Global Courant
Commerce and Industry Minister Ebrahim Patel says his department will finalize the Companies Amendment Bill in cabinet within three months, which aims to narrow the gap between the highest paid and lowest paid employees at listed companies.
The proposed bill, published for public comment in 2021, said listed companies would have to disclose the ratio of the highest paid to the lowest paid 5% of employees.
Speaking to parliament, Patel said finalizing the bill will help tackle South Africa’s inequality problems.
According to the 2021, Gini indexwhich measures inequality through income distribution, South Africa had the highest income inequality in the world.
The bill also aims to ensure stronger governance with regard to excessive executive pay and more transparency on ownership and financial data, the minister said earlier.
In April 2023, the average nominal take-home pay was R14,534, which represents a major drop from the R15,170 recorded a year earlier.
“As companies come under pressure from heavy tax cuts, high production costs, rising interest rates and declining demand, the environment remains unfavorable for comfortable wage increases or job creation,” said BankservAfrica.
“Organizations are likely to remain in the ‘survival model’ for an extended period of time.”
However, executives at South Africa’s largest mining and banking companies continue to earn significantly more.
In 2022, the CEOs of Anglo-American, BHP Billiton, Sibanye-Stillwater, Thungela Resources and African Rainbow Minerals (ARM) earned an average salary of R131.64 million per year – or R10.93 million per month.
BHP Billiton CEO Mike Henry took home R269.22 million ($14.7 million) in 2022, which includes a base salary, short-term incentives, cash bonuses and long-term incentive plans.
This figure is more than four times more than Capitec CEO Gerrie Fourie (R62 million) and five times more than Nedbank’s Mike Brown (R43.6 million).
Pros and cons
The Congress of South African Trade Unions (Cosatu), the largest trade union in the country, previously said the new law is a necessity for South Africa.
“This will help address the apartheid wage gap that still persists in many businesses, in mining, banking and retail,” Cosatu said.
“(Cosatu) wants the Public Investment Corporation and other investment funds that manage employee pension and insurance funds to take a more activist role in setting limits on what CEOs earn and the pay gap in companies where they are shareholders.” said.
However, Business Leadership South Africa (BLSA) CEO Busi Mavuso previously said the new laws would damage South Africa’s image as a place to do business.
“Taken together, these elements reduce South Africa’s attractiveness as a place for companies to do business by adding to all the other heavy compliance requirements,” she said.
“Why would any company, local or foreign, want to list on a South African stock exchange when we put up so many obstacles while others are doing everything they can to attract them? We already have a problem with companies based or listed in Mauritius or London avoiding the bureaucracy of South African exchange controls – this is another reason for them to do so.”
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