The payment premium
SA CEOs earn 51 times what the average worker does
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).