Rich List provides ammunition for national minimum wage

Virtually every day in South Africa, we hear business leaders, politicians and ‘expert' commentators bemoaning the ‘excessive' and ‘unrealistic' wage demands by workers, and deploring the rising number of strikes in support of those demands.

But they never try to investigate the underlying reasons why workers make these demands and put them into the context of the world's most unequal society. As usual, the Sunday Times' annual Rich List, unveiled on 1 December 2013, exposes that when it comes to ‘excesses', just look at what some of the very rich people are taking home and how much they own (see report).

Big earners

The country's total yearly wage bill in 2012 was R1.5 trillion. Of this, R6.6 billion was earned by South Africa's 2,952 top-paid directors, giving them an average of R2.2m a year or a gross salary of R186 314 a month. The top 10 directors of companies listed on the JSE earned a staggering R1.1 billion between them, an average of R11 million each.

But even that is peanuts compared to this year's highest-paid director in South Africa - David Hathorn, CEO of Mondi - who earned a total salary of over R76m last year.

Meanwhile 50% of the average workers in the formal sector, according to the most recent median salary data from Statistics South Africa, earn R33 600 a year (R2 800 a month).

That means that workers on the median wage would have to work for 2,261 years - about 37 average lifetimes - to earn what Hathorn did in a single year through a basic salary, performance bonus and the appreciation in his stock option.

And Hathorn's salary increased by 330% from the previous year. The rich complain when workers demand double-digit increases, so why are they silent about his huge triple-digit increase. Is that not to be condemned as ‘excessive'?

Compare that 330% increase with what the workers have been getting and are likely to get next year. Research, by Employment Conditions Abroad International, estimates that South African workers can expect an average 7% salary increase in 2014. With inflation taken into account, this is increase in real terms of about 1.5% - slightly higher than this year's wage rise which is just 7.6%, a paltry 1% in real terms.

So most workers are barely staying ahead of inflation, while the gap between them and inequality keeps getting wider and wider.

At least one political analyst, JP Landman of Nedbank, has been forced to agree with the conclusion of COSATU's Collective Bargaining, Organising and Campaigns Conference in March that such levels of inequality are a recipe for social explosions.

In a research paper he says this vast gulf in salaries between shop-floor workers and management is the key factor behind worker expectations during salary negotiations and one of the leading causes of industrial action.

He found it was not coincidental that the country is both the most unequal on earth and the most strike-prone. The number of man-days lost due to strikes has averaged 3.4-million for the 19 years since democracy and that the figure got worse as the JSE All Share index rocketed, boosting management salaries through the appreciation of stock options.

Echoing almost exactly what COSATU has been saying for years, Landman comments that as the country grapples with what seem like persistent strikes, dragging the economy further into the abyss, the gulf in pay between ordinary workers and management seems like a good place to start looking for solutions.

Big owners

Inequalities in the ownership of wealth are equally massive. The richest 100 South Africans now own a collective total of R198.6 billion, up by 10% from the previous year. That means that a mere 100 people, out of the country's 51.91 million, own the equivalent of 6% of the country's GDP.

This year the number one spot has been claimed by Christo Wiese, Chairman of both Shoprite and Pepkor, whose personal wealth amounts to R27.4 billion. He has changed places with last year's richest man, Patrice Motsepe, who is now only Number 2.

Workers in Shoprite, Checkers and PEP will be particularly angry to see how much of the wealth they have created through their labour has lined the pockets of just one individual, while they work long hard hours, struggling to earn enough to feed their families.

Of the 73 000 working for Shoprite and Checkers only 35% are working full-time for the company, 5% are working on a 40-hour working week on flexitime and a massive 60% are on ‘variable time' or casuals.

They are now in Year 2 of a three year wage agreement, under which the minimum wage is just R2300 a month (R27 600 a year). And that is only scheduled to go up to R2 350 in Year 3, clearly not an ‘excessive' increase! Meanwhile, the firm's CEO, Whitey Basson, No 8 in the latest list of big earners, made R40 964 million, 1484 times as much as his lowest paid employee!

The Rich List provides powerful new evidence to support the call of the Collective Bargaining, Organising and Campaigns Conference for a legislated national minimum wage, as demanded in the Freedom Charter, to be introduced by 2014.

Statement issued by Patrick Craven, COSATU national spokesperson, December 4 2013

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