CEO Pay Gap: South Africa Retail Faces Inequality Scrutiny
In South Africa’s wholesale and retail sectors, the disparity between CEO pay gap salaries and those of the lowest-paid workers has reached staggering levels. Recent research conducted by Just Share reveals that the average lowest-paid worker would have to toil for an astounding 21 months to match what a CEO earns in just one day. This article delves into the findings, shedding light on the significant wage gaps and the implications for inequality in South Africa.
Analysis of CEO and Employee Compensation
The Just Share report analysed ten major companies listed on the Johannesburg Stock Exchange (JSE), focussing on their recent public disclosures. These companies include:
Together, they employ approximately 389,766 full-time workers and generate an impressive annual revenue of R833.7 billion.
The Role of the Wholesale and Retail Sector in Employment
As South Africa’s second-largest employer—behind the government—the wholesale and retail sector is responsible for 17% of the country’s workforce. While these companies are vital for providing jobs, the income disparity between their CEOs and the lowest-earning employees is alarming.
The staggering CEO-to-worker pay ratios in South Africa’s retail sector are a stark reminder of the urgent need for economic justice.
The CEO Pay Gap Revealed
The average unweighted ratio between total CEO compensation and the remuneration of the lowest-paid workers is a staggering 597:1. In practical terms, this means that, on average, a CEO in this sector earns 597 times more than the lowest-paid employee. Woolworths stands out with the highest vertical pay gap, where CEO Roy Bagattini earned R122 million in the 2023 financial year, creating a vertical pay gap of 1,308 years when compared to the internal minimum wage of R93,600.
Shoprite follows closely behind, with CEO Pieter Engelbrecht earning R64.6 million, while the company’s internal minimum wage stands at R65,263, resulting in a pay gap of 991 years. Mr. Price’s CEO Mark Blair earned R45 million, creating a vertical pay gap of 711 years compared to the average internal pay of R64,537.
| Company | Total remuneration | Internal minimum wage | Vertical pay gap |
|---|---|---|---|
| Woolworths | R 122 468 000 | R 93 600 | 1308 |
| Shoprite | R 64 666 000 | R 65 263 | 991 |
| Mr Price | R 45 913 000 | R 64 537 | 711 |
| Truworths | R 38 259 000 | R 59 483 | 643 |
| Foschini Group | R 36 145 000 | R 64 537 | 560 |
| Spar Group | R 25 043 000 | R 59 483 | 421 |
| Clicks | R 19 418 000 | R 59 483 | 326 |
| Dis-Chem | R 16 702 000 | R 64 537 | 259 |
| Pick n Pay | R 10 000 000 | R 64 537 | 155 |
| Average | R 42 068 222 | R 66 162 | 597 |
In contrast, Pick n Pay reported the smallest disparity, with CEO Sean Summers earning R10 million—155 times more than the lowest-paid employee.
Acknowledging the Impact of Wage Gaps on Inequality
Kwanele Ngogela, a senior inequality analyst at Just Share, emphasised the importance of recognising the extreme vertical wage gaps in the wholesale and retail sector, stating, “While the sector undoubtedly plays an important role in employing low- and semi-skilled workers, it is nevertheless crucial to also recognise the contribution of the extreme vertical wage gaps that characterise these companies to the country’s overall high levels of inequality.”
Components of CEO Remuneration
It’s essential to understand that CEO remuneration often extends beyond basic salaries. It includes short-term incentives (STIs), long-term incentives (LTIs), and other benefits, which can significantly inflate their total compensation packages. Notably, around 60% of Bagattini’s pay was linked to long-term incentives.
Diversity and representation issue
The research further highlights concerning trends in diversity and representation at the board and management levels within these companies. Despite legal requirements for gender and racial diversity at board levels, many companies fall short. Clicks stands out as the only company where black individuals comprise the majority of the board (60%), while Spar follows with 50% black representation.
Women make up 46% of the economically active population (EAP), but Pepkor is the only company where the board reflects this gender diversity. Clicks and Spar have achieved 40% female representation, but Shoprite, Woolworths, and Mr Price have not met their targets, which range from 40% to 50%.
Management Representation and Employment Equity Act Compliance
The Employment Equity Act 55 of 1998 mandates that companies implement affirmative action measures to enhance diversity in their workforce. Although companies are required to disclose their race and gender representation in top management, many have failed to provide this data. This lack of transparency raises concerns about the commitment of these companies to diversity and inclusion.
Legislation and Future Requirements
The recent Companies Amendment Act 16 of 2024, signed into law by President Ramaphosa, introduces mandatory disclosure of vertical pay gaps for public and state-owned companies. Companies must now report:
- Total remuneration received by each director and prescribed officer
- Total remuneration of the highest and lowest-paid employees
- Average total remuneration and median remuneration of all employees
- The pay gap ratio between the top 5% highest-paid employees and the bottom 5% lowest-paid employees
However, the Act does not include provisions for gender pay gap disclosure, which many advocates believe is a missed opportunity to address wage disparities effectively.
Conclusion: CEO Pay Gap
The findings of the Just Share report underscore the urgent need for addressing the extreme wage gaps in South Africa’s wholesale and retail sectors. sectors. As the country grapples with high levels of inequality, it is imperative for these companies to take meaningful steps toward equitable pay structures and improved diversity representation at all levels of leadership. Only through committed action can we hope to foster a more just and inclusive economy for all South Africans.
South Africa CEO Pay Gap: 5 FAQs
What is the average CEO-to-worker pay ratio in South Africa’s retail sector?
The average pay gap is astounding. According to the Just Share report, a CEO in South Africa’s retail sector earns, on average, 597 times more than their lowest-paid worker.
Which South African retail company has the largest CEO pay gap?
Woolworths currently holds the unfortunate distinction of having the largest pay gap. CEO Roy Bagattini’s 2023 earnings would take a minimum-wage worker at the company 1,308 years to earn.
Why is the CEO pay gap in South Africa a concern?
Beyond the ethical implications, a large pay gap contributes to South Africa’s already high levels of income inequality. This disparity destabilises society and hinders economic progress for the majority.
What is being done to address the CEO pay gap in South Africa?
The recent Companies Amendment Act now mandates that public and state-owned companies disclose their pay gap ratios. While a positive step, advocates are pushing for further measures, including gender pay gap reporting.
How can I learn more about this issue and support efforts for change?
Organisations like Just Share provide valuable research and advocacy on corporate accountability in South Africa. You can support their work and stay informed through their website and social media channels.