How much should Singapore’s leaders be paid?

Prime Minister Lawrence Wong announced on September 8 that Singapore's ministerial salaries and MP allowances would increase for the first time in over a decade. This salary revision aims to reflect the country's economic goals and social vision. The decision to revise political salaries is not unexpected, as the benchmark for these salaries is based on the median income of the top 1,000 Singaporean earners, with a 40% discount for public service.

This benchmark includes high-level positions such as CEOs, chairmen, and directors, as well as professionals like bankers, lawyers, accountants, and doctors.

Unlike private-sector salaries, political salaries in Singapore are characterized as "clean wages" that exclude benefits like housing or tax breaks. However, they consist of a fixed component (65%) and a variable component (35%), which includes bonuses tied to both individual and national performance. The current framework, introduced in 2012, sparked debate on the allocation of the benchmark rate between fixed and variable components.

The opposition Workers' Party had previously proposed a higher fixed component (81%) and a smaller variable component (19%), but this would have reduced the link between salary and performance.

The latest salary revisions are set to be discussed in Parliament, with the independent review affirming the existing framework and suggesting adjustments to the national performance bonus calculation. The government is tweaking four targets used to measure national performance, including citizen unemployment, real income growth for citizens at the median and the lowest 20th percentile, and real GDP growth.

These targets, aimed at ensuring good jobs for Singaporeans and creating economic opportunities, are particularly relevant given the current economic situation.