The Growth Bonus: Is there a causal link between a civil servant offering public service and an economy doing exceptionally well?

In the design of a successful incentive plan, an obvious starting point is "what do we hope to achieve ?". In other words, "What is the objective of the proposed incentive scheme?"

As organisational practitioners, it is always challenging to frame the main purpose of an incentive plan and its competing agendas. Organisations may adopt SMART ideas in determining the goals and objectives of the plans. Performance standards and measures may be formulated using economic value added models or balanced (HR) scorecard templates. With performance measures aligned to the strategic intent of incentive plans and the goals and objectives of the organisation, the causal link between pay and performance may perhaps be forged in theory, and may not necessarily be forged in practice.

As its name implies, the primary purpose of incentives is to incentivise and reward behavioural change towards performance targets. A significant challenge in the design and implementation of successful incentive schemes (both long and short term plans) is the notion of line of sight. If we are unable to "set our sights and sight our targets", it will be problematic for us to achieve our goals regardless of our competencies and motivation. If the line of sight is remote or obscure, organisations would simply be offering us more money for nothing.

In an attempt to make the civil service careers more attractive, the public service division of Singapore announced it would provide extensive career development opportunities and performance based pay for its public servants. An aspect of the performance based pay is the concept of a "Growth Bonus".

According to its press release of 25 October 2007:
"A new Growth Bonus, to be paid in times of exceptional economic performance, will also be introduced. In line with the philosophy to link rewards to performance, this bonus will be tied closely to individual performance, with the better performers receiving more ... The Growth Bonus will only be paid when the Singapore economy has done exceptionally well, and is a reflection of the Civil Service’s contribution to the economic performance as well as the contribution of the individual officer"

With an expectation of a "Growth Bonus" for a stellar economic performance to be payable in March 2008, the public service division under the Singapore Prime Minister Office may be setting another quantitative benchmark on short term incentives for the private sector to follow.

As a tiny red dot, the economic performance of Singapore may be driven mostly by external factors, such as the growth economies of China and India, and may be beyond the grasp of our public servants. No matter how hard we may try, we are still a sampan in an ocean. Do we reward ourselves while we sail in calm waters, and blame the tankers for creating waves when they are in close proximity? What happens when the sea level raises?

As a servant of the public, performance standards and measures may be difficult to articulate. In addition, the line of sight between the performance and contributions of civil servants and the exceptional (?) economic performance of Singapore may be obscure, or even remote. Seriously, is there a line of sight between a high performing civil servant offering public service and the Singapore economy doing exceptionally well?

What about incorporating measures that go beyond economic performance to focus on the well-being of its residents such as income disparity and work-life expectancy in a knowledge-based Singapore. Should we include the Human Development Index (HDI) and its composite people dimensions of longevity, knowledge, and purchasing power parity, as well the Gini coefficient as key performance indicators for public servants. Surely, we should align the well-being of its residents to the economic growth of the economy, or shouldn't we?

While the public service division attempts to incentivise its civil servants through "a sharper link between pay and performance to recognise staff according to contribution", will the servants of the public run into "the folly of rewarding A while hoping for B?"

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TodayOnline, 11 April 2007, Singapore

Why the GDP link? Bonus peg a good indicator of how ministers, top civil servants have created wealth for all of Singapore, says Teo

Derrick A Pauloderrick@mediacorp.com.sg

FEW would probably take issue with the fact that a minister's pay - in fact anybody's pay - should be linked to his performance. But when his pay packet is also tied to Singapore's economic performance - the higher the gross domestic product (GDP), the bigger the bonus - even some ruling party MPs question the wisdom of such a link.

If Monday's parliamentary debate on pay revisions for ministers and civil servants focused mainly on that "benchmark thing", yesterday's session saw the spotlight being trained on the "GDP bonus".

This bonus is a component which ministers, parliamentary secretaries, top civil servants and MPs are eligible for.

Several of the 13 backbenchers who spoke yesterday had reservations about the GDP bonus, even as they expressed support for the tighter link between pay and performance in the public sector, a distinctive feature of the revisions compared to past exercises.

One common refrain heard in the House was whether it is a fair performance peg to use.

