$220m price tag on HDB downsizing - Tax Payers Money
- The Straits Times today featured the HDB downsizing with a tax payers's price
tag of $220 mio. See "$220m price tag on HDB downsizing" By Leong Pik Yin.
We attach below a previous discussion on a previous retrenchment exercise for
your reading pleasure.
The exercise, which took place four months after the HDB announced it was going
to let staff go, affected 2,630 employees.
Those affected had an average age of 46 and had served an average of 23 years
with the board. About 400 were managerial staff.
The HDB said they each received a month's salary for every year of service.
Unlike the packages provided by most companies, there was no cap on the amount
of benefits those leaving the HDB could get. So, an administrative executive
earning $4,000 a month and with 30 years of service would pocket $120,000.
This is perhaps one reason why 1,280 opted to go.
Another 700 have been given jobs at the HDB's newly corporatised arm, while 650
are now hired on contract.
--- In Sg_Review@yahoogroups.com, LEE HAN SHIH -SPH wrote:-------------
Article By LEE HAN SHIH
Source: The Business Times
Date: 27 Feb 2003
HDB, don't be so generous to transferred staff
THE Housing and Development Board has said it will trim perhaps 2,700
people from its workforce of more than 8,000. But amazingly, HDB does
not expect to retrench a single person.
The key is a $100 million package for staff who opt to 'retire' from
the housing board. Each will get a month's pay for every year of
service, except those who have worked for less than three years and
those whose mandatory retirement is less than 18
A month's pay for a year's service may not be unusual, although in
today's dismal economy, not many private sector employers can afford
to give that. But even those who do often cap the amount - to say, 24
Not so in HDB's case. There is no cap for those who are eligible, and
some older staff will walk away with more than 36 months' pay, come
But that's not the most amazing part. The retirement package is being
given not only to the 900 or so who choose to leave the housing
board, but also to a larger number, some 1,800, who are staying
behind but will be transferred to a new subsidiary called
In all, some 2,700 will leave HDB proper. Their departure will cost
$100 million or more, including an estimated $450,000 per head
offered to a few senior staff.
If all this sounds generous, it is. Giving benefits to transferred
employees is unheard of in the private sector. After all, retirement
benefits are given to those who no longer draw a salary from a
company. If employees get to keep their job, is there a need to give
them the same benefit?
Neither HDB nor its parent, the Ministry of National Development,
offered an explanation. The move will underline the perception that
agencies like HDB offer an iron rice bowl, providing job security
with a salary matching or exceeding that in the private sector.
HDB Corp is a different story. This new company will get the
exclusive right to design and develop public flats for a few years,
after which it is expected to compete for jobs with private-sector
As a privatised company, albeit a subsidiary of HDB, HDB Corp will be
subject to market forces and its staff will not be on civil service
employment terms. Salaries are very likely to be lower and jobs may
be lost when the going gets bad. The benefit given to the 1,800 staff
transferring to HDB Corp is, therefore, not so much to compensate
them for 'retirement' - they are not retiring - but for loss of job
security. This is the biggest, most glaring difference between the
public and the private sector.
In the private sector, job security is never taken for granted. If
your company does badly, you are lucky to keep your job. Few complain
about a pay cut - at least, not openly - because everyone knows this
is the way the market works.
But in the public sector, not only is there job security but if your
employer does badly and you get transferred out to a privatised
entity - you get a retirement benefit.
Don't blame HDB for doing this - it is following procedures laid down
by the civil service's special resignation scheme or SRS. When other
government departments privatise subsidiaries, their affected staff
can expect the same generous treatment.
This has far-reaching repercussions.
The government is redefining the role of the civil service, with the
aim of keeping statutory or regulatory functions in-house while
outsourcing service functions (such as designing and building public
flats) to the private sector.
The cost of doing so, under SRS, could come to billions of dollars.
No one begrudges the 900 HDB staff getting retirement packages. But
should taxpayers' money be used so the 1,800 who are keeping their
jobs get the same treatment? Ask anyone in the private sector: the
answer is likely to be no.
Why not modify the scheme and delay paying retirement benefits to
those going to HDB Corp until (and if) they lose their jobs?
This way, HDB staff who truly need the benefits will still get them,
and at the same time the government will be able to save a lot of
money for other, more urgent uses.
Surely this is appropriate in today's climate.
Commentary: Mellanie Hewlitt
Source: Singapore Review
Date: 27 Feb 2003.
It was only yesterday (26 Feb 2003) that the US (and the general
public) was calling for greater transparency and accountability in
management of GLCs and state owned entities, especially in regards to
public funds. Dominance of GLCs is a worry for US firms, Lavin says
US companies want greater transparency in S'pore govt procurement.
Latest management decision in HDB, the city-state's Housing
Development Board (a government body which provides public housing),
confirm this need for transparancy and accountability.
Only in Singapore's civil service bureucracy will it ever be possible
to retrench 2,700 workers, without having to actually lay-off a
single person. The trick lies in a game of "musical chairs"
wherein "retrenched workers" are transferred to another arm of the
government, at same pay packets. And the icing on the cake is that
they get to collect their retrenchment benefits on top of their
existing pay packets. All this of cause is at the expense of tax
This concept of "musical chairs" has long been in practise amongst
senior civil servants and politicians in Singapore who conveniently
re-locate themselves between GLCs and State Runned Enterprises. It is
already public knowledge that Singapre has the highest paid ministers
and senior civil servants in the world. Indeed the Ruling Elite are
at pains to keep the actual numbers of their obscene pay-packets from
the eyes of the public. But this source of public embarassment has
been an open secret for many years.
