At That Point
  • home
  • our story
  • our services
  • your resources
  • SA Industry News

Will the COVID-19 crisis close the wage gap?

24/4/2020

0 Comments

 
Picture
Internationally, there is a growing trend to reduce executive pay in response to the current COVID-19 crisis.

South Africa is following the trend, with several private sector companies voluntarily announcing reductions and donations in executive pay, among them Woolworths, EOH, FirstRand, Vodacom and Sibanye.   

The South African Reserve Bank’s Prudential Authority, the banking sector regulator, has asked banks to avoid paying ordinary dividends or executive bonuses this year and of course, our President announced in his more recent addresses to the Nation that cabinet members will take a 1/3 pay cut and contribute this to the Solidarity Fund.

Martin Hopkins, President of the South African Reward Association (SARA) and Master Reward Specialist, says getting executives to lead by voluntary example by accepting pay reduction at this time is the appropriate thing to do from several viewpoints.

“As a gesture of solidarity at this time, executive pay sacrifice can be a powerful morale booster and could provide a way to repair some of the damage caused by the perception that executives are over-rewarded” he says.

“Executive pay cuts, along with dividend freezes, also make sound business sense because, in uncharted waters like these, conserving cash is going to be key to survival - and thus to keeping as many jobs as possible.”

Dr. Mark Bussin, SARA executive committee member and Master Reward Specialist, says: “If there is one thing that the Corona Virus crisis has done, it has united us against a common enemy. I have seen so much goodwill between communities. I almost want to be thankful that we got this wake-up call. Perhaps we can explore this comradery further by each organisation seeing all employees in the same boat and showing more sympathy and empathy towards each other. This should include a deliberate effort to narrow the wage gap. Let’s not waste a perfect crisis”.

As Mr Hopkins points out, executives are likely to be able to better weather a significant reduction in their income than low earners who subsist from pay-check to pay-check.

He expects that most variable pay, which makes up a significant portion of the remuneration of top executives, would be curtailed—although most performance targets are in any event unlikely to be met if the economic fallout is as bad as predicted.

He suggests that executives could be incentivised to lead their business to survive the crisis and thrive in the future by means of restricted share awards rather than cash incentives, even though these would have the effect of diluting the assets of existing shareholders.

​Any such awards should be granted prudently to mitigate the perception that executives are taking undue advantage of currently depressed share prices.

Looking beyond the short to medium term, Mr Hopkins says he does not foresee that these emergency executive pay cuts will necessarily translate into a permanent reduction in the wage gap between a company’s executives and its lowest paid employees.

He believes that ultimately pay is governed by supply and demand, as well as the imbalance in negotiating skills between executives, company remuneration committees and shareholders.

These factors will not disappear, and shareholder activists will continue to have limited room for manoeuvre given that shareholder votes on remuneration are typically non-binding.

He speculates that if enough companies close down, there might be a glut of top executives looking for jobs, and this could bring down executive salaries.

Mr Hopkins also comments that the issues of poverty and unemployment may be more pressing issues and drivers of fundamental inequality and suffering than the corporate wage gap.  “At the end of the day, human dignity and well-being is highly dependent on the ability to earn a living wage. We should be focusing our efforts on ensuring the maximum number of people have a job and are earning a living wage,” he says.

Nicol Mullins, SARA executive committee member and Master Reward Specialist says: “There is an incredible opportunity for organisations to unite and build trust.  The call to reduce compensation and contribute to assist others in need is not only answerable by executives, but by all to the level of where it makes sense.  Nothing stops the rest of a workforce to contribute voluntarily.  What we need right now is not the money of a few, but the collective action of many – meaning financial, and through other means.”

“The recent proposal by 65 economists, academics and business analysts for a universal basic income grant of R1 000 for four months also has merit to protect the vulnerable whilst we reboot the economy”.

The work that organisations have done is admirable, specifically around the sacrifices executives are making, but this can be short lived once the crisis is abated if the focus falls away.  The result could mean that the after-effects of COVID-19 is that the wage gap will not shrink because some segments of the population will be affected disproportionately. “Many lower skilled jobs may start to fall away as time progresses and ways of work evolve”, says Muhammed Goolab, SARA executive committee member.

ENDS
 
MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, [email protected], www.atthatpoint.co.za  
For more information on SARA please visit:
Website: www.sara.co.za 
Twitter: @SA_reward
LinkedIn: South African Reward Association
Facebook: SARA – South African Reward Association
​
0 Comments



Leave a Reply.

