Tuesday November 25, 2008

Singapore ministers, civil servants 2009 pay cut up to 19% on GDP decline, Singapore recession

This article belongs to the Singapore recession watch story arc.

channelnewsasia.com :

Ministers and top civil servants will get a pay cut of up to 19% in 2009. Top civil servants and ministers were supposed to get a pay rise in Jan 2009 but this has been deferred in view of the clouded economic outlook. The annual salary for top civil servants and ministers will fall next year to levels below April 2007, because close to 25% of their annual salary comprises variable payments linked to the GDP growth of Singapore and their salary will fall as long as the economy remains weak. In 2009, the Prime Minister and President will see their annual salaries cut by 19%, Ministers and Senior Permanent Secretaries by 18%, and Members of Parliament by 16%.

As for civil servants such as teachers and police officers, they are getting a total of two months' bonus payment for 2008, plus S$100 to S$300 paid in July. This comprises the 13th month payment or Annual Wage Supplement [AWS] and a one-month Annual Variable Component or AVC. The year-end AVC has been reduced to 0.5 month. Last year, the total bonus payment was three months plus S$220.

- In a price deflation scenario, prices of goods and services fall. But wages tend to fall faster than prices, being the exact opposite of the inflation scenario where prices rise faster than wages. In either case, workers are still screwed because they cannot keep up.

Chartered Semiconductor fired the first shot as it implemented a 5-10% pay cut, which was followed closely by a move by Temasek Holdings to cut the pay of its top executives by 25%. A manager in my office remarked that the Motorola factory in Singapore has been sold and the new owner told the workers that they could stay on and take a 25% salary cut, or they could leave. So, an average of say 10-20% seems to be the going rate nowadays as far as pay cuts go, depending on the position, industry, and particular company.

See also :

1. Singapore stagflation : May 2008 exports fell most in 17 months; inflation at 26-year highs
2. Singapore GDP shrinks 6.6% in Q2 2008 as stagflation continues
3. Singapore economy falling into technical recession as exports fall
4. Singapore economy in recession, GDP contracts 6.3% in Q3 2008, MAS ends currency gain policy
5. Singapore GDP contracted 6.8% annualized in Q3 2008, heads deeper into recession

(2008-11-25 18:15:46 SGT) [Biz] Permalink

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