No chance of closing worker-boss wage gap
THE average director (executive or non-executive) of a listed company in South Africa earns R2.2-million a year in total earnings, far above the median wage in the country.
According to the Rich List data, the 2 952 directors surveyed earned a total of R6.6-billion in 2012, earning an average of R2.2-million a year or a gross salary of R186 314 amonth.
On the other side of the palisade fence, 50% of the formal South African workforce earns less than R2 800 a month, or R33 600 a year, according to the most recent median salary data from Stats SA.
The highest-paid director in South Africa in the year under review (to this March) was David Hathorn, CEO of Mondi. He earned a total salary of just over R76-million last year.
With the median salary in South Africa being less than R3 000 a month (R2 800) or R33 600 a year.
It will take the majority of workers in South Africa (those who earn the median wage) 2 261 years or about 37 average South African lifetimes (South Africa’s average life expectancy is 60 years) to earn what Hathorn did in a single year through a basic salary, performance bonus and the appreciation in his stock option.
The most recent employment trends, as published by the Stats SA’s Quarterly Employment Survey (QES), shows that in the first quarter of the year the total labour force in the country was 8.5-million people employed in the formal sector, excluding agriculture, earning a collective R377billion.
This means South Africans employed in the formal sector earned an average monthly wage of R11 000, but this relatively high figure hides the distortion of the average caused by the extremely high salaries earned by professionals and specifically company executives.
Going by the R377-billion of quarterly earnings in South Africa, a rough calculation gives the yearly wage bill in South Africa at R1.5trillion.
Inequality is not only rife between management and workers but also at intra-management levels
South Africa’s 2 952 directors earned R6.6-billion of this, while the top 10 directors of companies listed on the JSE earned a staggering R1.1-billion of that.
Inequality is not only rife between management and workers but also at intra-management levels, with a few rock-star CEOs earning the bulk of money while the rest are lagging.
While the top-paid director got R76million in the 2012 financial year, the lowest-paid director on the JSE earned a token salary of R1, much lower than what the average worker in South Africa gets.
Research by ECA International found that South African workers can anticipate 7% salary increases in 2014. With inflation taken into account, salaries will increase by about 1.5% in real terms — slightly higher than this year’s real wage rise of just over 1%.
In other words most workers are barely staying ahead of inflation and they stand no chance of closing the gap between them and management.
South Africa is either the world’s most unequal society or a close second. According to a landmark research paper by Nedbank Private Wealth’s political analyst JP Land- man, this vast gulf in salaries between shop-floor workers and management is the key factor behind worker expectations during salary negotiations and one of the leading causes of industrial action.
Landman found it was not coincidental that the country is both the most unequal on earth and the most strike-prone.
Landman found that the number of man-days lost due to strikes has averaged 3.4-million for the nearly two decades since democracy and that the figure got worse as the JSE All Share index rocketed, boosting management salaries through the appreciation of stock options.
As the country grapples with what seems like persistent strikes, dragging the economy further into the abyss, the gulf in pay between ordinary workers and management seems like a good place to start looking for solutions.