Retail group Woolworths has provided more details around its ‘Just Wage’ initiative, which will see it steadily increase worker wages in the coming years as part of a move to close its remuneration gap.
In its integrated annual report published on Thursday (30 September), the group said that the pandemic had highlighted socio-economic disparities, particularly in South Africa.
“A key principle for our fair and responsible remuneration practices is to actively move away from minimum wage legislative requirements to providing a living wage,” it said.
“We started with the concept of a ‘just wage’ in 2019, a wage which would recognise the critical need to close the remuneration gap in the context of the socio-economic environment in South Africa.”
Data provided by the group shows that South Africa’s retail sector minimum wage as of 1 March 2021 was around R28.25 an hour. By comparison, Woolworths said that its base pay as of 1 April 2021 was R33.40 an hour.
The group said it now plans to increase this base pay to a target of R41.25 an hour by 2023, which will require an additional R120 million investment. This is well above the country’s minimum wage, which is currently set at R21.69.
“Last year, the Woolworths South Africa’s (WSA) base pay was 47% higher than the South African minimum wage rate and 13% above that of the retail sector.
“To further accelerate the improvement in the lives of WSA store-based employees, we will invest an additional R120 million over a three-year period to adjust WSA’s hourly base pay from R33.40 to R41.25 in 2023 – a 23.5% increase. This investment will bring a meaningful benefit to the more than 20,000 store staff and go a long way towards our ‘just wage’ aspirations.”
A just wage
Woolworths said that one of the principles that guide its policy on fair and responsible remuneration is: ‘consideration given to minimum wage legislative requirements and living wage’.
“The International Labour Organisation (ILO) defines a living wage as the amount necessary to meet the reasonable needs of a worker with a family of average size to live a decent life. Quantifying this accurately is the subject of much debate,” it said.
“On the premise that the minimum wage is the legislated level of remuneration for an employee’s qualification and following the principle of fair remuneration, Woolworths South Africa has developed strategies to remunerate our staff a ‘just wage’. In thinking through this strategic journey towards a WSA’ just wage’, our key consideration has been the socio-economic context of the majority of staff employed in our retail stores,” it said.
Woolworths said that its calculation of a ‘just wage’ is informed by many data points, including minimum wage rates, market rates, CPI, and its Employee Value Proposition (EVP) strategy.
While Woolworths has made a deliberate effort to close its wage gap, incoming legislation is set to mandate South African companies to disclose the pay differences between their highest and lowest-paid earners.
President Cyril Ramaphosa’s cabinet has approved the Companies Amendment Bill of 2021 for public comment, with the draft bill set to be officially gazetted in the coming weeks.
First mooted in 2018, the bill proposes substantial changes to the South African Companies Act, including further disclosures around executive pay in the country.
One of the key focuses of the new bill is ‘wage ratios’, with companies expected to be more transparent on the difference between the lowest- and highest-paid earners.
In line with this, the 2018 version of the bill proposed that the following information would have to be disclosed on an annual basis:
- The total remuneration of the highest-paid employee in the company;
- The total remuneration of the lowest-paid employee in the company;
- The average and the median remuneration of all employees;
- The remuneration gap reflecting the ratio between the lowest and the highest-paid employees.
While it remains to be seen the exact details that will be required of companies in the 2021 version of the bill, the Department of Trade, Industry and Competition has confirmed that wage ratios will be included.