Lower rewards at the top

Trevor Nel, in his article (Various factors can change the reporting methods on wage gap, June 6), is right to say there is widespread concern globally about rising income inequality, and that there is a common perception that there is an unnecessary large gap between CEO remuneration and general staff pay.

What is also correct is that CEO remuneration is not confined to the salary. There are also shortterm bonuses and long-term incentives such as share-based payments. For instance, the CEO of Standard Bank received R7m in cash for 2017, but his total package was R50m. What is more, the top 60 officials all got proportional bonuses, so the total amount for management was huge. I have no idea what the general staff pay is like, but the unequal rewards must be very large.

So Nel is right to look at inequalities within firms to see the trends. But the problem of rising inequality in SA goes beyond individual firms. The real comparison is between the R50m a year and the R42,000 of the basic minimum wage. The former sets an enormously high standard at the top, which is emulated across the board, leading to us being the most unequal country in the world in terms of income, with a Gini coefficient of 0.65.

The problem is compounded if we look at wealth inequality, where the Gini coefficient is 0.95 and where 10% own 95% of all wealth. Is there any other country with comparable data?

We understand that the Davis committee on tax policy believes a wealth tax will not bring in much revenue, although it favours full disclosure. So there is no simple solution, such as taking from the rich to redistribute to the poor. But does this mean we are powerless to redress the enormous inequalities in our country?

And is it enough to blame the apartheid legacy? The fact is that under democracy inequality is not reducing and we are faced with huge social problems as a consequence.

Perhaps we should be looking at how people are rewarded generally in our society. Do we really need to persist with the huge incentives and salaries we give to people in authority, whether it be in the private sector or in government? Surely it is time to say that the inequalities of the past need to be reduced and start by lowering the rewards at the top.

It will be argued that you can only retain high skills with high pay at international rates. But we can no longer sustain this practice and need a national consensus that it should be changed.

Prof Ben Turok

Director, Institute for African Alternatives