Equal-pay for work of equal-value implementation within a South African SOE

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Equal-pay for work of equal-value implementation within a South African SOE by

LW Langa

MINOR DISSERTATION

Submitted in partial fulfilment of the requirements for the degree

MAGISTER COMMERCII in BUSINESS MANAGEMENT in the FACULTY OF MANAGEMENT at the UNIVERSITY OF JOHANNESBURG Supervisor: S Bronkhorst 2019

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ACKNOWLEDGEMENTS

Throughout the lonely research journey of this mini dissertation, I was blessed to have the support and encouragement of very special people. I wish to acknowledge the contribution of the following persons:

To my family, thank you for the support and understanding you provided during the study years for primarily my physical and psychological absence from you. Thank you for the unconditional love you gave me even if I was not fully there for you.

To my friends and colleagues, thank you for supporting and believing in me when the days were darker and I needed you most, for the encouragement you gave me and the continuous enquiry about the research progress.

To Bonginkosi Makuyana for giving me the opportunity to study this course and conduct the research. I thank you dearly.

To my supervisor, Seugnet Bronkhorst, lots of gratitude to you for your support, encouragement, guidance, insights, leadership and staying positive about the research progress. Thank you for your helping hand during the course of the research journey. Words alone do not do justice to the level of gratitude extended.

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DECLARATION

Student Number: 925199400

I declare that the minor dissertation “Equal pay for work of equal value implementation within a South African State-owned enterprise” submitted by me for the degree Master’s of Commerce

(Business Management) at the University of Johannesburg is my independent work, that all sources used or quoted have been cited and acknowledged in the references and has not been submitted by me for a degree at another university.

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3.1 Introduction ... 48 3.2 Research Environment ... 49 3.3 Research Approach ... 49 3.4 Research Philosophy ... 50 3.5 Research Paradigms ... 51 3.5.1 Interpretative paradigm... 52 3.5.2 Pragmatist paradigm ... 53 3.5.3 Other paradigms ... 54 3.6 Research Methods ... 55 3.6.1 Research methodology... 55 3.6.2 Methodological choice ... 57 3.6.3 Research strategy ... 58

3.6.4 Sample procedure and size ... 59

3.6.5 Data collection ... 60

3.6.6 Data analysis ... 60

3.6.7 Ethical considerations ... 60

3.6.8 Role of the researcher ... 61

3.7 Conclusion ... 62

CHAPTER 4: RESEARCH RESULTS ... 63

4.1 Introduction ... 63

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4.3 Data Analysis ... 66

4.3.1 Demographic distribution of qualitative primary data ... 67

4.3.2 Response rate for qualitative analysis ... 67

4.3.3 Demographic distribution of secondary data ... 68

4.3.4 Discussion of key findings ... 68

4.3.5 Discussion of central themes ... 75

4.3.6 Researcher learning ... 78

4.3.7 Bracketing and credibility ... 78

4.3.8 Limitations of the analysis ... 79

4.4 Conclusion ... 79

CHAPTER 5: CONCLUSIONS AND RECOMMENDATIONS ... 80

5.1 Major Findings ... 80

5.2 Recommendations for Future Research ... 81

5.3 Final Conclusions ... 82

APPENDIX A: INTERVIEW GUIDE QUESTIONS ... 84

APPENDIX B: PARTICIPANT INTERVIEW SCHEDULE ... 85

APPENDIX C: CONSENT FORM ... 86

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LIST OF FIGURES

Figure 2.1: Equal pay for work of equal value 17

Figure 2.2: Monthly earnings per profession per percentile 42

Figure 3.1: Data collection and analysis framework 55

Figure 4.1: Initial coding 68

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LIST OF TABLES

Table 3.1: Research design 51

Table 4.1: Demographic distribution of sample 67

Table 4.2: Coding and developing themes 71

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ABSTRACT

The vast empirical literature on pay inequity reflects extreme interest from various stakeholders such as policy makers, economists and social groups, including employees and trade unions. Less interest is observed from employers due to the legislative obligations. The literature review is consistent in that pay inequity is a reality, and irrespective of the efforts by policy makers and courts, pay inequity persists. Researchers have made convincing observations with regard to providing individual reasons that seem probable to justify pay inequity for claimants. In addition, various reasons are provided to justify why pay inequity exists. The research focuses on assessing how the state-owned enterprises have implemented equal pay for work of equal value. Using the financial data available, together with qualitative semi-structured interviews to collect primary data, a data analysis has been conducted in order to assess the observed state-owned enterprise work environment with regard to equal pay implementation through a qualitative approach. Employing equal pay in the SOE were found to be taking place, though without a comprehensive approach, with no observable unfair discrimination and that it was affordable to implement.

Keywords: Employment Equity Act, Equal pay assessment, State-owned enterprise, Semi-structured interview, Reflexivity and Interpretative Phenomenological Analysis

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CHAPTER 1: BACKGROUND

1.1 Introduction

Equal pay for work of equal value has received much attention in recent years due to the important implications for employees and challenges to employers. Thus, the promotion of gender equality and equal pay for work of equal value are currently high on the agenda of various countries (Adelekan & Bussin, 2018:3). Equal pay for work of equal value includes work that is the same, substantially the same and work with same value with other work (Bussin & Smit, 2015:28). Equal pay for work of equal value is the provision made within the Employment Equity Act 55 of 1998 in South Africa which was introduced in August 2014 (Ebrahim, 2016:5).

