Government’s high earners
They claim it’s about skills retention
PUBLIC SECTOR WAGES at State-owned enterprises – in most cases, monopolies – have drawn more than their fair share of criticism over the past 12 months. The line between compensation and performance has in many cases been blurred. The big issue concerning Eskom’s meaty performance bonuses was that they were paid despite the public corporation’s failure in January this year to prevent the rolling blackouts that threatened to cripple South Africa’s economy. It emerged that providing electricity wasn’t part of the performance measurement criteria used to decide executive salaries. In January, then Public Enterprises Minister Alec Erwin defended salaries as being “market-related”.
There was outrage at revelations that former Eskom CEO Thulani Gcabashe earned R13m in 2005, despite widespread power cuts during his tenure linked to failures at the Koeberg nuclear power station in the Cape. The decision by Gcabashe’s replacement Jacob Maroga to forfeit his bonus earlier this year (and the remaining executive directors’ decision to take 50% cuts in their bonuses) helped quell some of the public outrage. However, their overall cost to the company increased by more than 25% in the year to March 2008.
It has also emerged that SA Airways CEO Khaya Ngqula has been paid almost R20m since his appointment in 2004. He has received generous salary payments of around R5m/year as well as a performance bonus of R1,85m in 2005/06 and, subsequently, a much criticised “retention premium” of nearly R690 000 – that despite SAA continuing to sustain operating losses and receiving continued Government bail-outs.
The public reaction to the increases afforded to the most senior members of the SA Reserve Bank has been vocal due to the fact that its Governor, Tito Mboweni – despite his calls for consumer austerity – accepted a 27,5% pay increase. Reserve Bank directors, who had constructed the new salaries for senior Bank members, appeared to miss the point that Mboweni, who’d berated unions and corporate SA about the consequences of double-digit increases, had himself accepted a package that increased guaranteed remuneration by twice the rate of inflation at the time to R3,796m.
Chairman of the Bank’s audit committee, Len Konar, insisted Mboweni didn’t decide his own remuneration. Head of the remuneration committee, Thandi Ore- lyn, said outside consultants had been brought in to make recommendations and suggested it was time for Mboweni’s pay to catch up with “industry norms” after having accepted low, single digit increases in previous years.
The Bank insisted it had considered remuneration at other central banks, commercial banks and State-owned entities as part of its salary review. Mboweni's pay rise was beaten by deputy governor, Xolile Guma, whose remuneration was increased by 66,4% to R2,774m, while Renosi Mokate, the Bank’s other deputy, received a 72,7% pay hike to R2,839m.
Any moral high ground Mboweni may have had was eradicated by the decision to award him a big wage increase.
However, not even her most serious detractors questioned Transnet CEO Maria Ramos’s R5,1m in guaranteed remuneration – plus her bonus of about R3m – earlier this year, despite the fact her pay was higher than that stipulated in the Department of Public Enterprises’ guidelines on guaranteed packages. The guidelines suggest heads of large public sector organisations shouldn’t be paid more than R3,1m/year.