The ‘Pigment premium’
Is there growing animosity towards black professionals who earn marginally higher salaries than their white counterparts?
LAST WEEK I RECEIVED a very short but thought-provoking email from a friend, who posed a very simple but controversial question. He asked: Is it right that employers should pay a premium for skilled black labour, which may result in a situation where two people doing similar work are being paid very different salaries?
I thought about that for the whole week, because – let’s face it – it’s a very big question in South Africa at the moment and the crux of all controversy concerning employment equity policy. “After all, isn’t affirmative action just reverse apartheid?” I’ve heard some of my white colleagues ask. As a black woman I’m pretty sure you know what my answer is… I do think it’s acceptable. But not for the reasons you think.
Let’s put aside the moral and social reasons for affirmative action for a moment and try to ignore the damaging effect of apartheid on this country’s black population. Let’s also forget about the hundreds of years where white people earned higher salaries by pure virtue of the fact that they had less pigmentation than others, and focus for a minute on the economic reasoning.
Why is it so important to include more black people into the mainstream economy? The simple answer is that black people (which, for the purpose of this column, includes coloureds, Indians and Asians) constitute the majority of this country’s population. For any country to develop and prosper, the majority of that country’s people must be employed and skilled so that they increase production and consumption within that economy. Impoverishing your population does nothing for development.
Excluding the majority of SA’s population from participating in the economy was one of the biggest contributors to apartheid’s downfall. So educating and employing as many black people as possible clearly makes perfect economic sense.
If we accept that argument and the need for employment equity policies, we can now deal with the main question itself: Is it right that skilled black employees should earn more than white employees, even when they’re doing similar work?
Once again, there’s no simple answer. But I would say that it’s acceptable and understandable under the circumstances. The logic behind my answer is one of the few pieces of knowledge I’ve retained from university and use regularly in my everyday existence: demand and supply theory.
I love that piece of economic theory, as it provides a simple explanation to most market pricing trends we see in everyday life. Wherever there’s a shortage of something in an unrestricted, free market, the price goes up. When there’s an oversupply of anything in a market, the price goes down.
As we all know, apartheid did a pretty good job of ensuring that there were very few black people who had a decent education, so naturally there aren’t enough black skills to go around. So the price goes up. But the beauty of high prices (and high profits) is that they encourage new entrants to the market. And as long as they are no major barriers to entry, supply will increase and, over time, equilibrium is reached that reflects the intrinsic value of the commodity in question.
So in the case of black skills, the high premiums will do two things: they will encourage more black people to gain skills and education because returns on educational expenditure will be worthwhile; they’ll encourage employers to skill more blacks within and outside the company through bursaries, scholarships and skills development programmes so that they don’t have to bid for scarce resources on the open market.
The ultimate result will be that the premium on black salaries will disappear.
In considering what my white friends call the “Pigment premium”, let’s remember how difficult it is for the average black person to obtain a professional qualification in the first place. Not only do they have to overcome the inferior education they receive in township and rural schools, they must also find a way to finance their education.
Frankly, any black person who has managed to achieve a professional qualification deserves a boost due to the unbelievable odds they’ve had to overcome to get there. Most black professionals (though there are exceptions) are first generation professionals. They have no parents to support them financially while they study, which means they’ll incur some significant debt before they’ve even earned their first pay cheque.
And if they somehow manage to overcome all the financial and educational obstacles and qualify, they’ll still have to support their parents, plus any other brothers and sisters they may have. And things will only become more difficult once they have a family of their own, which they will also need to support on that same salary.
I can’t tell you how many young women I know starting out in their careers who haven’t had children of their own yet are supporting children back home while paying off huge university debts.
One of my own close friends is paying R12 000/year towards one of her baby sister’s school fees (she also has to support two other younger sisters). At the same time she’s paying off a Government loan she received to study. Although I suspect she’d love to get married in the near future, she can’t even consider it because she and her boyfriend both have family to support.
The result is that most black professionals aren’t even enjoying the full benefit of their marginally higher salaries. I bet if you asked your black colleagues some of them would gladly switch places with their debtfree white counterparts any day – even if it meant taking a pay cut.
I worry about the tension this issue is creating between black and white people, but perhaps it’s important to remember that there’s a greater purpose here. Employment equity isn’t some kind of “revenge” on the oppressor by the oppressed. It’s a strategy to ensure that the mess created by the previous establishment isn’t permanent.