South African businesses may soon have to disclose the gap between its highest and lowest paid worker, and the difference in pay between men and women.
This follows an agreement reached by Business Unity SA (BUSA) who said that companies would be encouraged to voluntarily disclose pay differentials, with a view to making these commitments compulsory within 12 months, reports BusinessDay.
These details will be disclosed in company financial statements, and follow similar international regulations which are aimed at creating fairness in the workplace.
The summit framework agreement states that the initiative should ‘help develop a consciousness that will lead to action on the part of business’, by highlighting where there are ‘significant disparities and encourage employers to self-reflect and address the problem’.
“The idea is that business takes ownership of this and voluntarily discloses, self-reflects and addresses disparities that cannot be justified. It is a fix-it-yourself approach,” said Busa CEO Tanya Cohen.
Information on how remuneration is calculated (including consideration for bonuses) is set to be discussed by a separate Nedlac committee.
CEO vs employee pay
According to Stats SA, average monthly earnings paid to employees in the formal non-agricultural sector decreased from R20,060 in November 2017 to R19,858 in February 2018 – though this was up 5% year on year from R18,913 in February 2017.
Expressed as an annual salary, this equates to R238,300 a year.
By comparison, the latest findings from PwC’s 10th edition of the Executive directors: Practices and remuneration trends report, showed that the average CEO of a JSE listed company in the upper levels is R8.75 million. This can jump as high as an average of R25 million among the biggest listed companies.
Executives in the upper quartile saw an 11% increase in average salaries from the previous year – compared to the inflation-tracking increase of 6% for average workers.
Using the same metric as the UK, this shows that South African workers would have to work 36 years to match the average CEO salary – or 105 years to match the salary of the top 10 average.
According to PwC, the pay ratio in South Africa – worker pay to CEO pay – was at 65:1 in 2018, up from 62:1 in 2017.
In August, BusinessTech looked at the top 25 companies on the JSE, and worked out the pay ratios between CEOs and the workers at each group. Salaries below the average ratio (65:1) are highlighted in green, while ratios exceeding 100:1 are highlighted in red.