"We all know that a rise in GDP may not benefit all sectors of society equally. Some may even lag behind. I would suggest that the Government consider using indicators that directly impact the livelihood of all Singaporeans," said Dr Lim Wee Kiak (Sembawang GRC).

Nominated MP Loo Choon Yong, while "relieved" that a large part of the salary increases are not in the fixed salary component, said that relying on the GDP alone is "simple, convenient but inadequate".

He proposed one other indicator to be considered: That of the total cost of running the Government as a percentage of total revenue.

After all, CEOs in the private sector have to ensure profits are not eroded by increasing costs and expenses, Mr Loo said.

Other suggestions of alternative benchmarks included: The consumer price index and the inflation rate, as a way to keep cost of living affordable and protect savings; citizens' feedback to major public services; the number of jobs created for Singaporeans; and even the number of Singaporeans who migrate.

Based on the latest revisions, ministers will enjoy a GDP bonus of between three and eight months if the economy grows between 5 and 10 per cent or more. But they will not get any bonus if the economy grows by 2 per cent or less.

For example, the entry-level annual salary of a minister this year is expected to include a 5.9-month bonus based on Singapore's estimated GDP growth of between 4.5 and 6.5 per cent.

Mr Teo Chee Hean, Defence Minister and Minister-in-Charge of the Civil Service, heard them all. In his response midway through the debate, Mr Teo pointed out that the Government has to cater to all Singaporeans, not just individual groups.

"Therefore, the GDP is a good indicator of being able to create wealth for all of Singapore, and with that wealth, to make even those Singaporeans who may not benefit directly from the GDP growth better off as well ... through asset enhancement and wealth transfers."

In his hour-long speech, Mr Teo delved into each of the major talking points, raised by both MPs and the public, on ministerial and civil service salaries.

One of these is the question of comparing salaries to the private sector instead of a comparison with what politicians earn in other countries.

The latter would not be comparing apples with apples, said Mr Teo. "Our salaries are clean. Everything is there. You look at the salary of the Prime Minister of Britain or Australia or almost any other country in the world, you don't know what his total compensation package is."

More importantly, though, as civil servants or office-holders in Singapore cannot become office-holders abroad, there is no point in cross-country comparisons, he argued.

"You have to look at what a young man in his 30s or 40s is comparing himself to when he's deciding what he's going to do with his life. These are the relevant market comparisons - not what politicians in France, Finland or Denmark are being paid," said Mr Teo in response to points made by Opposition MPs on Monday.

Another comparison, between the civil service pay increases and the $30 monthly increase for those on Public Assistance, was raised in the House by both a backbencher and Mr Teo.

Said NMP Kalyani Mehta: "If we are going to be generous to civil servants, then let's be generous to the very poor." In response, Mr Teo said: "The needs of these individuals are quite different and we need to find more holistic and flexible ways of looking after their needs."

Commenting on salary revisions in the context of a widening income gap, he added: "Capping the salaries of ministers and top civil servants will not solve this problem. The problem can be best addressed by à sound policies and programmes, like those introduced in the Budget recently à but most importantly by creating jobs and the resources so we can help everyone in Singapore to lift themselves up."

One new issue that cropped up yesterday was the danger of concentrating too much power and money in the hands of top public officers.

MP Denise Phua (Jalan Besar GRC) said: "As responsible leaders, we must be careful not to leave behind a system or structure that combines power and monetary rewards to such high levels that incumbents are so handcuffed by this lethal combination that they find it hard to let go."

NMP Eunice Olsen argued that the coupling of political and financial power is more likely to lead to the creation of a rogue government.

On this issue, Mr Teo said that the checks are elections and the ruling party's selection process. "If (a person's) motivations are self-serving or to make money, we do not select him. And if we discover that's what he's about after he has come in, we drop him," he said.

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The Straits Times, Nov 27, 2007, Singapore
Two month year-end bonus for civil servants
Better performers' can also expect growth bonus of up to 0.8 months
By Li Xueying

SINGAPORE'S largest employer - the Government - will give its 60,000 civil servants a year-end bonus of two months.

Add on the half-month bonus they received in July and the total bonus civil servants will get this year amounts to 2.5 months.

