CEOs in South Africa are earning up to 300 times more than the average worker

Amid the high financial inequality, the Companies Amendment Act was recently signed into law, and will require listed companies to disclose any wage gap transparencies.

With the Act not yet in operation, non-profit Just Share said that wage gaps so far disclosed by South Africa’s largest companies are fragmented and inconsistent. 

It thus decided to compare the vertical pay gap ratios of the companies that constitute the JSE Top 40 where the data is available. 

Of the 15 companies that disclosed vertical wage gaps, six did so per the Companies Amendment Act, seven did so due to regulations in other nations, and two did so in non-standard formats. 

Of those who followed the provisions of the Companies Amendment Act—i.e., the difference between the top 5% and bottom 5% earners—Harmony Gold had the lowest difference at 7.9. 

The top 5% of earners of Harmony Gold collectively earned roughly R2.93 billion, while the bottom 5% earned R373 million.

Using the Companies Act standards, Investec Ltd had the widest internal pay gap, with the top 5% of workers earning 34 times more than the lowest 5%. 

However, Investec’s figure worsens when using the UK Companies Act regulations, which require companies to disclose the ratio between the top and bottom quartiles of earners.

In this scenario, Investec’s gap rises to 110. This is, however, lower than mining giant Glencore’s 139, as per the UK standards. 

On the other hand, the Dutch Corporate Governance Code showed the difference between the CEO’s remuneration and the average annual remuneration of the employees within the company.

With this methodology, South Africa’s most valuable company, Naspers, is by far the worst offender in the country, with a vertical pay gap of 311.

Prosus, with which Naspers has a cross-ownership structure, is lower at 120

Alcohol giant AB InBev uses its own vertical wage gap structure, which takes the difference between the highest-paid member of the executive committee and that of the lowest-paid employee in the company.

Despite using its own methodology, AB InBev still has the second widest wage gap, sitting at 184. 

South African-based Growthpoint Properties’ approach is consistent with the JSE Sustainability Disclosure Guidance and shows the difference between the top 10% and bottom 10%, and sits at 14.6. 

Comments

Just Share has criticised JSE-listed companies for often portraying themselves as committed to assuaging South Africa’s high levels of inequality, but most have not disclosed their wage gaps. 

“This analysis reveals a fragmented and inconsistent approach to wage transparency across the country’s largest companies, limiting stakeholders’ ability to assess internal equity structures or compare wage practices across sectors.” 

“Bringing sections 30A and 30B of the Companies Amendment Act into operation is essential to close this gap.” 

While some companies have adopted alternative disclosure formats, they lack consistency and comparability, which reduces their use for investors and regulators. 

“Responsible investors have a pivotal role to play in advancing wage equity. The Companies Amendment Act, once fully operational, presents a critical opportunity for shareholders to push for meaningful change.”

Issued on BusinessTech by Luke Fraser | https://businesstech.co.za/news/business/834898/ceos-in-south-africa-are-earning-up-to-300-times-more-than-the-average-worker/