Minimum wage pales next to executives’ pay
WHAT we don’t talk about can say as much about us as what we do discuss. The news item the mainstream here does talk about is the report of a task team recommending a national minimum wage of R20/hour.
Given the nature of our divides, this triggered a predictable shouting match.
Think-tanks and commentators who see the market as an object of worship rather than an economic arrangement insist that any minimum wage will kill jobs – on the other side of the debate, R20/hour is rejected as a pitiful amount and a sop to business.
Despite the heated rhetoric, a working knowledge of this country says there will be a national minimum wage, its details will be negotiated and the key interests will grumble about it but live with it.
Business negotiators are more interested in the real world than the one in the heads of free market zealots, and so they will compromise.
Unions are the only champions of a national minimum wage with enough muscle to affect the outcome: they are likely to feel that a national minimum is a breakthrough even if the amount is less than they wanted.
The news item the debate ignored is an international survey of CEOs’ pay by Bloomberg.
It found that South African CEOs are the seventhhighest paid in the world – they receive more than those in, for example, Norway, Spain, Australia, France and Japan.
Bloomberg also found that South Africa’s CEO pay outstripped that of the average person here by a greater ratio than in any country it measured.
The ratio between CEO pay here and that of the average resident is almost double that in the US, about nine times Malaysia’s and more than 130 times higher than Thailand’s.
These findings were reported but they prompted virtually no comment or debate, even though they strike a huge blow at arguments that are used here to reject demands for a fairer economy.
They suggest that CEO pay here is not the product of the normal workings of the market economy – it is highly abnormal when compared to other countries.
So critics of inequality in the private economy are not Bolsheviks trying to destroy the market place – they may be insisting only that our market economy begins to resemble more closely everyone else’s.
Second, where inequality is recognised as a problem at all, it is usually blamed purely on a government that wastes money.
The survey shows that there are also huge inequalities in the private sector that cannot be blamed on the government.
So unless some practices in business change, high inequality will persist whatever the government does.
Why is the minimum wage debated and CEO pay not?
Because the former is about poverty, which everyone is happy to discuss – after all, no one here ever makes an economic proposal without claiming it will help the poor.
The latter is about inequality, which the mainstream is very unhappy to discuss, unless the problem can be blamed on the government.
Opposing poverty gives most people in the debate a warm sense of virtue – talking about inequality in the private economy suggests that the wealthy outside government also have some adjusting to do, which is more likely to instill dread.
It is possible that the Bloomberg report was ignored because the debate only takes notice of media releases and media conferences.
But the fact that it attracted no statements or releases says a great deal – it signals that not a single lobby group that is taken seriously by the debate believes that the biggest gap in the world between people at the helm of the economy and everyone else is worth a comment, let alone a campaign.
Ironically, since many of those who don’t want to talk about inequality also want us to conform to current mainstream world thinking on the economy, this refusal to face the issue is out of kilter with that thinking – as this column has pointed out, the World Bank and key economists who used to dismiss inequality as a problem now see it as a key concern.
More importantly, whatever the minimum wage and however many anti-poverty measures we adopt, the economy will remain a battle zone until inequality is tackled.
Reducing poverty but not inequality may improve living standards, but it will not end the resentment people everywhere feel when they believe they are treated unfairly.
As some in business have pointed out, why should we expect unions to moderate wage demands when CEOs’ pay outstrips that of everyone else by the highest margin in the world, signalling that belt tightening is good for those at the bottom of the firm but not at the top?
We need a debate on a national minimum wage and other measures to fight poverty. But we will stay locked in conflicts that prevent us moving forward unless we talk about inequality too.
Why is the minimum wage debated and CEO pay not? The former is about poverty . . . the latter is about equality