Tuesday's bonus announcement is likely to be a guide for the private sector, as was typically the case in the past.

Although the payout is a dip from the 2.7 per cent given last year, most civil servants will still go home with more - thanks to the new 'growth bonus'. Introduced this year, it will be given in times of exceptional economic performance.

This year, the Government is forecasting the economy to grow by 7.5 to 8 per cent. For 'good performers', this new payout will bring another 0.5 month's bonus, and for 'better performers', up to 0.8 months, said the Public Service Division in a statement on Tuesday.

The payout comes in a year when the economy has 'performed better than expected', it added. Mr Teo Yock Ngee, general secretary of the Amalgamated Union of Public Employees, said he expects most civil servants - those banded in the top three of the four tiers - to receive the growth bonus. It is to be paid out in March.

This new bonus is in line with the Government’s policy to strengthen further the link between performance and pay.

And what's given this year is consistent with what the private sector companies are planning to hand out, the executive director of the Singapore National Employers Federation, Mr Koh Juan Kiat, told The Straits Times.

A survey it conducted among 276 companies in September shows that this year's bonus will range from two to 3.5 months. The median is 2.8 months.

This annual announcement of the bonus for civil servants is closely watched by the private sector, which often uses it as a guide for how much bonus to give out.

Is Singapore less attractive to its residents too?

TodayOnline, 27 November, 2007, Singapore
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The Straits Times, 2 Dec 2007, Singapore
Expats here are feeling the pinch too
By Mavis Toh & Shuli Sudderuddin

DOWNSIZING is one way of fighting soaring rents, but expatriate Diana Cloe and her husband moved downstairs instead, going from their 24th-floor condominium apartment to a similar-size unit on the fourth.

The step down came after their landlord raised the rent for their 2,900 sq ft Anderson Road flat by 40 per cent in April.

They moved down 20 floors to a flat that costs $8,200 in monthly rent - 20 per cent higher than what they were forking out.

Expats who have been complaining about rising rent are feeling vindicated by a recent global survey.

The ECA International survey showed Singapore rising 10 places to rank as the ninth-most-costly Asian city for expats.

Private home rentals have jumped by 32.2 per cent since January, compared with 14.1 per cent for the whole of last year.

Ms Cloe's American husband, a global development manager who did not want to be named, said: 'The rents are crazy. My housing allowance was $7,000 but my company was gracious enough to up it.'

Mr Ervin Scully, head of corporate leasing at Knight Frank, said soaring rents have prompted many multinationals to increase expat pay by up to 30 per cent.

Indian expat Sonya Madeira said her boss increased the pay of all 13 employees by 10 per cent after a discussion on the rising cost of living.

Ms Madeira, associate director of Eastwest Public Relations, said the rent for her 1,600 sq ft Pasir Panjang flat doubled to over $3,000. 'Prices are up but our salaries are not going up at the same pace, so it's still a bit difficult to manage,' she said.

Ms Madeira said her family might leave Singapore if rent hits $5,000.

The British and American chambers of commerce are concerned about the rise in rentals.

But Mr Terry O'Connor, president of the British chamber, said the Government's recent 'cooling measures' such as axing the deferred payment scheme has helped redress the situation. But this may not be enough to retain some expats.

Brand consultant Simon Faure-Field, 37, was hit by the doubling of both his office and home rents.

His High Street office now costs $10,000 a month but he renewed the lease as alternative locations were equally expensive.

However, when the rent for his 1,400 sq ft Bukit Timah apartment doubled to $5,000, he moved to a similar-size apartment in Pasir Ris for $3,000.

He said: 'I can live in Dubai for the same amount. But there, my company can charge up to thrice the price for our services.

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The Straits Times, 2 Dec 2007, Singapore
We can barely stay afloat, say low-income folk
Some MPs and social workers say pleas for financial aid from poorer residents are growing louder and more frequent with the rising cost of living
By Jamie Ee Wen Wei , Nur Dianah Suhaimi

ADMINISTRATIVE assistant Noor Zeen earns $1,350 a month and has not paid her utility bills for the past four months.

