Why the difference in income growth rate?

April 5, 2012

Today
Letter from Leong Sze Hian
04:45 AM Apr 05, 2012

I REFER to the report “1.618 months pro-rated National Bonus for political office- holders” (March 27). The article stated that there was no payout under the real median income growth rate indicator as it was -0.6 per cent last year.

There was a 50-per-cent payout for another indicator – the real income growth rate of the lowest 20th percentile, which was 1.8 per cent.

However, according to the Manpower Ministry’s Employment Situation 2011 report, the real median income growth rate of Singaporean workers was 1 per cent last year.

For the 20th percentile, it was 2.5 per cent.

Why is it that the ministry’s figures differ from those used in calculating the National Bonus for political office holders?

Rate differs due to CPF contribution
Letter from Han Neng Hsiu Senior Director, Rewards and Recognition, Public Service Division, Prime Minister’s Office and Farah Abdul Rahim Director, Corporate Communications, Ministry of Manpower

WE REFER to Mr Leong Sze Hian’s letter (above) on the difference in real income growth rates cited by the Public Service Division (PSD) and the real median income growth rate in the Ministry of Manpower’s Employment Situation 2011 report.

The ministry’s figures on income growth included employers’ Central Provident Fund (CPF) contributions while PSD’s figures excluded these for the calculation of the National Bonus for political office holders.

The ministry has included employers’ CPF contributions in reporting income growth as they form a significant part of compensation from work among resident employees and are used to meet housing and healthcare costs besides being retirement savings.

PSD had computed the National Bonus payout using income figures sans the contributions as it was felt that changes to employers’ CPF rates are decided by the Government and, hence, should not be linked to the payout for political appointment holders.

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About the Author

Leong
Leong Sze Hian has served as the president of 4 professional bodies, honorary consul of 2 countries, an alumnus of Harvard University, authored 4 books, quoted over 1500 times in the media , has been a radio talkshow host, a newspaper daily columnist, Wharton Fellow, SEACeM Fellow, columnist for theonlinecitizen and Malaysiakini, executive producer of Ilo Ilo (40 international awards), Hotel Mumbai (associate producer), invited to speak more than 200 times in about 40 countries, CIFA advisory board member, founding advisor to the Financial Planning Associations of 2 countries. He has 3 Masters, 2 Bachelors degrees and 13 professional  qualifications.