The pay­ment pre­mium

SA CEOs earn 51 times what the av­er­age worker does

Finweek English Edition - - Economic trends & analysis - GARTH THE­UNIS­SEN

IF YOU’RE A TYP­I­CAL cor­po­rate worker, you may have no­ticed that your salary hasn’t kept pace with the mas­sive in­creases in cor­po­rate prof­its over the past few years.

Sadly, data from Sta­tis­tics SA also shows an in­creas­ing di­ver­gence be­tween em­ployee com­pen­sa­tion and in­dus­try prof­its (see graph). So too the latest Re­serve Bank Quar­terly Bul­letin, which shows that the rate of in­crease in nom­i­nal re­mu­ner­a­tion per worker de­cel­er­ated to 7,2% in 2005. Given that this is the nom­i­nal rate – which doesn’t take into ac­count the erod­ing ef­fects of in­fla­tion – real re­mu­ner­a­tion in­creased by just 3,26% in 2005 (con­sid­er­ing an av­er­age CPIX in­fla­tion rate of 3,94% in 2005).

Com­pare that to the ob­scene salary in­creases paid to CEOs. Re­search by trade union Sol­i­dar­ity shows that be­tween March 2005 and March 2006 the av­er­age ba­sic salary of CEOs in­creased by 18,53%, com­pared to just 5,24% for nor­mal work­ers. How­ever, af­ter share op­tions, bonuses and other in­cen­tives were added, CEO pack­age in­creases soared to a mas­sive 44,19%.

That’s prob­a­bly why re­search firm Tow­ers Per­rin notes that CEOs in SA earn 51 times the salary of av­er­age work­ers – the fourth high­est in­come gap in the world af­ter Venezuela (54), Brazil (57) and the US (a stag­ger­ing 531).

EM­PLOYEE COM­PEN­SA­TION VS IN­DUS­TRY PROF­ITS

Source: Stats SA

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