Nonprofit shareholder activism group Just Share has called for systemic reforms to tackle gender and racial pay gaps, promote living wages and hold executives accountable for unjustifiable pay practices.
While some disparity in pay between executives and entry-level workers is expected, the magnitude of the gap in SA is both economically and morally troubling, the organisation said.
According to Just Share, historically disadvantaged groups, such as black people and women, are over-represented in lower-paying roles, indicating the importance of detailed pay gap analyses and Employment Equity (EE) strategies to promote fair hiring and advancement opportunities.
“Conducting a comprehensive pay gap analysis is essential, as awareness is the first step towards addressing this issue. Such an analysis enables companies to determine whether these gaps exist, understand the underlying reasons, and identify the steps needed to close them,” said Just Share senior inequality analyst Kwanele Ngogela.
“In SA, gender and racial pay gaps are prevalent in part due to the over-representation of historically disadvantaged groups at lower occupational levels.
“Addressing these disparities requires clear employment equity strategies, building robust talent pipelines and ensuring that hiring and promotions are fair, unbiased and free from discrimination.
“EE targets aimed at advancing qualified women and black people to leadership positions must be prioritised and tied to executive short- and long-term incentives to drive accountability.”
Ngogela advocates for retailers to go beyond the minimum wage by committing to living wages that meet workers’ basic needs and ensuring these wages do not decline relative to executive pay.
He said extreme disparities are evident, with CEOs earning on average 597 times the wages of the lowest-paid workers.
While minimum wage increases and bonus programmes are helpful, Ngogela said they fall short of bridging these gaps. Transparency in pay practices is limited, as only publicly listed retailers are required to disclose remuneration reports, though the upcoming Companies Amendment Act 16 of 2024 may enhance accountability, he said.
“Only a few provide details on their internal minimum wages, largely because the Companies Amendment Act 16 of 2024 is yet to take effect. However, the widening wage gaps within these organisations indicate that their remuneration policies are largely ineffective in advancing fair pay.”
Consumers and investors play a crucial role in demanding equitable pay policies, with the act introducing binding shareholder votes on remuneration policies. Ngogela urged institutional investors, particularly those managing public pensions, to take these votes seriously, as equitable pay is a matter of public interest.
He said systemic changes, such as binding votes on executive pay, EE targets tied to incentives, and living wage commitments, are essential to achieving wage equity, alongside greater transparency and active stakeholder participation.
“Investors, who often act on behalf of the public through pension funds, have demonstrated limited resolve in holding companies accountable for extreme pay gaps.
“This lack of accountability has partly been due to shareholder votes on remuneration policies being non-binding. However, the recent enactment of the Companies Amendment Act presents a potential turning point.”
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