringent requirements and have a passion for and dedication and commitment to Public Service. Once brought in, they are developed, stretched in challenging responsibilities and tested for future top appointments in the Public Service.

A lot is demanded from the Administrative Officers. They are expected not only to do their primary jobs well, but to also actively lead, participate and contribute to inter-agency issues and service-wide initiatives. This is a key role of the Administrative Service – to ensure that the whole Public Service operates with collective vision and coherence.

The officers are assessed rigorously every year and those who do not meet the mark are asked to leave the Administrative Service. They may then be transferred to another scheme in the Public Service, if they wish. There are also officers who ask to leave the Administrative Service as they prefer a more specialised area of work.

Those who make it to top positions as Deputy Secretaries and Permanent Secretaries have fixed term appointments, and are expected to step down at the end of the term to make way for younger officers. This provides for orderly succession and a pipeline of potential future Public Service leaders in order to maintain the drive and energy of the whole Public Service.
 
Administrative Service Salary Benchmarks

The salaries of the Administrative Service were last adjusted in 2000. It is one of the schemes that have fallen behind their benchmarks.  The salaries of Administrative Officers are pegged to two market benchmarks.  [I will now ask for the slides to be projected.] At the SR9 grade, which is the entry level into the Superscale grades, the benchmark is defined as the salary of the 15th person, aged 32 years, from 6 professions, namely bankers, lawyers, engineers, accountants, employees of MNCs and local manufacturers. [The next slide will illustrate how the benchmark is computed and derived.] Administrative Officers at the SR9 grade are typically in director-level positions in their organisations.

The second benchmark is set at the higher end, the Staff Grade I, or MR4 grade.  This is the grade at which senior Permanent Secretaries are paid. This benchmark is defined as two-thirds of the median salary among the top 8 earners in the same 6 professions.  This is also the entry-level grade for ministers. 

Last month, we released information on how the two benchmarks and actual salaries have moved over the last seven years.  This has been widely reported. I will briefly recap the trends and request Members to refer to the handouts. The income tax data that we are using for the benchmarks is for Year of Assessment 2006, that is, for income earned in 2005.  The benchmark salaries are therefore almost 2 years old. 

In 2000, SR9 salaries were at 67% of the benchmark and we adjusted salaries then to close the gap fully. This benchmark dipped in 2004 – 2005, but has since risen. It currently stands at $361,000, similar to what it was in 2000 ($363,000).  The SR9 salaries were reduced during 2001-2003 due to the economic recession but the cuts have since been restored. Currently, the SR9 salaries are close to the benchmark. 

At the MR4 grade, salaries were at 71% of the benchmark in 2000.   We raised salaries to 80% of the benchmark then, with the intent of closing the gap over a three-year period. We made the first adjustment in the first half of 2001, raising salaries to $1.2 million, according to plan. Thereafter, Ministers and senior civil servants took a pay cut of 10% after the Sep 11 attacks and another 10% cut after SARS. The two cuts were restored about two years later, in July 2004 and January 2005 respectively. Since then, there have not been any salary adjustments for the Administrative Service. Salaries at the MR4 level are at $1.2 million, the same level as in 2001.

In the meantime, the benchmark for MR4 has moved.  It rose from $1.4 million in YA2000 to $1.9 million in YA2001, reflecting income that was earned during 2000, which was a particularly good year for Singapore.  Thereafter, the benchmark dipped during the recession years, but it never fell below the $1.4 million mark. In recent years, the benchmark has increased, in tandem with Singapore’s good economic growth.  Currently, it is at $2.2 million, based on income earned in 2005.  This also means that at the MR4 level, salaries are now at 55% of the benchmark, compared to 71% in 2000.

The principle of benchmarking Ministers’ and senior civil servants’ pay has been established and widely debated in Parliament.  Our philosophy is to pay competitive salaries to facilitate the recruitment and retention of the quality of talent we need for the government and public sector.  To do so, we have to benchmark against the comparable top jobs in the private sector. These are the realistic alternatives that a student considering a scholarship, or a person considering a career in the public sector could pursue. Indeed for the public officers in their 20s and 30s, their peers in school and university would be pursuing such careers, and in a rising job market, these are the jobs that headhunters are targeting them for. For those considering whether to serve in political office, these are often the careers that they are currently pursuing with good prospects of rising further in the private sector. Some of those in their late 30s or 40s are at or near the top jobs in their companies or field of work.

There is no perfect method for doing this benchmarking. The methodology of establishing these two market benchmarks at SR9 and MR4 was set out in the White Paper on ‘Competitive Salaries for Competent and Honest Government’ in 1994. The White Paper was thoroughly debated in this House. In 2000, when the last salary adjustments were made, the benchmarking methodology was reviewed.

