Vertical pay gaps at JSE-listed companies

As part of Just Share’s work advocating for fair pay and disclosure of pay gaps by JSE-listed companies, we have for several years been asking boards of directors, at annual general meetings, whether they will commit to disclosing the wages of their lowest-paid workers.

Although wage gap disclosure is not yet a legal requirement in South Africa, several JSE-listed companies have started to make some disclosure relating to vertical wage gaps and internal minimum wages. In this briefing we analyse the most recent sets of disclosures by the following companies:

  • Absa Group Limited
  • Investec Limited
  • JSE Limited
  • Nedbank Group Limited
  • Old Mutual Limited
  • Shoprite Holdings Limited
  • Standard Bank Group Limited
  • Woolworths Holdings Limited

A common argument against pay gap disclosure in South Africa is that this disclosure will be “taken out of context” or “misinterpreted”. While there are important differences between sectors which impact levels of pay, Just Share believes that stakeholders can make their own assessments of fairness on a case-by-case basis, and that this disclosure is a crucial first step in understanding and addressing the high labour market inequality that is so damaging to our economy and society.

We commend the companies assessed in this briefing, all of which have voluntarily made these disclosures without being legally required to do so.

Just Share has calculated the vertical wage gap (i.e., gap between lowest disclosed salary and CEO’s total remuneration) for each of the assessed companies. Amongst these companies, the largest wage gap is at Shoprite, where the CEO in 2022 earned 1081 times more than a worker earning the company’s internal minimum wage (if that worker worked 45 hours per week for all 52 weeks of the year, earning approximately R58,700). The smallest gap is at the JSE, where the CEO in 2022 earned 49 times more than the disclosed “lowest grade total guaranteed pay” of R419,585.

Key messages

  • There is currently no prescribed method for the public disclosure of pay ratios in South Africa. Companies are using a wide range of formats and including different elements of remuneration in their pay gap analysis. This makes comparison difficult.
  • While the listed companies assessed here disclose what they refer to variously as their internal minimum wage / minimum annual guaranteed package / minimum salary, none of these companies explicitly states what the lowest grade job is that attracts this minimum salary. For Woolworths and Shoprite, the hourly base pay presumably applies to those working in these companies’ retail outlets. It is not obvious in other sectors, however, what the lowest grade job is, which means that it is unclear whether these minimum packages apply to unskilled workers.
  • None of the assessed companies refers to contract workers.
  • Principle 14 of the King IV Report on Corporate Governance deals with remuneration governance. Recommended practice 29 requires the remuneration policy to “include provision for … arrangements towards ensuring that the remuneration of executive management is fair and responsible in the context of overall employee remuneration in the organisation”. However, when assessing the “fairness” of their lowest wages most companies compare these wages to the statutory national minimum wage (wage floor), rather than to the fairness of overall remuneration within the organisation, as required by King IV, or to a living wage.
  • The use of CEO total guaranteed pay rather than CEO total remuneration to calculate pay ratios obscures the fact that the major portion of executive remuneration is derived from short-term and long-term incentives. It is therefore encouraging to see that some companies (Nedbank, Old Mutual and Investec) are calculating pay gaps using total remuneration.

Pay gap disclosures are necessary and important as they provide crucial insights into labour market inequality, and steer informed conversations and a broader understanding of the state of pay disparities and options available to reduce inequality. This increased transparency also empowers investors to make informed decisions when exercising their voting rights on remuneration policy and implementation reports.

It is encouraging to see that several JSE-listed companies have decided voluntarily to make these disclosures. In future, such disclosures should include:

  • more detail about the roles of the employees to whom the disclosed minimum salaries apply; and
  • the number of contract workers to whom these disclosures do not apply, and the types of jobs that they perform.

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