Chief executives of the largest companies in South Africa are earning, on average, 64 times the wages of workers.
This figure, referred to by economists as a company’s “pay ratio”, is included in a new report on executive remuneration in South Africa, released on Thursday by PwC.
The report defines a pay ratio as the ratio between the total remuneration of the CEO of a company and the average of the total remuneration of all other employees of the company.
The report found the pay ratio at SA’s largest companies had risen to 64.7 in 2018, up from 61.8 in 2017. It is slightly down from 64.8 in 2016.
Pay ratios at smaller companies differed. The lower pay ratio was 12.4.
The authors noted that while the pay ratios for South African company heads were lower than in the US – where more research has been carried out – the US also has a lower Gini coefficient and a lower unemployment rate.
The Gini co-efficient is used to measure income inequality.
In the US, pay gap ratios must be disclosed in accordance with Dodd-Frank Act regulations.
According to analysis carried out by PwC’s US firm, US companies with revenue in excess of $10bn have an average pay ratio of about 235:1. Those with revenues under $1bn have, on average, pay ratios of around 35:1.
While the report’s authors didn’t make specific recommendations around pay in SA, they did note a international trend of publishing pay ratios as part of public remuneration data.
In South Africa, this was becoming more of an issue.
“It is clear that discussions on the contribution of fair pay to addressing the issues of inequality, unemployment and poverty are gaining momentum,” the report’s authors said.
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