Views and attitudes as a source of a pay gap

Section 27 of the EEA was viewed by the government, headed by Nelson Mandela, as the solution to reducing the vertical pay gap, ‘but its efficiency will depend on both the extent to which employees, and society, can mobilise around its provi- sions.’182 This statement underlines the connection between the legislation and social views and attitudes. As the legislative material indicates, the post-apartheid govern- ment was well aware that the discriminatory legislation of the past played a huge role in the perpetuation of the vertical pay gap.

Can it be assumed that with the advent of democracy the views and attitudes which caused the vertical pay gap are outdated and no longer held by society? In my view such an assumption would be misplaced. The broad majority of South Africans were in agreement that apartheid was unjust and wrong, but this does not mean that prejudicial views and attitudes were completely eliminated upon the advent of de- mocracy. The vertical pay gap that exists today was largely caused by past legislation along with the views and attitudes of the past, which caused the undervaluation of ‘typical black jobs.’ Looking at the figures of the ILO and World Bank it is clear that the distance between the top and the bottom incomes in South Africa are extensive. In the post-apartheid South Africa today one gets the impression that the wage gap is still growing and that no real progress towards its eradication has taken place.

‘It is irresponsible and wrong to suggest that there is a ‘wage gap’ between the low- est and highest pay levels in an enterprise. (...) Pay has to be aligned with the work done or contribution of each employee. It is unreasonable to expect enterprises to

182 _{Massie, Kaylan; Collier, Debbie & Crotty, Ann Executive salaries: Who should have a say on pay?}

Proportionate Income Differentials, p 43 of 186

‘reward’ employees for ‘inputs’ that do not add extra value. Unless a qualification or long service adds additional value, or there is a shortage of those skills in the market, there is no point in paying ‘premium’ wages to employees. This is the value ex- change equation.’183

This above opinion of Graham Giles is that the amount of pay is dictated by the mar- ket (market-related). This view cannot be accepted. It is accepted that worldwide un- skilled employees receive the lowest wages, and the author is right to hold that addi- tional skills have to result in higher remuneration. However in South Africa the gap between the top and the bottom income earners is three times as high as in Brazil, the country with the second most disproportionate income levels. In light of the above quote, the author’s opinion suggests that there is much to be said about the views on income disparities within South Africa. Education, skills and expertise alone cannot be the sole criteria in assessing wages. Proportionality needs to be judged by looking comparative at the complete pay range within an establishment. Employers need to have a mindset in terms of which they acknowledge that wage disparities are not solely market-related and cannot merely be justified by employees` lack of formal education, skills and expertise. Proportionality remains essential. All over the world the lowest income levels apply to the unskilled. Market-related views do not refer to dignity, proportionality or individual contribution to value creation. In such a line of arguments exploitative low incomes can be dictated by the market. Because accord- ing to this view the only relevant perspective is, what entrepreneurs may be willing to pay.

‘Any premium paid must be earned by offering premium value. It is unfair and un- reasonable to suppose that consumers will pay for the cost of unnecessary premium wages, or to assume that entrepreneurs will cut their return on investment.’184

183

Giles, Graham ‛Pay differential: proportionality without a wage gapʼ by GilesFiles June 16, 2015 http://www.gilesfiles.co.za/philosophy-politics-economics/pay-differential-proportionality-without-a- wage-gap/.

184

The statement suggests that the currentpay differentials are justified by the market and not caused by discriminatory practices inherited from the past. To pay the un- skilled as little as they are paid today, and not more, is justified by the market and not an outcome of undervaluation that stems from the past. This view however cannot be accepted when one fully takes into account the vastly disproportionate income differ- entials within South Africa. The vertical pay needs firstly to be acknowledged and then it needs to be addressed.

‘Section 27 of the Employment Equity Act obliges employers to eliminate all dis- proportionate pay differentials. Using the term ‘wage gap’ only confuses readers and has the danger of prolonging the stigma of outlawed past practices.’185

One of the barriers tothe implementation of section 27 of the EEA is the lack of con- sensus in acknowledging the existence of the vertical pay gap and accepting that the pay structure in place today has been adopted from the apartheid era and is an out- come of discriminatory practices. Views and attitudes of employers have largely caused unequal pay for work of equal value and led to the undervaluation of black jobs. During the legislative process the legislators pointed out that the income distri- bution in South Africa shaped by the apartheid era is ‛unusually skew’.186

Different social views and attitudes are a barrier tothe implementation of pay scales, like those introduced by the German ERA, in South African companies. The implementation of the ERA took place after social views and attitudes on the differ- entiation of blue and white collar workers had changed in Germany. In South Africa, however, section 27 of the EEA has been introduced where social views affecting the vertical wage gap still largely persist and can hinder any progressive steps taken to- wards proportional income differentials.187 The collective agreements in Germany changed in response to a change in social views and attitudes. Social and legal condi- tions have shaped the vertical pay gap in South Africa and social and legal norms are

185 _Ibid.

186 _{Green Paper (1996) Chapter 2, 2.4.6.} 187

Proportionate Income Differentials, p 45 of 186

the tool to reduce and ultimately remove the vertical pay gap. The differentiation be- tween blue collar and white collar workers was an outdated concept in the German labour market. Differentiations based on race and education, however, still affect the South African labour market and this may play a influential role in preventing the ef- fective implementation of collective agreements such as ERA in South Africa.

There is reason to fear that a broad implementation of pay scales similar to the ERA in South Africa may be influenced by outdated views. In some cases during the implementation of the ERA in Germany the negative impact of outdated views on its implementation was observed. To prevent this from occurring, the insights of the research done on the inefficiency of the ERA agreements in the reduction of the gen- der pay gap should be taken into account in implementing similar agreements in South Africa. If the parties involved are unaware that their prejudicial views and atti- tudes can seep in during the implementation process of such agreements this can cre- ate barriers to the effective implementation of such agreements. In order to ensure any measure of success in erasing long-standing disproportionate income differen- tials the complete South African pay structure will require revision.

In addition to this, developments in the global context add a further layer of complexity, it is thus important to take a more detailed look at the vertical pay gap in South Africa in global perspective.