The South African Federation of Trade Unions (SAFTU) notes the reports showing the CEOs in two retail corporates, Shoprite and Woolworths, have received significant increases to their remunerations. The total pay package for Shoprite CEO, Pieter Engelbrecht, is R48,4 million; while Woolworths CEO Roy Bagattini took home R37,9 million. 

This is fuelling inequality, adding more explosives to the South African powder keg, in a way that tragically blew up on some of the same retail outlets in July 2021. 

Bourgeois market analysts have asserted that they deserve the huge pay rise. They laud the market performance of these firms, and use it as a basis to justify their fat cheques. Indeed, Shoprite increased their gross profits from R41,2 billion in 2021 to a little over R45 billion in 2022, and their net profit from R4,8 billion to R5,7 billion. (Of course, the rapid rise in inflation – including food prices passed on through these retail outlets – means these increases are around 7.5% less than they appear in nominal terms.) 

However, what the bourgeois market analysts will not explain adequately is how the excellent market performance came about. They attribute this to the genius of the bosses running the businesses, and not the workers who toil to ensure products are produced, transported, packed on shelves and sold at tills. Hence three executive employees had their benefits increase by R11,5 million to a combined R44,5 million compared to the remaining 129 000 Shoprite employees who must share a R1,2 billion increase to employee benefits. In fact, when we factor the pay benefits of the executives of Shoprite’s subsidiaries, the ordinary workers – cashiers, merchandisers, drivers, 

cleaners – in these retail stores will scramble for few rands left to improve their benefits. And yet during the worst waves of Covid-19, they were the ones who risked the most, coming to work and serving the public. 

For SAFTU, the real creators of wealth are workers, not the executives, as is usually propagated by bourgeois analysts and business school textbooks. The goods purchased by customers do not produce themselves and transport themselves to the market. Workers do this labour and play the central role in the conversion of productive capital into the commodity form, and then ensure that packaging and transportation of the commodity to the market realises revenue and profits. 

Profits from exploitation, executives benefit 

Shoprite prides itself for lower prices and the subsidisation of Shoprite bread and other food items. The prices of the few food products produced originally by Shoprite — Ritebrand — are 4,8% lower than food inflation and 15% lower than other brands. 

Lower food prices are something we ought to welcome, but what is concealed is how Shoprite lowers prices, especially when it complains about rising input costs. The basic formula for lowering prices of goods, coupled with internal cost subsidisation of consumers in a capitalist enterprise, is to intensify exploitation. That is, produce certain goods within a shorter time than your peers would, by overworking employees and doing so with lower remuneration. 

Ritebrand has become a no.1 brand in groceries, can afford to lower prices compared to their peers and still perform better than any retail by scoring high revenues and profits because they superexploit workers. 

Shoprite pays its South African merchandiser – a person who packs stock on shelves – about R4 800 per month, and a cashier R5 200pm. Taken on the basis of a basic remuneration, the cashier at Shoprite would have to work for 267 years before they could earn what Engelbrecht (their CEO) earned in the financial year 2021/22. 

In 2020, an entry level income for ordinary Shoprite workers in Namibia was R2000. The firm refused to accede to the workers’ demands to make R2 500 an entry wage for workers, and to increase wages in that year by R600. Shoprite supermarket and the firm’s other subsidiaries have 4 555 employees in Namibia. Assuming that all of its workers (in the context of today stats) were to be given a monthly wage increase of R600, this would only cost Shoprite a mere R2,7 million monthly (R32,7 million annually). 

Profits from driving prices 

If Ritebrand food groceries are truly priced 4,8% lower than inflation in 2022 compared to 2021, it implies that prices of other competing food brands are 10,2% higher than inflation. Hence the exponential rise in some goods’ prices is due to capitalists taking advantage of world chaos – the Russian-Ukraine war and sanctions (with resulting shortages of grain and vegetable oil), ongoing global trade hiccups caused by Covid-19 (e.g. in Chinese value chain disruptions during their harsh lockdowns), and the climate crisis – to mark up prices higher. Prices for basic food basket components have shot through the roof. In an article published by the labour-linked Economic Policy Institute in Washington, DC, corporate profits contributed 53% to the inflation rate in the United States. 

In addition, there is financial speculation, given that the vast Quantitative Easing flooding of money into the U.S., UK, Europe and Japan in 2020-21 empowers investors instead of ordinary people, and fuels unprecedented inequality. Commodity trading has become a highly lucrative source of effortless profits. Financiers take advantage of highly-liquid speculative markets in agricultural products, which has also contributed to food prices going up. There are many ways that the stock price of Shoprite, its subsidiaries and South African firms more generally have been boosted through financial speculation. This is reflected in the rise of the Johannesburg Stock Exchange index from 34 000 at the low point in April 2020 before global financial markets were boosted by artificial speculation, up to 76 000 two years later, although the rise of both interest rates and the US$ have given investors reason to run away from the JSE in subsequent months, facilitated by the dramatic loosening of exchange controls in Finance Minister Enoch Godonwana’s February 2022 budget. He allows 45% of investor funds to be taken out of South Africa now, up from 30% before February, so as a state-captured politician beholden to international financial capital, Godongwana is a major saboteur of our ability to mobilise finance locally for vitally-needed infrastructure, other fixed investment and even corporate finance. 

Johannesburg Stock Exchange speculation, 2020-22 

The combination of irrational speculation, pro-capitalist policies like exchange control liberalisation, profit mark-ups in prices and super-exploitation of workers all contribute to the better performance of Shoprite Holdings. The staggering super-profits and rise in JSE price from 10 000 to 25 000 per share from April 2020-2022, a higher gain than even the rest of the stock market, are obvious reasons to question the merits of capitalist methods ranging from exploitation to share valuation. 

Shoprite share price on the Johannesburg Stock Exchange, 2020-22 

In the next round of wage negotiations for workers, Shoprite must accede to above inflation wage increases and contribute generously to their bonuses (13th cheque). It is workers who have centrally contributed to Shoprite’s performance and profits, and thus are entitled greater share the pie. 

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