It takes a worker 100 years to earn what a director earns in one year
In 1993, it would have taken the average labourer 40 years to earn what the average executive director of a top company in South Africa earned in a year.
Twenty years later, it would have taken him or her nearly 100 years.
These are the findings of a study by Cape Town’s Labour Research Service of the income of 286 executive directors of 89 top companies in 14 sectors of the economy, published today in the 2014 edition of the annual Bargaining Monitor.
The LRS found that though company profits in the companies studied fell on average 5% between 2012 and 2013, the average executive director’s salary rose 14%, to reach R4.4 million in 2013. The average annual salary of a chief executive was R6.8 million and if benefits and bonuses were taken into account, this figure more than doubled to R13.7 million for 2013.
The average wage of a worker earning the minimum was R44,856 a year, up 8% on the previous year.
Executive directors were paid in a month more than a low wage worker would earn in 17 years.
Comparing 2013 figures with those published 20 years ago in the 1994 edition of the Bargaining Monitor, the study finds a widening gap between minimum wages and executive pay.
“In twenty years the gap between what the average executive earns as a basic wage and what a low wage worker earns has more than doubled,” writes Michelle Taal of the LRS. “It has grown to 99 years based on the average executive director salary; 209 years if we add benefits and bonuses to the executive pay figure.”
In 1993, the average salary of an executive director was R1.4 million a year; by 2008, the average executive director was earning almost that much in a month.
This month parliament’s portfolio committee on labour began nationwide hearings on a national minimum wage, following an election commitment by the ANC to look into a national minimum wage, which has been part of Cosatu’s demands since its inaugural conference in 1985. At a hearing in Gugulethu at the weekend, participants called for a minimum of R5,000 a month.
The LRS’s own study of a housing-based minimum wage, based on the assumption that housing is the biggest item in most household budgets and that a living wage can be derived from the cost of housing, set the level at R8,000 a month, more than twice the average wage of a low paid worker in the Bargaining Monitor study.
Directors of mining companies top the list of the highly paid. Among the companies studied by the LRS, Anglogold Ashanti’s executive directors had the highest salaries in 2013, earning R409,504 a week on average, followed by Anglo American (R354,325) and BHP Billiton (R313,178). If benefits and bonuses are taken into account, executive remuneration rose to R1,080,501 a week at Anglo American and R774,780 at BHP Billiton, with Mondi’s executive directors coming in third at R632,624 a week on average.
“Executive remuneration in a country of such wide and increasing disparities between rich and poor is a very sensitive topic,”writes Taal. “Such levels of inequality are starting to be recognised by governments and even corporate analysts as worrying.”
She notes that the forced disclosure of executive pay for companies listed on the JSE has had a perverse effect: far from being embarrassed by high pay, executives want to be at the top of the pile and are shamed by being seen to be paid less than their peers.
“So disconnected are they from the rest of the workforce that the rules do not apply.”
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