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SA wage gap is lower than world`s largest

By Frank Nxumalo, Business Report
23 May 2000

Johannesburg - The gap between South Africa`s highest and lowest paid wage and salary earners was not the largest in the world, it emerged yesterday in the latest Watson Wyatt Global 50 survey, which provided pay and benefits information for 50 benchmark jobs in each of 27 developing and developed countries.

The Watson Wyatt survey incorporated information on South Africa from the Employee and Top Executive surveys of FSA-Contact, now part of the Deloitte & Touche Human Capital Corporation.

The survey showed that the South African pay gap was lower than those in the UK and US, both rated to be among the fastest growing economies.

Human Capital Corporation said this "startling fact" appeared to "fly in the face of strongly held perceptions that the wage gap in South Africa is too great".

Jim Steer of Human Capital Corporation, said he had examined the gap between the salaries earned by the lowest paid quartile of the lowest level employees and the highest quartile of the highest-paid in several countries.

He said he had not converted currencies or attempted to establish the buying power of the salaries and wages paid in each country because this had no bearing on the proportional differences between individual pay packets.

Steer said: "The survey reveals that the highest paid in the US and the UK earn approximately 46 times as much as the lowest-paid worker in South Africa. This differential is around 35, compared with 33 in Zimbabwe and 30 in Malaysia, another developing country.

"Interestingly, some of the smallest pay gaps occur in Japan, where the differential is 13 to one, and Germany where it is 19 to 1."

Steer believed some of the misperceptions surrounding the wage gap in South Africa rose from the issue being regarded as a hangover of apartheid.

"This is incorrect because the apartheid wage gap was a direct consequence of discrimination in the workplace."

"This gap has been largely eliminated; today in South Africa as in most other countries, the wage gap is based on supply and demand, and skills," he said.

Steer said the fact that the majority of the country`s lowest paid workers were black might be a legacy of apartheid which could only be rectified through improved education and training of the unskilled and semi-skilled workers.

He said state legislation aimed at narrowing a wage gap had never been successful in any growing economy.

"In any event, the largest wage gap in South Africa is between the employed and the unemployed," said Steer.