The benchmark of 15P32 for SR9 was found to be sound, while the benchmark for MR4 was modified to make it more robust by expanding the base to the current top 8 income earners in each of the 6 professions, to discount stock option gains by 50%, and using the median rather than the mean. We have looked carefully at the benchmarks again, and have found that they remain sound. They follow economic and employment market conditions up and down. After calculating the benchmark figure, we also do a check against private sector income earners. The ranking of the benchmark against the private sector earners is stable and does not fluctuate widely. 

I understand many Members have views and suggestions on this issue and I look forward to hearing their views and ideas.
 
Salary Revisions - Adjustments for MR4

Salaries at the MR4 Grade are currently at 55% of the benchmark.   Given the large gap, it is not realistic to close the gap fully in one go.  Instead, we will close half of the current gap, that is, from 55% of the benchmark, to 77% of the benchmark by the end of this year. This will be effected in two steps - one step now, and another step at the end of this year.  Next year, we aim to close half of the remaining gap, bringing salaries to 88% of the benchmark by end-2008.

But for now, in the first step, we will increase the annual salaries for MR4 grades and above, by an average of 25%.  The percentage increase will range from 33% at MR4 decreasing to 14% at the higher grades. The annual salary at MR4 will be increased from $1.2 million to $1.6 million.  This will bring the MR4 salary to 73% of the benchmark, fairly close to the 77% of benchmark we want to be at the end of this year. 

The revisions will be effected through adjustments to both monthly salaries and annual components.  Monthly salaries for the MR4 grade and above will be increased by an average of 15%.   Monthly salaries for the MR4 grade will be increased by 22.5% from $42,800 to $52,400.  This percentage increase in monthly salary tapers off progressively for the higher grades.

We will restructure the pay to remove components which are no longer relevant and to build up performance-linked components.  We will make three main changes - removing the Car Allowance, increasing the GDP Bonus and increasing the performance bonus.

First, the Car Allowance.  This is a legacy payment from the time when the Civil Service stopped providing senior officers with an official car.  The Car Allowance is currently 2.5 times the monthly salary of the officer. This is not market practice.  Typically, private sector companies pay car or transport allowance at a flat rate.    

As the Car Allowance is no longer relevant, we will remove it formally.  In its place, we will increase the GDP Bonus which depends on the performance of the economy, and performance bonus which depends on their individual performance. This will apply to all appointment holders, the Administrative Service, as well as senior officers in all ministries and statutory boards. I should emphasise that the Car Allowance is already counted into the annual salary package of these officers. Hence this change does not change the total annual salary package but restructures it to be more performance-based.

The President, Prime Minister and Speaker do not currently receive the Car Allowance as they are provided with an official car. The restructured salaries replace the Car Allowance with higher GDP Bonus and Performance Bonus. The President, Prime Minister and Speaker will draw this new restructured salary. The total salaries of the President and the Prime Minister will increase by about 25%, close to the average percentage for the MR4 grade and above.  They will continue to be accorded the use of an official car. This car benefit will be subject to tax.

Second, we will revise the GDP Bonus. This bonus payment depends on the growth figure for the year. Currently, the norm payment is 2 months if the economy grows by 5%. There will be no GDP bonus if the economy grows by 2% or less, but a maximum of 4 months will be given out if the economy grows by 8% or more. In between, the bonus varies linearly with GDP growth. 

We will put a major part of this salary increase into the GDP Bonus, to make a larger proportion of the annual salary package dependent on growth of the economy. Ultimately, every senior civil servant and appointment holder plays a role in ensuring that Singapore continues to thrive and prosper.  We will increase the bonus to a norm payment of 3 months if the economy grows by 5%. The minimum payment will remain at zero if the economy grows by 2% or less. The maximum will be increased to 8 months if the economy grows by 10% or more.  

Third, in line with our philosophy of paying for performance, we will increase the Performance Bonus by 2 months for officers at this level, to a norm of 7 months.  

With the above revisions, close to half (47%) of the annual package of MR4 grades and above will be variable compared to about one-third (34%) today.  20% of their salaries will be predicated on the GDP bonus. Another quarter of their salary is performance dependent. The Prime Minister decides on the level of performance bonus each minister receives.

The President, Prime Minister, Judiciary and Statutory Appointment Holders currently receive a fixed Service Bonus of 5 months instead of Performance bonus. The Service Bonus will be increased to 7 months which is in line with the 2 month increase in Performance Bonus quantum that those in grades MR4 and above could qualify for. About 20% of their salaries will be predicated on the GDP bonus.

All the salary revisions are non-pensionable.  There will be no increase in pension cost.  

The new salary levels will bring the rankings of MR4 and above salaries amongst all income earners to a level comparable to their rankings in 2000.

The Prime Minister’s salary currently ranks 164 among income earners. After the revision, the Prime Minister’s salary, at $3.1m will rank 102nd among the private sector earners. In 2000, the PM’s salary ranked 63rd.  The MR4 salary currently ranks 769th among income earners. The revised MR4 package will rank 438th compared with 367th in 2000.
 
