by Paul Fisher

Pound foolish

Cap on salaries could increase skills migration

President Zuma advises a freeze on salaries
Cap high-income earners

Both President Jacob Zuma and Economic Development Minister Ebrahim Patel, have proposed a new Growth Path policy salary and bonus cap for senior managers and executives earning more than R550 000 a year. This will also affect those who receive increases while earning more than R20,000 a month.

At the height of the mining strikes, Mr Zuma appealed to business leaders to freeze their salaries and bonuses for a year as strikes crippled mines.

Critics question whether or not the president will volunteer to cap his own salary.

"It is a stop-gap measure that cannot be a long-term solution," said Mervyn King, author of the King codes on corporate governance and chairman of the International Integrated Reporting Council.

It would be better if incentives were extended beyond financial performance to include the progress executives made in implementing the societal and environmental obligations in the integrated reporting framework JSE-listed companies are required to follow.

"Then you will see the long-term survival of companies and jobs," Prof King said.

A PwC report  showed that executive remuneration at the 100 top listed companies in South Africa was heavily weighted towards variable pay — only 34% was guaranteed pay for CEOs. Short-term incentives make up 41% of the variable component.


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Issue 58