Prices of everyday goods have gone up and she finds that she no longer earns enough to cover household expenses.

The 28-year-old divorcee said her monthly utility bill alone has gone up by at least $20. The breadwinner in her family, she lives in a four-room flat in Hougang with her mother, her eight-year-old son and her late aunt's two children.

Cash-strapped and with unpaid utility bills of about $600, Madam Noor asked her MP, Madam Cynthia Phua (Aljunied GRC), for financial help last week.

After the soft-spoken woman poured out her financial woes, Madam Phua put her on short-term financial assistance that will provide her with $200 for the next three months.

The economy may be buoyant, but low-wage earners such as Madam Noor have been telling MPs and social workers that they can barely stay afloat because the cost of living has been going up.

These workers say that their wages are not rising as fast as inflation.

In October, inflation rose to a 16-year high of 3.6 per cent. Two months ago, prices of food staples such as bread and noodles went up by 20 per cent. Soaring oil prices have also driven up pump prices and electricity tariffs.

Median monthly starting pay for cleaners and labourers has in fact fallen by nearly one-third, from $860 to $600, between 1996 and last year.

Twelve MPs and social workers interviewed said pleas for financial help from residents are growing louder but most could not give figures.

In Jalan Besar GRC, MP Lily Neo said she sees about 60 hard-luck cases a week at her Meet-the-People sessions. In the past, she saw about 40 cases.

She said: 'Each week, I find myself busier and busier, staying longer and longer, because there are so many people asking for financial help.''

Madam Halimah Yacob, an MP for Jurong GRC, said some of the low-income residents are holding two jobs and doing overtime, yet they still ask for rations of basic items such as cooking oil and Milo because they do not earn enough to feed their families.

Mr Zaqy Mohamad (Hong Kah GRC) observed that those on financial aid schemes are showing up more often at Meet-the-People Sessions.

'They used to come once every three months. Now, some come back every couple of weeks to ask for food and utility vouchers,' he said, because their cash is running out faster.

Mr Charles Chong (Pasir Ris-Punggol GRC) said he was even told off by a retiree who had asked for financial aid.

The elderly man told the MP: 'I'm retired, in my 60s, have no job and living off my savings. But GST is up, food prices are up, inflation is up. The only thing that has not gone up is the banks' interest rates!'

Mr Sim Boon Choon, 68, is in the same boat as the retiree. He tries to stretch every cent of the $290 in public assistance that he receives every month.

A loaf of bread now costs 20 cents more and the price of a packet of 20 Milo sachets is up by 40 cents. Even chicken rice and kway teow soup at the hawker centre cost 50 cents more.

To save money, he has stopped eating out for all his meals. Dinner is a simple meal of bread and Milo. To save electricity, the bachelor does not switch on the lights in his one-room Telok Blangah flat.

Even then, he finds himself running out of money before the month is up. 'I'm already very thrifty but the money is still not enough,' he said in Hokkien.

In March, public welfare recipients such as Mr Sim had their monthly allowance raised from $260 to $290 to offset the impact of the GST hike and rising cost of living.

But social workers said the $30 increment is not enough, given that inflation has risen so high.

Ms Grace Lee, centre director of Care Corner Family Service Centre (Toa Payoh), said the centre has been receiving more requests for the monthly free food packages of rice, instant noodles and canned food.

At least 100 packages are handed out, compared to 80 a few months back.

Over at the Care Corner Seniors Activity Centre in Toa Payoh, programme executive Lim Siew Eng said the elderly poor who show up for free daily lunches are asking for larger portions to take home for dinner. A typical lunch consists of rice, mixed vegetables and meat.

MP Cynthia Phua said she has been advising the elderly in her ward to rent out the rooms in their flats to generate income.

She said: 'A can of luncheon meat used to cost $1.30. Now it's $2.50. Not everyone can afford that, especially the elderly who are not working and depending on handouts.'

MPs said that they try not to give cash to residents seeking aid because they cannot ensure that the money is spent on food. They prefer to give food vouchers.

While utility, service and conservancy rebates, and Workfare payouts have helped, the MPs hope that the Government would come up with schemes which help those without income cope with the rising cost of living.

