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.