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$220m price tag on HDB downsizing - Tax Payers Money

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  • sg_review@yahoogroups.com
    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
    Message 1 of 1 , Jun 30, 2003
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      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
      months away.

      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
      July 1.

      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
      HDB Corp.

      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
      public funds;

      1. Singapore
      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
      President: US$200,000
      Vice President: US$181,400
      Cabinet Secretaries: US$157,000

      3. United Kingdom
      Prime Minister: US$170,556
      Ministers: US$146,299
      Senior Civil Servants: US$262,438

      4. Australia
      Prime Minister: US$137,060
      Deputy Prime Minister: US$111,439
      Treasurer: US$102,682

      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


      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
      display of
      public indignation here, with Singaporeans criticizing the move on
      the Internet
      and even in the normally pro-government media.

      Under the new pay scale, Prime Minister Goh Chok Tong will see his
      annual salary
      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
      most junior
      minister will increase 12% to S$968,000, putting Singapore's
      ministers well
      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
      when many
      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
      undertaken while
      the majority of Singaporean workers are still being told to be
      patient about
      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,
      Deputy Prime
      Minister Lee Hsien Loong and Senior Minister Lee Kuan Yew -- to argue
      for the
      raises in Parliament.

      Five Plates of Fried Noodles

      The pay increases work out to S$11 a year per Singaporean, equivalent
      to "about
      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
      office holders.
      Citing the glowing evaluations by international organizations of
      economic competitiveness and the effectiveness of its government, Mr.
      Goh asked
      Singaporeans to judge his government by its record.

      Singapore came through the financial crisis in far better shape than
      many other
      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,
      and to
      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
      the region
      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
      attributed to
      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
      by AsiaOne,
      the online version of the Singapore Press Holdings newspapers, asked
      whether "Singapore's ministers and political appointment-holders
      should continue
      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
      salary, the
      answers ranged from S$180,000 to S$600,000 a year.

      The Straits Times also interviewed government workers who had
      recently left
      their jobs and found that money wasn't the reason for quitting --
      they simply
      wanted a more interesting job. The newspaper found that some had left
      to work
      for less money outside the civil service, and that higher wages
      wouldn't have
      made any difference to their decisions. Marcus Yong, 26 years old, a
      assistant director at the Ministry of Trade and Industry, was quoted
      as saying
      he would have left no matter how large the pay increase was because
      he preferred
      to be a player in the business world to operating behind the scenes in
      government. Others who left to join Internet companies said that
      though they
      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
      Cuneta in
      Manila contributed to this article.

      Write to Sara Webb at sara.webb@a...
      --- End forwarded message ---
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