Pasir Ris-Punggol's Mr Chong said: 'The current schemes that we have, such as Workfare, help those who work. But for the elderly who are retired and sickly, we need to find new schemes for them.'

The Government has said that it will not keep prices artificially low by controlling price increases to help people cope with the rising cost of living. Its aim is to get the basics right - housing, jobs and affordable necessities.

It also tops up the wages of low-income workers through Workfare and gives various cash handouts and rebates. A total of 2.4 million Singaporeans are eligible for $650 million in GST credits and senior citizens' bonuses this year.

It is not just the low income who are feeling the pinch. Mayor for Central Singapore district, Mr Zainudin Nordin, said families living in four- and five-room flats are trying to downgrade to smaller flats because they cannot afford the cash portion of their mortgage.

He said: 'These families find that they need that few hundred dollars for other necessities now that prices have gone up. They can't afford to put aside any cash for housing.'

For housewife Norliza Maidin, 40, the rising cost of living could not have come at a worse time.

Her husband was retrenched from his warehouse supervisor job last year and now earns $1,500 - $500 less than his previous pay.

The couple have two sons -- aged five and one - and Madam Norliza's elderly mother lives with them in a four-room flat in Jurong.

Madam Norliza limits the family's electricity usage to $3 a day, chooses the cheapest fish and buys the cheapest groceries.

But she still finds herself with no savings at the end of the month. Sometimes, she has to borrow money from friends.

After being out of the workforce for five years, she is back in the job market because she wants to supplement her husband's income.

'I want to save for a rainy day. And buy better food for my children, such as salmon and not just selar,' she said.

With inflation expected to go up to 4.5 per cent next year, MPs such as Madam Phua think that the number of financial aid requests they are receiving is only the tip of the iceberg.

She said: 'I believe more will ask for financial help. This is just the beginning.'

jamieee@sph.com.sg

ndianah@sph.com.sg

Should we pay volunteers and full time employees of charitable organisations "private sector" salaries?

It appears that we are having a stab at the "war on talent" problem, once again, by throwing money at it. Haven't we learn from Gordon Gekko of The Wall Street that greed is good and we may get away with murder regardless of corporate governance? What happened to the lessons on the "old" National Kidney Foundation of Singapore, and more recently the Singapore Ren Ci Hospital and Medicare Centre?

Can we cultivate a Singaporean culture of caring simply by throwing money at it? Some of us truly believe we can because we are motivated by money and money alone. Offering more money is an expensive way to incentivise or reward behavioural change. Offering more money does not, in itself, solve the problem of inefficient working practice. Nor does it instil sincerity and care. How about volunteering for the sake of volunteering? Social responsibility or wishful thinking?

Shouldn't we be engaging senior (professionals above the age of 55 years) volunteers at charitable (or non-profit) organisations instead? Can we pay them what they're worth and in accordance with benchmarked salaries of charitable organisations? Perhaps, the Singapore National Volunteer & Philanthropy Centre can play its role in connecting our senior "brick and mortar" nation builders with charitable and non-profit organisations for this purpose.

When we are told to jump, do we ask how high we need to jump, as opposed to whether we should jump at all. Really, can (or should) we pay volunteers and full time employees of charitable organisations private sector salaries, or can we afford not to?

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SPEECH BY MR GOH CHOK TONG,SENIOR MINISTER, AT ASSISI HOSPICE'S FUND-RAISING CHARITY DINNER, 25 NOVEMBER 2007, 7.45 PM AT PAN PACIFIC SINGAPORE

“Lighting up the Lives of Hospice Patients”

1 My wife and I are delighted to be here this evening at Assisi Hospice’s fund-raising charity dinner.

2 Assisi Hospice was started by the Franciscan Missionaries of the Divine Motherhood Order in 1986, first as a home for the chronic sick, and then as a hospice in 1993. Over the years, Assisi Hospice has provided a comprehensive range of palliative care services and generated greater public understanding of hospice and palliative care services.

3 Palliative care is a comprehensive approach to treating terminal illness. It focuses on keeping patients comfortable through pain control and symptom management, and also addresses their psychological, social and spiritual needs. This is a challenging job because patients and their family members generally find it difficult to accept that curative treatment is no longer an option. They may not recognise that palliative care can help patients spend their final days with dignity, comfort and support from their loved ones.

