The South African Federation of Trade Unions is appalled at the report released today by Deloitte accountants, which reveals that the average pay of executives in the country’s top 100 companies is now R17.97 million a year, which amounts to R69 000 a day!
If that is the average, there must be many who receive even more! The report also reveals that “executive guaranteed pay increases in general have well exceeded inflation” in the last five years. Thus the society which is already the world’s most unequal is growing even more unequal every day.
Many of these companies who are paying these grotesque amounts to their executives are the very same ones which, for instance in the engineering sector, are demanding that the trade unions should agree to lower wages and working conditions for their workers.
Other big companies who pay these salaries and bonuses are the same ones who are outsourcing work, using labour brokers and retrenching staff in order to increase their profits and throw more workers into poverty.
Yet it is the workers whose labour creates these companies’ profits from which the excessive pay for executives is financed. And these workers are also the consumers who create the market for goods and services which these companies exploit.
Deloitte’s actuarial‚ reward and analytics leader‚ Leslie Yuill, also notes that companies’ remuneration reports often “provide little or no explanation as to the cause or reason for these trends” and found little correlation between CEOs’ guaranteed pay and the size and complexity of their organisation — particularly for companies with a market capitalisation of between R5-billion and R50-billion.
“Cases in which companies declined to pay incentives were the exception‚ rather than the rule. In the case of the CEO‚ we only identified 15% of instances where an incentive was not paid over the last six years” said Yuill. “In the case of CFOs, instances in which bonuses were not paid were even rarer at 9%. It is almost as if executives are entitled to expect a reasonable performance bonus even when not warranted by performance.”
Most significantly Yuill comments that “The disparity in levels of top executive pay in relation to those of the lower-paid workers is a societal concern worldwide. This is particularly the case in South Africa‚ with its additional transformational needs and high levels of unemployment‚ which contribute to a powder keg of potential dissent and disharmony.”
This reference to a “powder keg” echoes SAFTU’s own view that the inequality in South Africa is creating a ticking time bomb which is already beginning to explode in angry and often violent protests in one township after another. Though they may have specific local issues, these protests are a reflection of a growing feeling among the majority of people that they are excluded and marginalized from the economy.
Some business leaders and pro-capitalist academics have been spouting the idea of “inclusive growth” as the solution to this problem of inequality and the anger it is stoking. Yet Deloitte proves that this message has totally failed to reach most business leaders who blindly pursue policies that exclude millions of the poorest South Africans, the workers and the unemployed.
That is because inequality is not some sort of unfortunate mistake that can be solved by tinkering with the way the economy is managed. Inequality is an integral feature of capitalism, made even worse in the era of monopolisation, which in South Africa is also racially skewed so that the majority of these super-rich executives are white and male.
It is a recipe for a social explosion. That is why SAFTU and a growing number of people around the world are now demanding a fundamentally different and socialist economic structure, which was foreshadowed years ago in the Freedom Charter’s call for “The mineral wealth beneath the soil, the banks and monopoly industry to be transferred to the ownership of the people as a whole”, a goal we are getting further and further away from achieving.
Unfortunately the ideas of “radical economic transformation” and “defeating white, monopoly capital” have recently been misappropriated by members of a corrupt faction who have turned it into empty rhetoric for their own ends, and open themselves up to the probably justified accusation that they are only interested in opportunities to enrich themselves and their cronies.
By hijacking this legitimate programme, they discredit what is still the only way out of the country’s crisis of poverty, unemployment and particularly the inequality so graphically exposed in this report. It must be rescued from these imposters and made the centerpiece of a mass campaign by workers and the poor for democratic nationalization of the mines, banks and key industrial monopolies, to bring about real radical transformation of the economy and the lives of all South Africans.