With retrenchments and pay-cuts rampant all over the island, and the
city state caught in the grips of a pro-longed recession, the latest
move by HDB management can best be described as baffling.
It again relates back to an issue that has been avoided by the Ruling
Elite;- the management of public funds. This is a significant issue
as there is an estimated USD100 billion approx in foreign exchange
reserves and public funds, which are at the back and call of the PAP.
And these are not subject to any known process of audit, disclosure
or independent scrutiny/review.
Read on and find out more about the latest travesty in management of
Prime Minister's Basic Salary US$1,100,000 a year
Minister's Basic: US$655,530 to US$819,124 a year
2. United States of America
Vice President: US$181,400
Cabinet Secretaries: US$157,000
3. United Kingdom
Prime Minister: US$170,556
Senior Civil Servants: US$262,438
Prime Minister: US$137,060
Deputy Prime Minister: US$111,439
5. Hong Kong
Chief Executive : US$416,615
Top Civil Servant: US$278,538
Financial Sec: US$315,077
Source: Asian Wall Street Journal July 10 2000
Subject: FW: LEGITIMIZED CORRUPTION
July 10, 2000
Singaporeans Protest Pay Increases
Granted to Government Officials
By SARA WEBB
Staff Reporter of THE WALL STREET JOURNAL
SINGAPORE -- Hefty pay raises awarded last month to what are already
some of the
highest-paid government officials in the world have sparked a rare
public indignation here, with Singaporeans criticizing the move on
and even in the normally pro-government media.
Under the new pay scale, Prime Minister Goh Chok Tong will see his
increase 14% to 1.94 million Singapore dollars from 1.69 million
dollars (US$1.1 million from US$971,264), while the salary for the
minister will increase 12% to S$968,000, putting Singapore's
ahead of their counterparts in the U.S., the United Kingdom and many
countries in the salary league tables.
Join the discussion: Are civil servants paid adequately for what they
The pay raises, which follow a two-year pay freeze, come at a time
Singaporeans feel they are still worse off than they were before the
financial crisis of 1997-98. During the crisis the government cut
contributions to the Central Provident Fund -- Singapore's compulsory
scheme -- by 10 percentage points, and many Singaporeans are upset
that this cut
has been only partially restored despite the economy's revival.
"The disturbing part of this latest pay revision is that it is
the majority of Singaporean workers are still being told to be
their CPF restoration ... . As leaders of a country, money is not
said Chong Wee Lee in a letter to the Business Times.
The government brought out its heavyweights -- Prime Minister Goh,
Minister Lee Hsien Loong and Senior Minister Lee Kuan Yew -- to argue
raises in Parliament.
Five Plates of Fried Noodles
The pay increases work out to S$11 a year per Singaporean, equivalent
five plates of char kway teow [fried noodles] per Singaporean," noted
Mr. Goh in
defending the S$34 million cost of the pay raises for political
Citing the glowing evaluations by international organizations of
economic competitiveness and the effectiveness of its government, Mr.
Singaporeans to judge his government by its record.
Singapore came through the financial crisis in far better shape than
Asian countries, but its economic growth did slow in 1998 to just
Meanwhile, Lee Kuan Yew and his son, the deputy prime minister, told
that it was necessary to pay civil servants higher wages in order to
them from leaving the service to pursue other, better-paying careers,
encourage bright young Singaporeans to consider working in the public
"That period of revolutionary change that threw up people with deep
and overpowering motivation is over. We are in an era of high growth,
fortunes being made by the enterprising," Senior Minister Lee told
"Do not believe that we have escaped the problems that have plagued
for corruption, collusion and nepotism. Our market-based pay and
allowances will give no excuse for any slippage."
High Pay, Low Corruption
Singapore consistently scores high in international surveys for clean,
corruption-free government, a result that is often at least partly
its high government pay.
Singapore's new salaries were calculated according to a complicated
system based on the income of the top eight earners of six well-paid
Citizens in any country rarely think their government officials
should be paid
more, and Singapore is proving to be no exception. A poll conducted
the online version of the Singapore Press Holdings newspapers, asked
whether "Singapore's ministers and political appointment-holders
to receive high salaries" and found that 69.4% disagreed, while only
agreed and 6.3% couldn't decide. The Straits Times newspaper
conducted a street
poll, and found that out of 150 people interviewed, 55% said
increasing a junior
minister's pay to S$968,000 wasn't fair. Asked what would be a fair
answers ranged from S$180,000 to S$600,000 a year.
The Straits Times also interviewed government workers who had
their jobs and found that money wasn't the reason for quitting --
wanted a more interesting job. The newspaper found that some had left
for less money outside the civil service, and that higher wages
made any difference to their decisions. Marcus Yong, 26 years old, a
assistant director at the Ministry of Trade and Industry, was quoted
he would have left no matter how large the pay increase was because
to be a player in the business world to operating behind the scenes in
government. Others who left to join Internet companies said that
earn less now, they had wanted to break out of "the comfort zone" and
be a part
of the New Economy.
--Lingling Wei in Hong Kong, Puspa Madani in Jakarta and Josephine
Manila contributed to this article.
Write to Sara Webb at sara.webb@a...
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