    Welcome to the SARA newsroom. 

    Archives

    May 2025
    March 2025
    January 2025
    December 2024
    November 2024
    October 2024
    August 2024
    July 2024
    March 2023
    February 2023
    October 2022
    August 2022
    July 2022
    May 2022
    April 2022
    March 2022
    January 2022
    November 2021
    October 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    November 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    January 2019
    December 2018
    November 2018
    October 2018
    August 2018
    May 2018
    April 2018
    March 2018
    February 2018
    December 2017
    November 2017
    October 2017
    August 2017
    July 2017
    June 2017
    April 2017
    March 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015

    Welcome to the South African Reward Association newsroom.

    Categories

    All
    2016 SARA Reward Awards
    2016 South African Reward Association Conference
    2021 SARA Reward Awards
    2024 SARA Reward Awards
    4IR
    ABSA
    Agile Remuneration
    AI
    André Daniels
    Anglo AMerican
    Annual Salary Increase
    Artificial Intelligence
    Benefits
    Board
    Bridgestone
    Career
    Career Growth
    Carmen Arico
    CCMA
    Chris Blair
    Companies Amendment Act 16 Of 2024
    Compensation
    Corruption
    Covid 19
    Covid-19
    Cyber-attacks
    Cybersecurity
    Deon Smit
    Digital
    Disruption
    Diverste Needs
    Dr Mark Bussin
    Dr Ronel Nienaber
    Economic Growth
    Economy
    Education
    Employee
    Employee Empowerment
    Employee Engagement
    Employee Experience Management
    Employee Performance Management
    Employees
    Employers
    Employment Equity Act
    Equal-pay-for-work-of-equal-value
    Equity
    Executive Bonuses
    Executive Pay
    Executive Remuneration
    Fair Pay
    Female Employees
    Financial And Non Financial Rewards
    Financial And Non-financial Rewards
    Fixed Pay
    Flexibility
    FNB
    Four-day Work Week
    GDP
    Gender Inequality
    Gender Pay Gap
    Generation Z
    Gen Z
    Global Workforce
    Goldfields
    Governance
    Holistic Total Awards
    HR
    Human Recources
    Incentives
    Inequality
    Inflation
    International Mobility
    Janine O’Riley
    Jerry Botha
    Job Retention
    Job Security
    Job Seekers
    Kevan Hawley
    Khokhela Consulting
    Kim Lombard
    King IV
    Kirk Kruger
    Labour Relations Act
    Laurence Grubb
    Lindiwe Sebesho
    Living Wage
    Marie Claire Mclachlan
    Marie-Claire Mclachlan
    Martin Hopkins
    Mental Wellness
    Millennials
    Minimum Wage
    Morag Phillips
    Mr Price Group
    MTN
    Muhammed Goolab
    MultiChoice
    Multi-generational Workforce
    Nazlie Samodien
    Negotiating Salary
    Nicol Mullins
    Openserve
    Parental Leave
    Pay Discrepancies
    Pay Gap
    Peet Kruger
    Performance-based Remuneration
    Performance Management
    Personal Development
    PwC
    RemCo
    Remote Working
    Remuneration
    Remuneration Policies
    Remuneration Resolutions
    Remuneration Voting
    Reward Awards
    Rewards
    Reward Systems
    Salary
    Salary Increase
    Salary Negotiation
    SARA
    SARA Conference 2015
    SARA Conference 2020
    Shareholder Votes
    Skill-based Pay
    Slilled
    South African Reward Association
    Standard Bank
    Talent
    Technology
    Termination Pay
    The South African Reserve Bank
    Total Reward Internship Programme
    Total Reward Package
    Total Rewards Model
    Total Reward Strategy
    UIF
    Vaccination
    Variable Pay
    Wage Freeze
    Wage Negotiations
    WFH
    Women In Business
    Women's Day
    Women's Month 2024
    Workers
    Workforce
    WorldatWork
    World Of Work
    Yolanda Sedlmaier
    Zondo Report
    Zuma

    RSS Feed

CONTACT US

office [at] atthatpoint [dot] co [dot] za
© COPYRIGHT 2025
ALL RIGHTS RESERVED
  • home
  • our story
  • our services
  • your resources
  • SA Industry News