SA LAGS BEHIND IN GENDER PAY EQUALITY
NARROWING the gender pay gap will make a significant contribution to transformation of the South African economy by improving workplace equality and alleviating poverty and financial vulnerability that affects women. Corporate board directors and investors have a key role to play.
The 2018 World Economic Forum (WEF) Global Gender Report ranks South Africa’s gender equality 19th out of 149 countries, but on wage equality for similar work, the ranking plunges to 117th.
Anita Bosch, an associate professor in Organisational Behaviour and Leadership at the University of Stellenbosch Business School and research chair at Women at Work, says: “South Africa’s labour market has changed little in the past decade – remaining more favourable to men, who are more likely to be in paid employment than women, regardless of race. Addressing the pay gap between men and women is an important step towards income justice for South African women.”
Women’s lower level of education is often cited as a reason for lower pay, but Bosch said South African women were graduating at the same rate, or better than, men in higher-paid fields such as commerce, science, engineering and technology, “which renders the argument that women do not have the right types of qualifications null and void”.
In her latest research on the gender pay gap in South Africa, she says corporate board members and investors can exercise “responsible activism” to address gender-based wage inequality in the companies they lead or invest in.
“As directors and shareholders, they have rights and responsibilities that can be used to positively influence organisations to take a stand against pay discrimination. Pay equality can be seen as a compliance issue, or it could be regarded as a focus on fairness and the basic right to equality, which is enshrined in the Bill of Rights of the Constitution,” she says.
Bosch adds that firstly, board members and shareholders can exercise their oversight role to ensure that companies are complying with legislation and corporate governance codes on equal pay for equal work and reporting on pay differentials and remuneration policies.
These include the Employment Equity Act (EEA) which enforces the principle of equal pay for work of equal value and requires employers of more than 50 people to report on income differentials.
The King IV Codes on Corporate Governance stipulate that a board of directors must approve a remuneration policy and a report on its implementation, as part of the annual report, and these must demonstrate that the company “remunerates fairly, responsibly and transparently”.
While application of the King Codes is voluntary, the Johannesburg Stock Exchange Listing Requirements make some provisions mandatory, including the tabling of the remuneration policy and implementation report for a shareholder vote at the annual general meeting.
“Both the Act and the King IV Codes imply that companies do gender pay audits as a basis for adjusting remuneration policies, and they must have an implementation plan for making the necessary changes.
“Not only do the listing requirements make reporting on remuneration mandatory, but shareholders can vote against the policy or implementation report if they believe there is unfairness. If more than 25% of the shareholders vote against either of these, the board of directors is obliged to commit to corrective action to implement fair remuneration practices. This is the shareholders’ and directors’ opportunity to exercise responsible activism,” says Bosch.
Shareholders can also engage with the board’s social and ethics, and remuneration sub-committees to “drive the quality, quantity and transparency of gender pay reporting”, she said, pointing out that practice in countries like Australia, the UK and Iceland had shown that requiring greater transparency in reporting ensured that companies focused closely on key equality indicators.
“When trade unions place specific emphasis on pay equality, the gender wage gap reduces. For instance, the standardised manner in which positions in government service are advertised – with wage transparency – has resulted in a low gender pay gap,” she says.
Bosch says that directors and investors also had a role to play in influencing changes in legislation, reporting and listing requirements to expand the scope of mandatory reporting and increase the types of indicators used in reporting to ensure greater transparency.
For example, she says, EEA does not require reporting on pay in the form of share incentives, discretionary bonuses or profit-sharing, which often form part of executive pay packages.
“The absence of reporting requirements for these types of remuneration could influence the gender pay gap negatively and hide important indicators of pay inequality,” Bosch says.
Further areas for lobbying included tax reform that takes into account the financial burden of childcare and educating trade union representatives to include focus on the gender pay gap in engagements and negotiations with employers.
She encourages non-executive directors to scrutinise company policies such as childcare, maternity and parental leave, recruitment and selection, performance management and reward schemes, and educational support for employees to ensure that they support the family obligations of both men and women and do not create bias against women due to maternity and childcare.