Dr Salomé Teuteberg of the Transforming Corporate Governance programme at the Labour Research Service in Cape Town writes that an amendment to the Companies Act – when it is finally passed into law – should provide welcome information on differences between the highest and the lowest paid employees in companies in SA, which is one of the most unequal countries in the world.
Three quarters of employed people in the country earn less than R5,800 per month, according to Business Market Research. Yet SA chief executive officers (CEOs) are among the best paid in the world. Remuneration of directors is among the most hotly debated topics in corporate governance, with shareholders wanting information and directors wanting privacy. Some policy on this does exist in the King Report on Corporate Governance. But the Companies Amendment Bill will elicit much more detailed information, by compelling companies to divulge the difference between lowest paid and highest paid workers – or at least to be more transparent on these numbers. The Bill was posted for comment in October 2021, and the comment period expired 30 days later. But the Department of Trade, Industry and Competition says it is still processing the Bill. In SA, the average CEO received a total guaranteed annual package of R5.7 million in the year ended February 2022. CEOs also typically earn short term incentives (a form of bonus) of about R3-million to R4-million. A minimum wage worker in SA earns R21.69 per hour, or less than R42,000 a year. Typically, these workers do not earn bonuses. Minimum wages vary per industry. Research in 2021 found the lowest wages to be in the wholesale and retail trade, with a minimum wage of R4,257 a month. In comparison, retail CEOs earn on average over R3-million a month (R37-million a year in 2021). This is over 700 times what a low-level wage earner earns. “We don’t argue that CEOs and workers should be paid equally. But we do argue against such large gaps, especially in South Africa where inequality is persistent,” Teuteberg indicated.
- Read Dr Teuteberg’s article in full at GroundUp
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