4 We live in a fast-paced society. Not many people pause to think about dying. In our culture, it is also considered inauspicious to talk about death. Many of us believe that we will age healthily, with only occasional and short episodes of illness. Unfortunately, we may not always be so lucky. Moreover, Singapore has a rapidly greying population. We will increasingly encounter elderly people with chronic medical conditions.

5 With the rapid advancement in medical science, lives can be prolonged using sophisticated machines and treatment. However, merely extending lives without giving due consideration to the quality of the life is a burdensome and wrong approach. Moving forward, the Ministry of Health will make end-of-life issues one of its priorities. It will study issues such as how end-of-life healthcare practices and provisions are managed and how they can be improved. Our goal is to help Singaporeans to live long, live with dignity and peace of mind.

Living Life to the Fullest

6 Here we can follow the inspiring example of Ng Wei Hau. Wei Hau, whom I first met two years ago, is a young man with strong determination to live his life to the fullest despite his illness. Wei Hau was diagnosed with brain cancer in 1999, at the age of 12. He was then given only 6 months to live. However, since then, Wei Hau has survived against the odds and has written two little books detailing his struggles with cancer. When I met Wei Hau during the charity lunch in 2005, he was weak and walking unsteadily. I am therefore delighted to learn that he is now a member of the Taekwondo programme in Assisi Hospice. I look forward to his Taekwondo performance this evening. I hope that Wei Hau can be an inspiration for other Hospice patients to similarly make the most of their lives.

Contributions of a varied team

7 The lack of cure for a disease must never lead us to think that nothing else can be done for a patient. The holistic care provided at a hospice requires an interdisciplinary approach. Doctors and nurses, of course, play a pivotal role by providing good medical and nursing care. However, the needs of hospice patients go beyond physical concerns. Patients and their families also require support with psychological, emotional and spiritual issues. Social workers and pastoral care staff help patients and their families with their social and emotional needs. Volunteers are also an important pillar of support for patients and their families. I understand that Assisi Hospice is supported by over 70 individual volunteers and several corporate volunteers. Working with the hospice team, volunteers befriend patients and coordinate patient activities, such as exercise and karaoke sessions and birthday celebrations. Their enthusiasm, energy and encouragement have lifted the hearts of many patients.

8 Donors, of course, are needed. They play a key role in providing the financial resources for hospices. Earlier this month, the inaugural Barclays Asia Forum and the Barclays Singapore Open golf tournament were held in Singapore. As both events were very successful, Barclays decided to donate $75,000 to a charity in Singapore. As I was the Guest-of-Honour and Patron for the two functions respectively, Barclays asked me to nominate a charity for their contribution. I nominated Assisi Hospice because I was coming for your dinner. On behalf of the Hospice, I thank Barclays for their donation. I also commend the Lee Foundation, the Singapore Totalisator Board and Singapore Pools, Ms Emily Chan and many other organisations and individuals for their generous and sustained support for Assisi Hospice.

Good corporate governance

9 Charitable organizations provide valuable social services in our community. However, it is important that they have robust systems to ensure sound governance, transparency and accountability. This is to retain the trust of the donating public. It is no longer sufficient for charities to solicit donations just by explaining the good work that they do. The public should have the confidence that their donations are used prudently and effectively.

10 It is therefore important for charities to have people of integrity and the necessary expertise on their boards to provide sound leadership and raise governance standards. Charities should also actively attract the right people to work in their organisations. One way to do this is to pay full time employees salaries commensurate with the alternative jobs they could hold. Otherwise, the charity sector will fail to attract enough professional staff and lag behind the private sector in terms of efficiency and management. The volunteers on the boards who supervise the management must be capable men and women of integrity with a deep sense of social responsibility. Only then can the charities be run well and earn the trust of the public. While Singapore companies are now placing greater importance on corporate social responsibility and many have made financial contributions to charities, I hope corporate leaders could be more forthcoming in volunteering to serve on the boards of charities. Following the more stringent supervision by the Commissioner of Charities, some corporate leaders and professionals may become hesitant about serving as board members. This will be the wrong way to react. The right way to react is that such scrutiny is welcome as it will help them to help charities raise their standards of governance. Volunteering to serve on the boards of charities is a very meaningful and rewarding way for those who have succeeded in the corporate world to help make Singapore a compassionate society.

