Inequality is nothing new in South Africa, which has one of the world’s biggest income gaps. South Africa has one of the world’s largest income gaps. The worrying pay gap between CEOs and workers at companies listed on the Johannesburg Stock Exchange (JSE) is one of the most visible signs of this issue. Since this discrepancy contributes significantly to income inequality in South Africa, businesses there have an immediate need to do something about it.
The data are presented in the “Uncovering the Gap” section
The JSE-listed companies with the largest compensation discrepancies were recently investigated by Just Share, a shareholder activist group. Absa Group, Investec, JSE Limited, Nedbank Group, Old Mutual, Shoprite Holdings, and Standard Bank Group are only some of these corporations. The Woolworths Holdings corporation was also listed.
A CEO at Shoprite made 1081 times as much as a worker at the minimum wage in 2022, when the wage gap was at its largest, according to their analysis. At JSE Limited, where the wage gap was lowest, the difference between the CEO’s income and the lowest-paid worker’s guaranteed salary was only 49 times lower.
Compared to 1965, when the ratio was 20 to 1, and 1989, when it was 59 to 1, the remuneration of America’s chief executive officers was 399 to 1. When compared side by side, the wage difference in South African companies looks enormous.
An Uncertain Disclosure Landscape When It Comes to the Wage Gap
Despite the useful information provided by pay gap disclosures, it is vital to emphasise that such announcements are not yet legally enforced in South Africa. Just Share voluntarily contributed this data from the businesses it analysed. Good work has been done, but evaluating and analysing the figures is complicated by the fact that they have been provided in multiple formats and cover a wide range of compensation.
There was also a lack of transparency in that, not a single company that was reviewed specified what level of employment would qualify for the minimum wage. In addition, rather than examining the fairness of remuneration inside the corporation, as King IV had commanded, the vast majority of businesses compared their lowest earnings to the mandatory national minimum wage.
Resolving the Pay Gap Between Men and Women
The pay disparity is more than just a numbers game; it reveals much about the company’s culture and ideals. Therefore, companies need to take the initiative to address this issue, and they can do so by publicising pay disparities.
Just Share asserts that providing clear and comparable information about the income gap is the first step toward resolving the issue. The company believes that stakeholders can assess the fairness of the situation on a case-by-case basis, regardless of whether there are differences in remuneration based on industry.
To broaden our understanding, we discussed the economy with Dr. Tumi Seaketso, an economic analyst. “The widening gap between workers’ pay is bad for business and society as a whole. It’s past time for businesses to step up and do their fair share to help close the wage gap. Dr. Seaketso claims, “This is not just a moral problem; it is also a financial problem.”
Companies shouldn’t be afraid to be transparent about wage disparities because they worry the data may be misused or misinterpreted. When pay ratios are disclosed, shareholders can make more educated decisions. This is due to an increase in shareholders’ awareness of their ability to vote on compensation policies and procedures.
South African businesses have a unique opportunity to help solve the country’s inequality problem. It’s past time they started doing their duties with the seriousness they deserve, thereby paving the road for a more equitable society. Despite its massive size, this difficulty can be overcome. Dr. Seaketso reaches the following summary: “It’s a group effort. To solve this issue, businesses, workers, and the general public will need to work together. It’s not a fight; it’s a discourse, an ongoing conversation to make a difference.
About The Author:
Lebohang Mokoena is an award-winning journalist with over a decade of experience in business reporting. She specializes in innovation and technology in South Africa and beyond. Lebohang holds a Master’s degree in Journalism and has previously worked for top-tier publications before joining Africa Nova.