New wage law planned for South Africa wants to clamp down on ‘excessive’ director pay

Trade and Industry minister Ebrahim Patel says that his department is finalising new legislation which aims to narrow the earnings gap between company executives and the lowest-paid workers.

Presenting his departmental budget speech on Tuesday (18 May), Patel said the new bill will be finalised within the next two months.

He said that the draft legislation will require disclosure of wage differentials in companies, stronger governance on excessive director pay, and enhanced transparency on ownership and financial records, he said.

South Africa is one of the world’s most unequal nations, a legacy of the system of racial discrimination that disadvantaged the Black majority and ended in 1994, Bloomberg reported.

Chief executives and top lawyers can make in excess of R20 million a year, while the official minimum wage is just over R20 an hour.

April data from BankservAfrica’s Take-home Pay Index (BTPI) shows that the average salary is currently R15,092 in nominal terms and R12,749 in real terms.

Data published by PwC at the end of 2020, meanwhile, shows that the Median Total Guaranteed Package (TGP) for a JSE chief executive is R5,242,000 pre-tax. This drops down to R2,833,100 post-tax.

The report shows that the chief executive salaries are significantly higher at large-cap companies such as the JSE’s top 10.

The Median Total Guaranteed Package (TGP) for a JSE chief executive at a JSE top 10 company is R23,600,000 pre-tax. This drops down to R12,990,000 post-tax.

The JSE’s top 10 listed companies are predominantly companies whose primary operations are based in foreign territories and as a result the respective CEOs are remunerated in foreign currency terms, PwC said.


Read: Government to review BEE rules for South Africa

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New wage law planned for South Africa wants to clamp down on ‘excessive’ director pay