THE SARB ENABLES BANKING SECTOR’S MASSIVE PROFITS AT THE EXPENSE OF THE WORKING CLASS
The South African Federation of Trade Unions (SAFTU) condemns the obscene earnings of banking executives amidst working class poverty. Recent figures have shown that bank executives of South Africa’s four banks – Capitec, Nedbank, Investec, and FNB – have raked in millions of rands in executive pay. In the financial year 2023, Fani Titi, Investec CEO, earned R175 million or R475, 452 a day – that is, he earned in a day what an average worker earns in a year. In the same financial year 2023, the combined earnings of top banking executives of above-named banks amounted to R456,24 million. This in a country the most unequal in the world.
The dominant narrative in mainstream economic circles is that the major contributor to South Africa’s low growth is the inflexible labour regime and the above inflation wage demands by workers. We are further told that minimum wage laws and the supposed inflexible labour regime, which is said to infringe on the sacred prerogative of employers to hire and fire workers at will, undermines investment. But evidence shows as false the ideological narrative of the mainstream.
For instance, 75% of the workforce in South Africans earned less than R5800 in 2022, while a food basket for an average household costs R5300. Moreover, South Africa’s Gini Index, which compares before tax earnings of the highest earners with lowest, is of 63 – the worst in the world. In a word, South Africa is the most unequal country in the world. Yet, we are expected to believe that the measly earnings workers are problem in the economy, and not the hefty pay packages of corporate executives.
Since the South African Reserve Bank (SARB) started what it calls policy normalization following the Covid-19 induced lockdowns, it has raised the policy rate to a 15-year high of 8.25%, thereby facilitating a massive transfer of wealth from the working and the middle classes to the bankers. This massive transfer of wealth to the bankers takes the form of bank charges, interest payments on loan repayments, overdraft facilities, etc. By 2022 already, two years following the Covid-19 induced lockdowns, the banking sector was recording huge profits – with Capitec Bank, FNB, ABSA Group, Standard Bank all registering above 10% profit increases. It is this transfer of wealth to the bankers, aided and abetted by the SARB, that is the source the hefty packages accruing to top banking executives. This confirms what we have always maintained: that interests rates, ramped up by the SARB in the name of protecting the purchasing power of working class and the poor from the vagaries of inflation, are but a pretext to enrich the bankers and their hangers-on in the money market.
