Linking public sector salaries to economic growth: the Flexiwage solution

Growth sparked by transparency-improving eGovernment solutions can produce advantages for public sector employees.

In many cases, public officials have resisted introduction of initiatives that reduce bureaucratic discretion and graft opportunities.  Yet innovations in the form of success-linked compensation systems can fundamentally change the resistance often found in the civil service towards economic liberalization. Singapore's "flexible wage" system has enabled public officials at all levels to share in the fruits of creating a transparent business climate. Its success-sharing compensation partnership, based on a transparent system of linking public sector pay to the efficiency of administrative services, has helped produce a remarkable transformation in the quality of the business climate.

Singapore, at one stage, was struggling with problems of a bureaucratic mentality and administrative inefficiency.  In the mid-1980s, however, it began to implement a revolutionary policy that has effectively made civil servants into stakeholders in wide-ranging private sector success.  The Flexiwage policy links the salaries of the public sector directly to the economic growth rate of Singapore.  Over the years, public sector employees at all levels of Singapore's government have become interested in applying eGovernment and related innovations that improve the business climate of the country.  The Flexiwage system has enabled all civil servants in Singapore to enjoy high levels of compensation, as annual Flexiwage bonuses equal to the private sector growth rates have compounded year after year.

Today, the Flexiwage bonus typically adds equivalent of about three weeks of regular salary each year per public employee.  Adoption of this innovation in other countries and communities around the world can lead to increased willingness on the part of public officials to support eGovernment initiatives that accelerate economic growth.