There has been a lot said in recent years regarding the earnings of chief executives in the private sector versus the pay of workers and whether or not this is morally acceptable in the context of poverty and inequality. Take for example the earnings of someone like Whitey Basson, Managing Director and Chief Executive of Shoprite Holdings Limited. Firstly, one has to acknowledge that Basson is an exceptional businessman and the fact that he heads the largest retailer in Africa is no accident of fate. He studied hard, worked hard at gaining experience and then used his skill and ability to turn a R1 million company into a R53 billion company.

There are very few people who have his business acumen and risk tolerance. As Shoprite Chairman, Christo Wiese said: "a guy with this talent is terribly rare". His ability to acquire and rebuild troubled companies, to reposition and differentiate brands is phenomenal, and through his work, one cannot ignore the fact that he has also done some amazing things for people in Africa. The group employs a significant number of people and when he acquired and turned Checkers and OK around, he saved 16 500 and 33 252 jobs respectively. His efforts, and those of the team that he built underneath him, have resulted in Shoprite Holdings Ltd. cornering 30% of the formal retail food market in South Africa. An incredible accomplishment! He clearly has a passion for what he does and his personal dream to drive food prices down in Africa is commendable and has benefited many people across the continent. The Chairman of the Board has always defended the decision to pay Basson the remuneration that he is paid, based on the fact that the Board benchmarked his remuneration against what others at his level were being paid elsewhere in the world. Wiese said that they were comfortable that they were paying a competitive package.

The point was also made, that since people of Basson's talent are so rare, the demand for his services is high and he is thus extremely marketable. In order to retain him, it is necessary to pay him a competitive salary. All this is perfectly understandable in the context of our economic system, but the disparity between those that have and those that don't, remains a challenge. I think that it is fair to question how we can have an economic system in which 48% of the population lives below the poverty line and 60% of those employed earn less than R2500 a month, when others earn the kind of money that Basson does. Do I think that talented executives like Whitey Basson should be paid well to do the incredible work that they do? Absolutely, because if we didn't reward excellence, then people would stop expending energy on acquiring knowledge, expertise and skill and would expend the least possible effort because there would be no motivation to excel. Mediocrity is not sustainable, but the question remains: how much is enough, before it becomes unpalatable?

It has been suggested that the disparity between what the highest paid employees and lowest paid employees are paid should be limited. Some years ago there was a proposal in Switzerland that it be legislated that CEO's income not exceed twelve times that of the lowest employees' wages, in this way, the CEO could not earn more in a month than his/her lowest paid employees could earn in a year. It didn't make it through the system, because of a lack of support, so the benefits of the proposal were never tested. I don't know the answer, but I do know that we're on an unsustainable path, and that a new, more equitable way must be found. Perhaps there is some merit in the proposal?

Having said that, this is not a South African problem, rather, it is a world problem, because it doesn't help us to change the rules here if the rest of the world does not subscribe to the same way of thinking, because we operate in a global arena - our deciding on our own to limit the disparity between the pay of executives and the lowest paid employees will simply result in a South African brain and talent drain, as our best people take up opportunities elsewhere in the world.

The status quo is not sustainable, but perhaps it is world leaders that need to acknowledge this and agree to collectively address it? n
www.pcb.org.za (This article was first published in The Mercury Network)


Melanie Veness,
CEO Pietermaritzburg Chamber of Business