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ANNEX 1

FACTSHEET ON SALARY BENCHMARKS

1.                 The 1994 White Paper on Competitive Salaries for Competent and Honest Government established 2 private sector salary benchmarks to peg the salaries of Ministers and Administrative Officers.  In 2000, a review of the White Paper made further refinements to the benchmarks.  The benchmarks are based on the salaries of top earners from a basket of six professions (namely bankers, lawyers, accountants, engineers, employees of Multi-National Corporations and local manufacturers).

2.                 The 2 benchmarks are currently defined as follows:

a.                 Staff Grade I (MR4): The annual salary of an Administrative Officer in Staff Grade I is pegged to two-thirds of the salary of the 24^th highest earner (median) among a group comprising the top 8 earners from the 6 professions;

b.                 Superscale (SR9): The annual salary of an Administrative Officer in the entry Superscale grade is pegged to the annual salary of the 15^th top earner aged 32 years belonging to the 6 professions.

3.                 Salaries for the intermediate grades are interpolated between the 2 points.  The salaries of political, judicial and statutory appointment holders are pegged to these benchmarks.  The entry grade for Ministers is pegged at Staff Grade I, and the higher appointments (for example, the President, Prime Minister, Chairman Public Service Commission, judges, etc) are set based on predetermined ratios to the Staff Grade I salary.

4.                 For the benchmark data, only earnings of Singapore citizens, Singapore Permanent Residents, and Malaysians working in Singapore are included.

The Six Professions

5.                 The six professions are bankers, lawyers, accountants, engineers, employees of Multi-National Corporations and local manufacturers.

6.                 These six professions have been selected as they are alternative professions that top calibre senior civil servants could have joined. Our Ministers and top civil servants should be of calibre similar to those who would have risen to the top in these professions.

7.                 Civil servants at Staff Grade I are typically Permanent Secretaries leading very large ministries. They also hold concurrent additional appointments such as Chairman of a statutory board, government-linked company, or are involved in other demanding cross–agency projects. The expectations, demands and skills set required of these top public sector jobs are comparable to those in the six professions.

8.                 Doctors and architects typically also earn high salaries. However, these professions are excluded because these are jobs requiring specialist skills.   

Comparing with the Private Sector

9.                 Singapore is well known for its first-class and clean Public Service. To sustain this, salaries offered by the government must be sufficiently competitive to attract and retain top individuals with the necessary ability and integrity.

10.             The Staff Grade I benchmark compares Ministers and top civil servants with top executives and professionals. We recognise that the nature of work in the public and private sectors is different and there is some personal sacrifice involved in public service. This sacrifice cannot be so large as to put off able men and women. For this reason, we have discounted a third of what the median 48 income earners get.  

11.             Ministers are not in guaranteed long-term jobs. They serve at the pleasure of the Prime Minister, and like all MPs face the general elections every five years. Similarly, our top civil servants are put on fixed term appointment once they are appointed to top positions. 

Salary Components

12.             The benchmarks are based on Principal Earned Income which has been taxed.  These consist of earnings from the individual’s primary source of employment and include monthly salaries, bonuses, stock options, partnership fees and commissions.  Unearned and passive forms of income, such as dividends, rent and interest, are excluded. If a person has more than one source of earned income, only the Principal Earned Income in respect of the largest source or the aggregate of the income from the same trade, partnership or employment was used.  Therefore, the salary data reflected in the benchmark is not necessarily the total income brought to tax.

13.             Taxpayers are classified into the various professions/sectors according to the 1990 Singapore Standard Industrial Classification[1] (SSIC).  The salary data was extracted on basis of these classifications.

14.             Stock options are included in the salaries of the top income earners. However, the gains from stock options vested each year are discounted by 50%.  This means we only take half of the stock option gains in the current year, as current year income. This is because the amount of stock options are usually accumulated over a few years, and the gains may be quite large. Taking the total gains would cause incomes to escalate, and it would not be a good reflection of the actual earnings. 

15.             The benchmark figures are audited by Auditor-General every year.

Median Salaries of the Top 8 Earners in the 6 Professions

in the Staff Grade I (MR4) Benchmark

 (YA2006 Figures)

The median income for the top 48 earners in YA2006 is $3.29 million

Civil Service: More pay for good performers                                Average rise of 25% for PM and Ministers

·        About two thirds of civil servants get 3% to 5% pay rise              Range from 14% to 33%

• Home Team, Management and Support Executives

and Foreign Service to get more

Summary of Civil Service Salary Revisions

^# For schemes which are undergoing further review, such as the Management Executive Scheme and Home Affairs Uniformed Services, there will be further adjustments later in the year if the economy continues to do well and market conditions permit.

*  An estimated 5% of civil servants in these schemes will not be eligible for the salary revision which will be linked to  performance.

^ About 1% of civil servants on moribund schemes (which are outdated) will not eligible for any salary revision.

Summary of Increases in Wage Bill for Appointment Holders and Members of Parliament