Just and equitable growth in South Africa

By Nedgroup Investments

Tracey Davies, the Executive Director of Just Share, a leader in shareholder activism in South Africa, discusses gender and pay inequality.

To watch a recording of the webinar, click here.

Have job losses for women been disproportionately higher than for men and if so, why?
The International Labour Organisation and the World Bank have repeatedly warned of the outsize impacts that Covid is having on women. Women make up 39% of the global workforce, yet account for up to 54% of job losses since the start of the lockdowns. This is partly due to their working in the hardest hit industries, such as hospitality as well as bearing a disproportionate burden of the school and office closures. Many women have had to choose between their job and looking after their children. In South Africa, approximately 3 million jobs were lost in the first hard lockdown and of these 2 million were women, mostly in manual and domestic labour. These impacts could reverse some of the progress that has been made in recent years.

What guidelines are in place for businesses to play their part when it comes to equitable gender participation?
There are very few requirements in terms of gender and race diversity for listed companies. Companies with a primary listing on the JSE must have a policy in place on gender and board diversity and must report to shareholders on voluntary targets and where they are in terms of achieving them. While progress is being made at board level, there is far less diversity at senior management level. These policies don’t have to be made publicly available, so it’s difficult to assess their progress towards targets. The polices are not required to be updated or revised, so many companies say they’ve achieved targets that were in fact met several years previously.

The 30% club
The 30% club was started in the UK in 2016. It has 16 regional and country chapters of which SA is one. Its mission is to achieve 30% female representation on boards in c suites globally by 2020. That target was not achieved in very many places. The 30% target was chosen despite the fact that women account for more than 50% of the population. Research suggests that 30% represents a critical mass from which point minority groups can impact the boardroom dynamics. By last year, only 3 of the 16 chapters had reached the target. In South Africa, 24% of board members are women. They make up 13% of executive directors and only 28% of non-executive directors. The board assessed the gender composition of 219 JSE-listed companies and claimed to be answering questions like why there are not more women on the boards of listed companies and are there enough women of the right calibre to fill board positions as they arise? The problem is not that there aren’t enough qualified women, the problem is they’re not being appointed. Even the 30% club report confirms that it is still common practice for board members to nominate or recommend individuals that they know based on their own networks. Boards also only recruit individuals who they consider to be highly experienced and seasoned. If you’re not getting the opportunity to become experienced, you end up in a vicious cycle where you never actually qualify for the role.

The pay gap in South Africa
Inequality in and of itself stops us from experiencing better economic growth. Global research shows that unequal societies are more violent, have less stable and slower growing economies and poorer levels of education. Societies in which citizens are less likely to trust each other and to participate in public and communal life, impacts the ability to govern and set policies that might reduce that inequality. In South Africa, wage inequality has deep historical roots and arguably has the most dramatic economic and social repercussions. More than 20 years ago, the TRC in its final report called the gap between rich and poor in South Africa morally reprehensible, politically dangerous and morally unsound. Since then, the incomes of the top 5% have grown at more than double the rate of economic growth. The income of the remaining 95% of people have either stagnated or grown really slowly. The real incomes of the top 1% over the last 15 years have almost doubled. The top 1% have increased their share of total income to more than 12%. That is in and of itself a contributor to increasing inequality.

We also don’t have mandatory wage gap disclosure. We have complicated remuneration packages for the highest paid people in our society, but don’t talk about what we need to pay people at the lower levels in companies to ensure they have a dignified life. Tackling inequality is not making sure everyone can scrape by on the minimum wage, but taking concerted action to close the gap between the top and the bottom. How much does one person really need to live well and how can we better share the prosperity of our society to improve the wellbeing and respect the dignity of the poor? There are proposed amendments to the Companies Act that would require companies to disclose remuneration information publicly, but there is a huge and strong lobby against that and as a result the bill has been with Nedlac for several years.  Salary benchmarking can be misleading especially if you consider that many employees and contractors can spend up to two-thirds of their income on transport to and from work. There are huge inequities perpetuated by pay gaps and the way pay is structured. Unless we know what those gaps are, it’s very difficult to make progress.