Workers’ growing awareness of massive executive salaries may make future negotiations much more interesting, labour analysts warned after trade union Solidarity released its report on wage discrepancies between bosses and workers recently.
The report found the average CEO earned between 35 and 53 times more than the average worker.
CEOs of general retailers and retailers in the food and drug trade earned more than 75 times that of their employees, and those in transport and telecommunications 85 times more, with packages including stock options.
Topping the list of big earners was Edgars Consolidated boss Steve Ross, with R111,6-million last year, nearly double that of Shoprite Holding’s Whitey Basson, who earned R58,9-million.
A Department of Labour report released this week says the number of pay strikes in South Africa had more then doubled last year from the previous year, and links yawning income disparities with the rise in wage-linked disputes.
The 102 wage strikes recorded last year was the highest tally in more than five years, the report says.
The department said the relatively new corporate practice of disclosing directors’ pay packages had drawn attention to the disparities between increases offered to shop-floor workers and those granted to executives.
Jackie Kelly, a labour analyst at Andrew Levy Employment Publications, remarked that pay transparency had “certainly brought about more emotionality and tension into the negotiations. Workers are now much more aware of the salaries their bosses are earning.”
Executive salaries were another bargaining card for unions to use, Kelly said, but she doubted it would change the outcome of negotiations.
“You have to separate the two salaries,” she said. “You cannot compare an unskilled worker’s wages with that of the CEO.”
Pay discrepancies were not limited to South Africa, but were a worldwide phenomenon. But another labour analyst, Duncan Innes, insisted that the gap between executive and workers’ pay was particularly marked in South Africa.
“It is obscene that CEOs can earn more than R100-million a year,” he said, adding that, in terms of the Gini coefficient, South Africa’s income disparity was the widest in the world.
Solidarity economist Lullu Krugel and her team surveyed the annual reports of companies listed on the JSE over a two-year period, examining the basic salaries, benefits, bonuses and options exercised.
An interesting fact emerging from the report is that there is no correlation between the net profit of a company and what is paid to its CEO.
Krugel found that 18% of chief executives received a rise in their total remuneration, which includes bonuses, and 21% received an increase in their basic salary, despite their company’s decreasing profitability.