Conclusion

11 To conclude, I commend Assisi Hospice for its many contributions to palliative care. I am touched by the dedication of its staff, volunteers and board members. Please keep up the good work and continue to light up the lives of hospice patients and their relatives. For those of us who do not have the time to volunteer but have the financial resources, we too can play our part.

12 I wish everyone a warm feeling as we help others in a less fortunate position. Thank you.

Piloting for more pay?

TodayOnline, 20 November 2007, Singapore

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Airfinance Journal, 01432257, Jun2007, Issue 301

Singapore Airlines ordered to pay A380 pilots a premium by arbitration court
©Euromoney Institutional Investor PLC
www.euromoneyplc.com

The Industrial Arbitration Court (IAC) in Singapore has decided in favour of the Air Line Pilots Association (Singapore) and ordered Singapore Airlines to pay flight-deck crew operating the A380 more than a premium compared with those operating other aircraft in its fleet. Although the decision will not create a precedent outside of Singapore from a legal perspective, it is nonetheless possible that the decision will set a benchmark for other carriers.

Under the ruling, the minimum salary for captains on the A380 will start at about $7,000 per month, which is $460 more than captains earn on the 747.

The union had asked for a salary scale starting at $8,618 for A380 captains, arguing that pilots operating the larger aircraft have added responsibilities and should be paid more. The carrier took the position that because of advances in technology, operating the A380 is no more difficult than other aircraft fly-by-wire.

The IAC panel concluded that the "ease with which modern airplanes may be manoeuvered in the air and on the ground is, by itself, not a reason for reducing pilots' salaries".

Are we paid what we are worth?

One of the most challenging questions that organizational and compensation practitioners faced in a resource-scarce labor market is "Are we paid what we are worth?" Depending on who we ask, what we read, and the perspectives we adopt, the organizations we work for may claim that our pay is externally competitive, and internally equitable. But, what is equitable, or fair? Who decides what is fair? Perhaps, it is better to be internally consistent with our pay policy than to be fair. We can be consistently wrong but we may not be fair, or can we? How long is a piece of string? Can we be fair if we are transparent?

In an attempt to be transparent, NTUC Singapore, a local conglomerate (co-operative) has taken the lead in publishing its employee age profile on its website www.ntuc.org.sg/ageprofile. The purpose of disclosure of the demography of its employee is in response to a call by its secretary general on companies to demonstrate their commitment towards age-friendly employment practices, ahead of the Singapore re-employment legislation that will take effect in 2012.

It is intended that such disclosure will "enhance the employability and re-employment of all workers, including older workers and women who form a significant potential source of labor supply". In addition, the disclosure, NTUC argues “aims to better recognize companies that practice age-friendly and fair employment". More importantly, NTUC disclose its employee age profile as a group on its website to give greater transparency on its employment practices.

For compensation practitioners, an understanding of the demography of an organization is the initial step towards gaining greater transparency on what is termed as "fair" employment practices. Perhaps, it may be insightful to know "who gets paid what?" in order to know if “we are paid what we are worth”. If we understand the pay practices of organizations of our "brick and mortar" nation builders, we may be better prepared to embrace their expertise, and lobby employers to include them as members of the "family". Many of our nation builders may heed the calls of our Singaporean leaders to address the labor shortfall in the Singaporean economy by deferring their retirement plans.

NTUC must be commended for taking the lead in sharing the demography of its employees on the Internet. Will NTUC complete the puzzle by sharing actual compensation data of its mature employees? If aggregate data on compensation and benefits of mature workers are made publicly available, we may be a step closer towards knowing if "we are paid our worth". It may also draw people back to employment, particularly those who require additional pocket money to pursue their indulgence.

“Are we paid what we are worth?” It is a difficult question to answer; the perception of people may be biased and perhaps emotional when it comes to money matters.

Reward for working hard?