Adjustments for SR9

We have to make sure that salaries at the SR9 benchmark stay competitive to retain our top officers. For Administrative Officers who are bonded, their bonds will be ending when they are in their late 20s and early 30s.  This is a critical juncture in their careers, when they will ponder alternative career options. These officers are most mobile and likely to be drawn to all the attractions of the private sector, in particular the banking industry. 

At the Superscale entry grade, or SR9 grade, our salaries are close to the benchmark level.  But we should be mindful that the benchmark measures salaries received in 2005, almost two years ago.  The market for talented young professionals is very competitive and we expect that market salaries have risen further in 2006 and 2007.  As the SR9 salary is currently near its benchmark we will not be making any adjustment to the monthly salaries at this grade or in the grades below.  But we will make a performance-based payment of 0.5 to 0.75 month.  This is in line with other civil servants whose schemes are at or close to their benchmarks.

This payment, together with the higher GDP bonus paid out this year, will raise annual SR9 salaries by 3%, from $ $372,000 to $384,000. About 36% of the revised salary package will be variable depending on how well the economy and the individual perform. 

The salaries for grades between SR9 and Staff Grade I will be adjusted by between 3% at SR9 and 33% at MR4.

 We will watch private sector salaries at the SR9 benchmark carefully. Should we see the market moving, we will move promptly to make a further adjustment, later this year if necessary. 
[I will now ask for  the tables on the Civil Service revisions and on the 2000, 2006 and revised 2007 salaries for PM, Minister (MR4), and SR9, including ranking info to be circulated.]
 
Adjustments for MP Allowance

We will also adjust the allowance for Members of Parliament. The MP Allowance is pegged to the Administrative Service SR9 grade. MPs currently receive a monthly allowance, as well as the Non-Pensionable Annual Allowance or the 13th month pay, as it is commonly known, and the Annual Variable Component which is paid in July and December each year. 

In 1995, the annual package for MPs was $100,500, or 56% of the SR9 annual package.  Over the years, the SR9 annual package has risen with a large proportion of the increase paid as annual components – the GDP Bonus and performance bonus.  As MPs do not receive these components, their annual package has decreased as a proportion of the SR9 annual package.  The current MP annual allowance is now 47% of the SR9 annual package.

We will bring the MPs’ allowance back to 56% of the SR9 annual salaries. The monthly MP allowance will be raised from the current $11,900 to $13,200.  The GDP Bonus will also be extended to MPs, so as to link their annual package to the state of the economy.  MPs will receive 1 month of GDP bonus if GDP grows at 5%, and up to 2 months of GDP bonus if the GDP growth reaches or exceeds 8% GDP. But if GDP growth is 2% or less, there will be no GDP bonus paid. The combined changes will bring the 2007 MP package back to 56% of the SR9 package, similar to the 1995 levels. We will make corresponding adjustments to the allowances for Non-constituency MPs and Nominated MPs.

We will also increase the allowances for an MP to engage a Legislative Assistant from $1,000 to $1,300 and for a Secretarial Assistant from $350 to $500.
 
Costing

All the adjustments will take effect from 1 April 07. The total salary revisions for the Civil Service will increase the Government’s wage bill by about $214 million or 4.7 %   The wage bill for political appointment holders will increase by $10.5 million (or 23%) to $56 million.

Ex-Gratia payment

The pay revisions outlined above are to ensure that we continue to have a good public service for the future.  We should, however, not forget those who have laboured hard to lay the strong foundation for us.  One group comprises the former office holders and MPs who were elected between 1959 and 1980 and retired before Dec 1992 and are now drawing a pension. They were among the first generation of leaders who toiled during the early years of independent Singapore and did not have a chance to enjoy the fruits of their labour.

Another group is the civil service pensioners who worked with the Government during the turbulent times of the 1950s and 1960s and who retired before Jan 1982. These pensioners served at a time where civil service pay was lagging well behind the private sector. Some did not enjoy the benefits of employers’ CPF contribution while others did not have their wage increase consolidated into their pensionable salaries. We would like to acknowledge these early pioneers and their dedicated service, even as the civil service adjusts its pay level for the current batch of officers.

In 1996 and 2000, we made ex-gratia payments to these two groups as a tangible recognition of their contributions during the early years of nation building. This year, we will make another gesture in the form of an ex-gratia payment of the same quantum to these two groups. The payment is estimated to cost $2 mil for 43 retired MPs and office holders. About 2400 civil service pensioners are expected to receive the payment, costing $7.6 mil.

Full Text of Speech

Annexes

Source: www.gov.sg Media Release 9 Apr 2007

ABOUT THIS WEB SITE | ADVERTISING WITH US | LISTING WITH US

ePartners  | Press  |  eMail Us | Permissions | Content Contributors

Copyright©   All rights reserved