Reference: Published by Luke Fraser, 5 June 2023
The firms Amendment Bill, which aims to reduce the pay gap between the highest-paid and lowest-paid employees at listed firms, will be finalized in Cabinet within three months, according to Trade and Industry Minister Ebrahim Patel’s administration.
The proposed Bill said that listed firms would have to report the ratio of the top-paid to the bottom-paid 5% of employees, which was released for public comment in 2021.
Patel stated in his presentation to Parliament that the Bill’s completion will aid in addressing South Africa’s inequality problems.
South Africa had the worst income inequality in the world, according to the 2021 Gini Index, which assesses inequality through income distribution.
The minister earlier stated that the bill also intends to guarantee greater governance over excessive director remuneration and increased openness about ownership and financial records.
The average nominal take-home pay in April 2023 was R14,534, a significant decrease from the R15,170 noted the previous month.
The atmosphere remains unfavorable for comfortable salary rises or the creation of jobs, according to BankservAfrica. “As companies are put under pressure from the harsh load shedding, high production costs, rising interest rates, and moderating demand,” the company stated.
Organizations “will probably stay in the’survival model’ for a long time.”
Executives in South Africa’s largest banking and mining firms continue to make much more money, nevertheless.
The average remuneration for the CEOs of Anglo-American, BHP Billiton, Sibanye-Stillwater, Thungela Resources, and African Rainbow Minerals (ARM) in 2022 was R131.64 million ($10.93 million) per year.
Mike Henry, the CEO of BHP Billiton, earned R269.22 million ($14.7 million) in 2022, which included a basic pay, cash bonuses, short-term incentives, and long-term incentive programs.
This amount is significantly more than Capitec CEO Gerrie Fourie’s (R62 million) and Nedbank’s Mike Brown’s (R43.6 million) respective salaries.
Arguments in favor and against
The new Bill is necessary for South Africa, according to the largest labor union in the nation, the Congress of South African labor Unions (Cosatu).
According to Cosatu, “this will help to start addressing the apartheid wage gap that is still pervasive in many industries, in the mining, banking, and retail sectors.
“(Cosatu) wants the Public Investment Corporation and other investment funds who manage workers’ pension and insurance funds need to play a more activist role in placing limits on what chief executive officers earn and the wage gaps in companies where they are shareholders,” the group said.
The new laws, according to Business Leadership South Africa (BLSA) chief executive Busi Mavuso, will harm South Africa’s reputation as a favorable location for doing business.
By adding to all the other onerous compliance requirements, “these elements collectively lessen the attractiveness of South Africa as a place for companies to do business,” she claimed.
“Why would a firm, whether domestic or foreign, want to list on a South African stock exchange when we’re placing so many barriers in their way while others are doing everything they can to attract them? This is yet another factor that causes corporations to domicile or list in Mauritius or London rather than South Africa, where exchange restrictions are more cumbersome.