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13 Mei 2009

PAY TOO HIGH IN SINGAPORE, TOO LOW HERE

The Sun
Tan Siok Choo
12/5/2009




On both sides of the Causeway, salary increases for government employees are currently under the spotlight. While the issue in Singapore differs from that in Malaysia, both highlight one salient fact - nurturing an efficient public sector could enhance economic competitiveness and accelerate economic development.

Last month, the Singapore government proposed giving cabinet ministers and civil servants a massive pay rise. Claiming high salaries are necessary to attract top performers and to curb corruption, the government proposed to hike a cabinet minister's annual salary by 60% to S$1.92 million (RM4.40 million).

Regardless of the merits or otherwise of the proposed pay rise and despite an upsurge in public criticism, there is no denying Singapore's civil service is a paragon of efficiency. Consistently ranked year after year as one of the most corrupt-free administrations in the world, the civil service has helped propel the island-republic from an economic backwater to the status of a developed economy.

But critics have pointed out, even before the proposed pay rise, Singapore's ministers and civil servants are among the highest paid in the world.

Will the island-republic's interest be best served by a policy that could result in a society that is highly risk-adverse? In the long term, will Singapore benefit if massive numbers of its best and brightest continue to opt for jobs in the public sector - jobs that offer fat paychecks with minimal probability of dismissal or redundancies - rather than embark on equally rewarding, but high-risk, careers as entrepreneurs?

Across the Causeway, the Congress of Unions of Employees in the Public and Civil Service (Cuepacs) has proposed a salary revision ranging from 10% to 40% for the 1.2 million Malaysian civil servants.

Although the government has yet to announce its response to Cuepacs' proposal, Prime Minister Datuk Seri Abdullah Ahmad Badawi said last Saturday the request is under "active consideration" by the Public Service Department.

Given the fact that the prime minister described the 11 million Malaysian employees as "this country's most valuable assets", and acknowledged their pivotal role in past economic success and in achieving progress for a better future, the prospects of a positive response to Cuepacs' request appears promising.

While Cuepacs president Omar Osman has acknowledged the need for increased productivity from civil servants, the union should offer to link higher pay with clearly measurable improvements in cutting red tape.

To be sure, Cuepacs' single-minded focus on boosting salaries may have been prompted by the fact that some 400,000 lower level civil servants need to take part-time jobs because their current incomes are grossly inadequate. Given the fact that the last pay hike in the public sector was in 1991, Cuepacs may have felt civil service salaries have a lot of catching up to do.

What Cuepacs should take into account is how far behind Malaysia lags in terms of government efficiency compared with regional heavyweights like Hongkong and Singapore.

In the IMD Competitiveness Yearbook 2006, Singapore is ranked second, after Hongkong, in overall government efficiency. This is defined as the extent to which government policies are conducive to competitiveness. Malaysia occupies the 20th position. Surprisingly, China takes the 17th spot - three notches above Malaysia.

In a sub-category, government bureaucracy, Singapore is ranked second, Hongkong third and Malaysia 11th. IMD assesses government bureaucracy based on the extent that it does not hinder business. Although Thailand, China and India are ranked significantly lower than this country in government bureaucracy, there is little room for complacency.

These three countries enjoy advantages, for example, a huge domestic market, that Malaysia does not. Additionally, competition for direct foreign investment in East Asia is heating up. Malaysia is now competing with countries like Vietnam and the Philippines that were previously off investors' radar screens.

Two recent mega investments underscore this point. In March this year, Intel decided to build a US$1 billion (RM3.45 billion) chip-testing and assembly plant in Vietnam, bypassing India and Malaysia. Not only is Vietnam the second fastest-growing economy in Asia after China, its tech sector - worth about US$800 million (RM2.76 billion) last year - is expected to expand by about 20% each year.

More recently, Texas Instruments opted for the Philippines as the site for its new US$1 billion chip assembly plant. Although Thailand and China were considered, the US-based chipmaker said its decision was based on the highly skilled workers at its existing chip plant in the Philippines.

Malaysian civil servants must realise their role has expanded. As Singapore has shown, a highly efficient civil service could give Malaysia a strong competitive edge against an ever-increasing number of competitors.

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