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In pursuit of a living wage

The role of shareholders in South Africa.

The 2018 Oxfam report on global inequality titled, “Reward work, not wealth” makes for depressing reading about the state of inequality around the globe. It was strategically released ahead of the World Economic Forum (WEF), held annually in Davos, where the rich and powerful of this world gather to discuss pressing and complex global problems through the neo-liberal lens. Not since the publication of Thomas Piketty’s book, Capital in the 21st Century in 2013, has any research work on inequality captured the public interest as much as this latest report from Oxfam. 

In light of this report it is surprising that global inequality is absent in the WEF 2018 top five list of the global risks in terms of impact. For South Africa, the report’s findings paint a grim picture. It not only reveals that the top 10% earn 50% of all wage income while the bottom half get only 12% but also confirms that South Africa remains one of the most unequal countries in the world as measured by the Gini coefficient.

For perspective, consider this: In 2016, Whitey Basson, former group CEO of Shoprite, got R49.7 million in basic pay and a special performance bonus of R50 million. Now, contrast this obscene total amount of nearly R100 million with the meagre wages averaging R2 700 per month paid to workers in the deli section. It was widely reported then that it would take approximately 290 years for the deli section worker to earn the equivalent of what the then CEO was paid in a month.

In its report, Oxfam offers some insightful recommendations that governments, international institutions and corporations should consider and implement to arrest this growing inequality by building what they describe as a human economy. The report states, “there are two important ways to achieve a human economy: designing economies to be more equal from the start, and using public spending to redistribute and create fairness”.

To its credit, the South African government – in line with one of the recommendations – in tackling poverty and inequality signed a minimum wage agreement of R20/hour, which will come into effect on May 1 2018. It remains to be seen whether it will be successfully implemented and enforced. 

The minimum wage will amount to R3 500 per month for a 40-hour work week or R3 900 per month for a 45-hour week. Considering the cost of living in South Africa this is hardly enough to adequately cater for daily living expenses let alone provide provision for savings and investments, and the government admits as much. At the time the agreement was signed, then Deputy President Cyril Ramaphosa rightly acknowledged that R3 500 was not a living wage but hastened to add it was the first concrete step to attain one.

The pursuit of a living wage, over and above implementing the progressive solutions recommended by Oxfam to governments, international institutions and corporations, also requires the participation of a key constituent in the pension fund industry which up until now has been conspicuously silent, at least in this part of the world.

In the case of South Africa, government employees as pension savers through the Government Employee Pension Fund (GEPF) can be mobilised to engage with investee companies, such as Shoprite, and get them to commit to guaranteeing that all their workers are paid a living wage via the fund asset manager, which is the government owned PubIic Investment Corporation (PIC). With a mandate from pension savers, the PIC as a big institutional investor can raise the living wage issue at companies’ Annual General Meetings (AGMs) and indeed influence remuneration policy with their vote.

This is not without precedence; ShareAction a UK-based NGO through its living wage campaign has successfully mobilised savers and investors to ensure that the biggest British companies pay all their direct staff and contractors enough to live by. To date 33 of the FTSE 100 Companies are on record as fairly rewarding all their employees. That is a remarkable feat of achievement in six years. It is encouraging to note that the civil society movement in South Africa has birthed an organisation aptly named JustShare, loosely modelled around ShareAction. It is my sincere hope that in due course once operations commence it will embark on a similar campaign and achieve comparable success.

If we are to take the notion that modern economies rely on the demand for goods and services from ordinary people as an article of faith. It therefore stands to reason that for stable and successful economies, the argument for a living wage is compelling even to proponents of neo-liberal economics. The stage is set for shareholders in South Africa to play a central role in the campaign for living wages on behalf of millions in the country scraping by on poverty wages. 

Tariro Mudzamiri is a financial services industry professional who has worked in the industry (SA and Zimbabwe) for ten years.

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In our operation we have R100 to spend on labour, currently having 10 employees.

In this example let’s assume that R10 is not a living wage. The only way to pay a living wage is letting 3 employees go, rising the salary for each employee to ~R14.

The only way we can do this is by taking a loan to modernize the operation to require less labour – a loan which takes around 7-10 years to be cash positive.

The end result is a some employees with much higher salary and others without any. It is a tough one.

Lemme tell ya this: If this article is the quality of a financial services professional, I am going to take advice from my dog.

Who honestly can live on R3500 per month? Don’t be ridiculous. You can eat that in one sitting at a fancy restaurant, not to mention rent, utilities, schooling, transport etc. Why not bring in a law that all shop workers must earn R50000 (fifty chips) per month. Then we will surely eliminate all poverty wages amongst shop workers. No shop workers living in poverty. Brilliant. Then we can do the same for municipal workers, mine workers, road workers, gardeners, domestics and factory workers. Problem solved in one foul swoop. Tariro can then return to Zim where they are having a new dawn & in need of expert financial advice.

