Top 10 highest paid government leaders

You may think that those wishing to suffer extreme public scrutiny while making decisions that affect millions of citizens would demand the big bucks, but when it comes to pay, many world leaders look like chumps compared to the CEOs of many corporations.

While most salaries pale in comparison to the likes of Warren Buffett’s, some are downright huge when compared to the people a leader may govern.

Top 10 political leader’s salary by country (2010):

1. Lee Hsien Loong (Singapore): $2,183,516

2. Donald Tsang (Hong Kong): $513,245

3. Raila Odinga (Kenya): $427,886

4. Barack Obama (United States): $400,000

5. Nicolas Sarkozy (France): $302,435

6. Stephen Harper (Canada): $296,400

7. Mary McAleese (Ireland): $287,900

8. Julia Gillard (Australia): $286,752

9. Angela Merkel (Germany): $283,608

10. Yoshihiko Noda (Japan): $273,676

Salary compared to GDP

What makes a world leader’s pay reasonable or outlandish? One way of making this call is by looking at pay compared to a country’s GDP per person at purchasing power parity (PPP). Using PPP helps make a better estimate of just how far money goes in a country, since the cost of living will vary from country to country.

Comparing each leader’s salary (in international dollars) to the IMF’s 2010 PPP figures shows how much more a world leader makes compared to an average Joe at home.

1. Raila Odinga (Kenya): 255.30

2. Lee Hsien Loong (Singapore): 38.51

3. Donald Tsang (Hong Kong): 11.17

4. Nicolas Sarkozy (France): 8.92

5. Barack Obama (United States): 8.54

6. Yoshihiko Noda (Japan): 8.08

7. Angela Merkel (Germany): 7.86

8. Stephen Harper (Canada): 7.57

9. Mary McAleese (Ireland): 7.29

10. Julia Gillard (Australia): 7.21

What do these numbers mean? Looking at GDP per person doesn’t show how a country stacks up in terms of income inequality, a statistic that can measured using the Gini coefficient. Ranking the leaders by their country’s income inequality can really show how far out of touch a leader is with those governed. The Gini coefficient changes things up (zero means perfect equality and one perfect inequality).

1. Donald Tsang (Hong Kong): 0.434

2. Raila Odinga (Kenya): 0.425

3. Lee Hsien Loong (Singapore): 0.425

4. Barack Obama (United States): 0.408

5. Julia Gillard (Australia): 0.352

6. Mary McAleese (Ireland): 0.343

7. Nicolas Sarkozy (France): 0.327

8. Stephen Harper (Canada): 0.326

9. Angela Merkel (Germany): 0.283

10. Yoshihiko Noda (Japan): 0.249

Base salary vs. perks

When it comes to what a leader is really paid, a distinction must be made between base salary and additional stipends. Leaders may receive free residences or residential stipends, free healthcare, free travel and other perks.

They may be permitted expenses that most people would have to pay for out of pocket. Those figures are more difficult to come by, especially in the murky world of political influence.

Less scrupulous world leaders may pad their own bank accounts with their own country’s money through corruption. “Transparency International’s Corruption Perceptions Index (CPI),” first released in 1995, tracks corruption trends in 178 countries.

It assigns a rank of 10 to countries deemed clean, and zero to countries considered highly corrupt. Ranking the leaders by how corrupt their countries are, the ranking shifts to the following:

1. Raila Odinga (Kenya): 2.1

2. Nicolas Sarkozy (France): 6.8

3. Barack Obama (United States): 7.1

4. Yoshihiko Noda (Japan): 7.8

5. Angela Merkel (Germany): 7.9

6. Mary McAleese (Ireland): 8

7. Donald Tsang (Hong Kong): 8.4

8. Julia Gillard (Australia): 8.7

9. Stephen Harper (Canada): 8.9

10. Lee Hsien Loong (Singapore): 9.3

Of these countries, only three would not be considered “full democracies” by the “Economist Intelligence Unit’s Democracy Index:” Kenya, Hong Kong and Singapore.

The bottom line

What do all of these numbers tell us? Leaders of advanced economies earn very similar salaries to each other, and those countries tend to be less corrupt and more democratic.

While Lee Hsien Loong may earn 38 times the average resident of Singapore, his country is considered a good place to do business even if it is not fully democratic.

On the other end of the spectrum, Raila Odinga earns an incredible amount more than the people he governs, and presides over a country that Transparency International would consider one of the most corrupt around (ranked 154 out of 178 countries).

(Source: Investopedia.com)