Defending the right to bonuses

There’s a wise and ancient saying that goes like this “Even the lion will protect the wildebeest from the jackal”. It means that a man will defend something if it benefits him. Okay, there is no such saying. I totally made it up. But if it did exist it would be great saying. Another totally-great-but-made-up saying would be, “When the enemies are at the gates, the King and the Cardinal will become bosom buddies”. It means two natural adversaries will join forces when they face a common foe. Confucius has nothing on me. 

 

The global financial crisis has hit home in more ways than one. Apart from the scores of retrenchment, dwindling consumer demands and diving stock markets, the financial crisis is also undermining some homespun rationale. A couple of days ago, Minister in the Prime Minister’s Office, Lim Boon Heng stressed that ‘bonus’ should not be a ‘dirty word’ (The Straits Times, 5 April 2009). He went on to observe that

 

There has been great misunderstanding over what the word ‘bonus’ entails. You have to understand that in today’s context, companies’ bonuses are part and parcel of the overall wage package. We now operate differently from the past. So, let us not get overexcited whenever we see the word ‘bonus’ being used.

 

It’s very odd that a PAP Minister needs to urge Singaporeans not to begrudge corporate players their bonuses. Firstly, unlike Wall Street, Singapore has no experience of major financial mismanagement in the form of AIG, Bear Stearns, or Lehman Brothers. As Americans grow increasingly cynical with corporate culture, Singaporeans generally have faith in local financial institutions. Secondly, unlike Main Street, Singaporean taxpayers have not had to bail anyone out (on the scale of AIG). As such, the bitterness felt by Americans over the million dollar bonuses of bankers and executives is absent in Singapore. Thirdly, as a deeply meritocratic society, Singaporeans are the last to deny a fat pay check to a talented individual.

 

So why did Lim feel the need to rehabilitate the word ‘bonus’? Surely he must know that Singaporeans are not Main Street and Shenton Way is not Wall Street?

 

Or could his remarks be aimed at something else? The Wayang Party recently dug up news that a couple of officers from the People’s Association (a statutory board) received a whopping 8 month bonus. More pointedly, the Times (1 April 2009) ranked the highest paid politicians in the world and no prizes for guessing who came out tops. Following behind Singapore were the leaders of Hong Kong, US, Ireland, France, Germany, UK, Canada, Japan and Australia filling up 2^nd to 10^th place, respectively. Some local wit pointed out that the ranking was all wrong. The 30 best paid politicians in the world all came from Singapore!  

 

At any other time, this would be dismissed as petty carping. During good economic times, few would bat an eye over ministerial salaries. After all, the evidence of economic growth was the ultimate KPI for ministers – so the rationale goes. But as folks lose their jobs, as Perm Secs get chastised for cooking classes, any hint of a big unwarranted pay check takes on greater political sensitivity. Furthermore, The Straits Times’s feature on the top CEO salaries in Singapore (2 April 2009) has added fuel to resentment if public reaction to the piece is anything to go by.

 

The echoing lesson from Wall Street is this. After years of rewarding the smartest guys with the best credentials to drive the economy, we now realize that the smartest guys may not necessarily be the best guys to do the job. Wall Street is learning that a credential-based meritocracy is not always the best way to go. This lesson is seeping into the consciousness of Singaporeans as they read about the paradigm shifts in corporate culture over in the US. With the rationale for our high ministerial salaries so informed by market logic and US corporate culture, it is no wonder that someone has come out to defend the right to bonuses.

 

 

 

Singapore is caught up in a tangle of contradictory forces. Our embrace of capitalism and globalisation has widened the wage gap. However, we refuse to implement minimum wage. And yet, we exhort Singaporeans not to engage in the politics of envy. There are many underlying tensions running through our society and if not managed well, its going to result in something unpleasant. In good times such tensions are hidden but in tough economic times it doesn’t take much for people to get upset. The government realises this and is out in force defending the status quo.