Singapore PM faces 36 pct pay cut, still world's best paid

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SINGAPORE  - Singapore Prime Minister Lee Hsien Loongand his ministers will see their pay slashed by about 36 percent as the government responds to public discontent over their high salaries, but Lee will remain the world's best-paid leader.

Singapore pays government members and civil servants generously to attract top talent to the public sector. High salaries have also helped its politicians stay honest in a region where corruption is rife.

Lee earns more than S$3 million a year but will have that reduced to S$2.2 million, a review committee he appointed last year said in recommendations made public on Wednesday.

Lee told local media the government would accept the recommendations.

Despite the pay cut, Lee's salary will still be three times that of Hong Kong Chief Executive Donald Tsang, the world's next highest-paid political leader who earns about $550,000 a year.

Australian Prime Minister Julia Gillard will get about A$480,000 a year under proposals unveiled recently, while U.S. President Barack Obama earns about $400,000.

The annual salaries of Singapore ministers will start from S$1.1 million, a cut of 37 percent.

"Salaries must be competitive so that people of the right calibre are not deterred from stepping forward to lead the country," the committee said.

The committee to review ministerial pay was set up after parliamentary elections that saw the tiny opposition make historic gains against Lee's People's Action Party, which has ruled Singapore since independence in 1965.

The salary cuts will be backdated to May 21.

CORRUPTION, INEQUALITY

Many Singaporeans have complained about growing income inequality and rising prices for housing, transport and other basics on the island, the main Asian centre for private banking.

The quality of service in the famously efficient city-state has also declined in recent years, as seen by multiple breakdowns in the subway system last month.

Mobile data services provided by government-owned Singapore Telecommunications were disrupted on Tuesday evening and not restored until early on Wednesday.

Singapore scores well in surveys on corruption -- the last scandal involving a minister dates from 1986.

Transparency International ranks the city-state at number 5 globally for clean government out of 183 countries and territories surveyed. Neighbouring Malaysia and Indonesia rank number 60 and 100, respectively.

Some Singaporeans, however, said they would prefer if politicians' pay were linked to average salaries or that of poorer people rather than to the top 1,000 income earners as proposed by the committee.

"A good measure of a country's socio-political advancement is how a government helps the lowest rung of the society," Dawei Yan wrote on the Online Citizen, a socio-political website.

"I still believe the pay structure should be pegged to the lowest 1,000 wage earners in Singapore."

The opposition said linking leaders' salaries to what they could earn in the private sector meant they only focused on the rich.

The Singapore Democratic Party has proposed that ministers earn a multiple of pay levels for the lowest 20 percent of wage earners.

According to data from the Ministry of Manpower, the income of Singaporeans in the bottom fifth was flat or negative in the 10 years to June 2010.