They don’t call me RTG for nothing.

I thought that the principle still applied that you as a employee sold your services to the highest bidder. Thus if you had minimal skills and a low education level you would hardly have employers rushing to your door to employ you. The minimum wages brigade may well end up with unintended, such as employers downsizing workforce and adding to unemployment numbers, or mechanisation of factories – yet again adding to the unemployment numbers. WE really need to address the unemployment and minimum wage perspective from cradle, through education, tertiary education and skills acquired. As an example watch our Jhburg JRA pot hole fillers and then judge whether a minimum wage is justified – they block half the road with cones, park their vehicles in dangerous locations, impeding traffic, and you have a cluster of workers filling a few holes. Productivity and urgency needs to be part of the minimum wage matrix

I am really dissapointed in this article. Inequality exist because of human diversity. Its almost as saying you cannot be happy if you dont have all the money in the world. People CANNOT be equal when it comes to potential for delivering on specific objectives in a business. And that is the beauty of diversity. What is the value of a good CEO? If you can do the math then divide Whitey Basson’s bonus (after he already paid tax to a government) between the 120 000 ALL EQUAL workforce and see what do they get extra COMPARED to not having a CEO that can generate enough profit to create 40 000 additional jobs. No one in this world just desrve to be paid more. I just think its more important to spread the truth than to write articles based on people’s emotions and how they feel. The truth dont care about your feelings of inequality. That does not mean because you dont like inequality that all of a sudden your feelings is now more important than the truth. If inequality is a major risk, then dont try to solve it at the end of the producer/consumer line. Start with the cause that creates the division. Education, opportunities, efficiency. And here is my big question: Are we not overpopulated on this planet? Should that not form part of the inequality discussion? Less people, more resources – simple math.

Watch the unemployment figure go over 60%.
Malawi has just lately upped the minimum wage to R475 per month ,yes R475.
All that will happen is some mechanisation and more employers hiring foreign workers or adjusting a 5 day week for domestics to 2 days.
if and when employers are caught they will simply close their businesses.
imagine how rates and taxes are going to skyrocket- a team of 10 municipal workers seldom has more than 2 actually working at any given time.

Hereshoping
When I first started work in South Africa in 1962 I earned R15-00 per month. I used to get to work by 6-00am and got all machines wormed up so by 7-00 when the workers arrived it was all go. I used to cut labels and prepaired the work for the following day. After 3 months the production had increased by 20% and the boss gave me a small increase. I took over the department after 7 months of hard work.
What Im saying is that anybody who is prepaired to work hard will be rewarded.
Now it is hard to get people to work as they accuse you of raceism.
How can you pay those wages when the people are just not prepaired to work?

South Africa remains one of the most unequal countries in the world as measured by the Gini coefficient.

‘Cause no other country has as large a proportion of their population that is so completely ………………….. fill in the blanks.

I think this is a very good article sir.

The reason it has attracted stinging comments is because those in the 10% getting the 50% are not yet prepared to give up their vantage point. Luckily its not entirely up to them only, if what is in the air is anything to go by.

Inferences are made about lack of education and skill amongst those earning below the living wage; look at the proportion of students at quality institutions by race, that should address that. Inferences are made about the authors country of origin; interesting enough Zimbabwe until late 90s and early 2000s paid tuition for university/ higher education which may explain a few things about the majority of those competing for opportunities with those in the 10%. it is fortunate that South Africa now seems to be on the trajectory of affording equal opportunity through empowerment/paying higher education and change in legislation.

Inferences are made about poor work ethic amongst those who earn below par; I suspect this has everything to do with motivation and feeling of belonging- as long as a worker feels that they are not an integral part of the company, do no expect them to be give 100%. One of the ways to instill that sense of belonging is through fair remuneration.

Inferences are made about human diversity as a means of justifying remuneration; this in fact is just an expression of an unequal system created to serve the interest of a few. To this day, this has worked to their advantage. I am only happy to say that enough of the current generation is now woke and the status quo will not remain the same.

Thank you for the thought provoking conversation.

While the cost of living has massively increased; there is a massive pool of unskilled people vying for jobs that anyone can do which means the work commands lower value. In most cases people employ domestics for example as a convenience. Should the price become excessive – people will seek alternatives, donit themselves or do without. Piketty has studied inequality but come the wrong conclusion. Micheal K. Hudson on th other hand who wrote Killing the host: How financial parasites & debt bondage destroy th global economy. Predatory lending; money printing; tax loopholes and exemptions; monopolies; insurance fraud;patent, brand & copyright price gouging; re-writing of educational textbooks; etc. by elitest multinational organisations are essentially re-creating a feudal situation for 99% of the global population. Read it and weep . . .

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