The Department of Employment and Labour recently amended the Employment Equity regulations to include an updated EEA4 form applicable to ‘designated employers’.
The objective of the EEA4 form is to collect information for the assessment of the remuneration gap between the highest-paid and lowest-paid employees and at the same time assess inequalities in remuneration in relation to race and gender in the various occupational levels.
The EEA4 income differentials report now requires that employers average the earnings of the top 10% of their workforce, the average of the earnings of the bottom 10% of their workforce and then calculate the multiple difference between the two, said John Botha, COO of Global Business Solutions.
“It is our view that most employers will report between an 8x and 15x multiple. The higher the multiple, the greater the vertical inequality,” he said.
He noted that this is the same basis that is used to calculate the Gini Coefficient (GC) across countries.
The National Development Plan aims to decrease the GC to 0.6%. In 2006 it stood at 0.67, where one represents perfect inequality and 0 perfect equality.
StatsSA recently stated that the GC in SA in 2015 stood at 0.65.
In addition to this overall vertical inequality, the horizontal earnings differential reflects that women with tertiary education earn 70% of their male counterparts, said Botha.
This differential becomes even worse at lower levels of education where women earn 65% of their male counterparts income, he said.
“The racial and gender income differentials, both vertically and horizontally, are underpinned by systemic drivers such as only 58% of Africans having access to the internet compared to white individuals with a 90% access.
“Similarly, white and African individuals have a 75%:10% access to medical aid respectively,” said Botha.
“There is no doubt that employers and business in general will have to revisit their remuneration and benefit policies as more than 27,000 employers will be reporting their horizontal and vertical income realities by 15 January 2020.”