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Article

15 Apr 2020

Author:
Tracey Davies, Ground Up (South Africa)

So. Africa: Some big business commit to pay cuts for executives in efforts to help fight Covid-19

‘Covid-19 shows us that executive pay cuts are possible’ 16 April 2020

The recent rush of salary “sacrifices” by extraordinarily highly paid executives should focus our minds on how to permanently change the system that supports South Africa’s extreme wage inequality, a system that desperately needed reform long before the onset of the coronavirus. In the third week of what is now to be at least a five-week lockdown, there are encouraging signs that some sectors of South African big business understand the interdependence of their success and the health and well-being of the society in which they operate. Not long after the announcement of the initial three-week lockdown, some corporate executives announced promises of pay restraint, waking up quickly to the realisation that they must be seen to be sharing a little of the pain of this destructive pandemic.

…These executive pay cuts are important, not merely as a symbol of solidarity. They may not amount to much in the life of individual executives, but if their redistribution is well managed, they could make a substantial difference to tens of thousands of people. Tracking progress and adherence to commitments, however, will be almost impossible. In the best of times it is difficult to track executive pay; these are not the best of times.

…Mr Price had announced on 26 March that “annual salary increases for head office associates have been delayed until further notice” and that its “executive management and board of directors have committed to a cut in salaries and fees”. Woolworths announced on 6 April that senior executives had decided to forego up to 30% of their fees and salaries for three months until the end of June. The savings will be used to provide additional financial support to staff “who find themselves in extreme hardship as a result of the current crisis”. On 7 April EOH announced that its CEO and executive committee would take a 25% pay cut, and that it was proposing a “20% reduction across the board in cash salaries, with the exception of those earning less than approximately R250,000 per annum”.