Prime Minister Lee Hsien Loong, who promised the salary review to ease public anger that surfaced in landmark 2011 elections, will take a 36 percent reduction in basic pay to Sg$2.2 million ($1.69 million).
That is still the highest salary of any elected head of government in the world — more than four times as much as Barack Obama who earns $400,000 a year as president of the United States.
It is also more than 45 times the $36,200 annual salary, including allowances, that Manmohan Singh is paid as prime minister of India, a nation of 1.2 billion people.
The People’s Action Party (PAP), which has ruled Singapore since independence in 1965, has been on the defensive since its share of votes in the 2011 election fell to 60 percent, an all-time low.
Among the hottest issues facing the PAP was ministers’ high pay, which the government has justified as necessary to attract talent from the private sector and to deter the corruption that afflicts other Asian countries.
Under the new scale the city-state’s largely ceremonial president will see his pay reduced by 51 percent to Sg$1.54 million, while entry-level cabinet members will receive half the premier’s salary.
That still puts them well ahead of government leaders in the world’s major economies.
German Chancellor Angela Merkel, who heads Europe’s biggest economy, earns a gross salary of about 189,216 euros ($246,750) a year, less than France’s President Nicolas Sarkozy who earns just over 230,000 euros.
Hong Kong chief executive Donald Tsang earns roughly $543,500 annually and the Japanese prime minister gets about $513,000 a year.
Singapore has the world’s highest concentration of millionaire households, with 15.5 percent boasting at least $1 million in investable assets according to the Boston Consulting Group, but it also has one of the widest income gaps among developed economies.
Critics immediately swamped online forums to slam the new system, which was recommended by an independent committee whose proposals Lee has agreed to implement.
“Ordinary minister’s salary still higher than US President! Still too high! Pure Nonsense!” wrote a reader who signed off as Lim Lao Pe on the Yahoo! Singapore portal.
Gerard Ee, a charity leader who headed the seven-month salary review, said the cuts showed political service should involve “sacrifice” but that pay should remain attractive enough to attract quality candidates.
Cabinet salaries had previously been pegged to two-thirds of the income of the top four earners in six fields: banking, accountancy, engineering, law, manufacturing and multinational corporations.
That meant ministers’ pay could still rise despite economic recessions.
Under the benchmarks unveiled Wednesday, the salary of an entry-level cabinet minister is set at 60 percent of the median income of the 1,000 highest-earning Singaporean citizens, which works out at Sg$1.1 million.
Popular local satirist Mr Brown wrote on Twitter: “Why must ministerial salaries be pegged to the Top 1000 earners of Singapore? Why not the lowest 1000? You help the poorest, you make more.”
The cuts will be retroactive to the start of the current government’s five-year term on May 21, 2011.
Despite the reductions, all cabinet members will be entitled to a “National Bonus” of up to three months’ pay if targets are met on economic growth, employment and improvement in Singaporeans’ incomes.
Bonuses were already part of the previous scheme, which permitted a maximum of eight months’ extra pay if economic growth exceeded 10 percent but none if growth dipped below 2.0 percent.
Political analyst Seah Chiang Nee said the salary cuts indicate a “serious effort to address people’s concerns” but that the government should be more transparent about bonuses, allowances and other perks.