According to Adelekan and Bussin (2018:3) and Laubscher and Gilfillan (2015:2), the promulgation of equal pay for work of equal value in South Africa is the result of criticism by the International Labour Organization (ILO) on South Africa for excluding the statutory principle that deals with pay equity as stipulated in the Employment Equity Act. The South African view of and justification for the criticism are that the introduction of equal pay has existed prior to the promulgation of this Act in August 2014, as it has been incorporated in the Labour Relations Act 66 of 1995 which stipulates that unfair discrimination has been prohibited in South Africa since 1994 (Laubscher & Gilfillan, 2015:1). Equal pay for work of equal value is deemed applicable although the mechanics of handling the employee claims and the employer defence have been omitted and lags on the perspective of the Labour Relations Act of unfair discrimination (Laubscher & Gilfillan, 2015:1). Equal pay for work of equal value is complex and difficult to handle and prepare for, irrespective of whether one is an employee or an employer, giving rise to challenges in dealing with equal pay.

While the origins of equality provision have resulted from gender discrimination in most businesses around the world, and according to Bussin and Smit (2015:28), Laubscher and Gilfillan (2015:3) as well as Lombardo, Meier and Verloo (2009:105), South Africa’s context on unfair discrimination and exclusion of pay inequality are apparent among the various race groups. Statistics South Africa (2017:1) states that South Africa’s economic climate is complex, as it is characterised by high

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2 unemployment ratios, the most unequal country in terms of distribution of country wealth, high skills challenges, low productivity levels, low economic growth, low inflation ranging from three to six percent, and high prices. Therefore, this situation necessitates a special need to have equality provision on pay. Blau and Kahn (2007:7), supported by Arulampalam, Booth and Bryan (2007:164) stress that without the provision of equal pay, the determination of remuneration is primarily based on supply and demand for work and labour.

Vartiainen (2001:19) argues that employers have too much uncontrollable power over salary determination. The determination of remuneration, which is based on supply and demand of labour, perpetuates low and unequal pay that is driven and fueled by capitalist approaches that undervalue gender and race groups previously excluded from the mainstream economics (Adelekan & Bussin, 2018:3). As a result, unfair discrimination practices arise from employers as they attempt to decompose what part of pay inequity constitutes unfair discrimination. In addition, Biltagy (2014:18) stresses that while the labour market discrimination often responsible for the unexplained wage gap, the challenge might be on unobserved and unmeasured variables in worker and job aspects. Vartiainen (2001:19) further states that the decomposition is evident in the gender pay gap of Finland over the years where pay gap explanations have been made, using variables such as educational background and choice of low paying jobs.

According to Sandberg (2016:1) it is acknowledged that the equal pay for work of equal value provision has started in August 2014, and that the Labour Relations Act has prohibited unfair discrimination in remuneration practices prior to the dawn of democracy for South Africans in 1994. Notwithstanding the long period stated, the fact that pay inequality is still dominant in South Africa shows the reluctance to implement equal pay for work of equal value in favour of unequal pay for equal value of work (Blau & Kahn, 2007:7).

1.2 Background

The reluctance of business to embrace the equality provision of equal pay for work of equal value as well as the lack of interest behaviour stems from being ill prepared to justify and defend the difference in pay as the need arises (Bussin & Smit, 2015:28).

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3 According to Bosch (2015:6), this gives rise to inspectors from the Department of Labour conducting inspections in selected companies as to how this provision is implemented in South Africa.

The provision of equal pay for work of equal value is very important to the South African population for them to be paid equally and equitably, as this has bearing on the income distribution levels within the economy. This is so, as the majority of workers support and feed family members beyond the immediate family (Hlongwane, 2007:75). In addition, Bosch (2015:6) states that, although pay inequality is an emotional topic, pay determines the quality of life of employees and their families. Therefore, it should be seriously be managed fairly among employees irrespective of gender and race differentials (Hlongwane, 2007:74).

Government, in responding to pay inequality and its challenges, realise the need to introduce equal pay for work of equal value. Based on the complex nature of this provision, employers and investors display a lack of interest and appetite to implement it while inversely, there is more interest and appetite from employees and trade unions than potential beneficiaries when implementing equal pay for work of equal value (Scheepers, 2014:20).

Most businesses consider the implementation of the equal pay provision as an organisational burden that is going to increase company salary costs unnecessarily. Business considers the introduction of the provision by government as shifting the responsibility of welfare income management and distribution from the government to business, as the government is unable to raise welfare grants any further. Stated differently, business considers government to be obligated to provide social packages from the government budget. However, it is passing the burden on to business through this equality provision (Nel, 2019:7), thus increasing the business costs and making business less competitive. The financial burden is worse if the company employs thousands of employees.

Laubscher and Gilfillan’s (2015:7) view on this is that employers, investors and critics of the provision is that the introduction of the provision is prescriptive on pay equalisation while it disregards seniority, employee performance and output delivered. Laubscher and Gilfillan (2015:7) provide a counterargument to the

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4 criticism that the provision prohibits unfair discrimination for pay for same work, equal value work and similar work, and permits differentiation on justifiable grounds. Business considers pay as being associated with, relevant to and dependent on the flexible market value; therefore, labour pricing is economic system-driven and irrelevant to be legislated (Hlongwane, 2007:71). Inversely, trade unions regard the equality provision as an opportunity to further acquire better salaries for their members. Equal pay implementation is too complex for most employers understanding it easily (Scheepers, 2014:5).

The persistent pay gap is the result of a complex dynamic South African society, its central role players and stakeholders, and how these link to the failure of unfair discrimination in addressing equal pay for work of equal value (Levy, 2015:3). Further and as highlighted by Lobardo et al. (2009:106) and confirmed by Freidenvall and Dahlerup (2009:10), the contested nature of and the ongoing discursive struggle on both the gender and racial pay gaps are evidence of the challenge.

The Department of Labour Inspectorate expects organisations to submit their annual employee salary report showing how employee salaries per job title are positioned. This is required in order to identify instances where pay inequalities exist. Organisations are also expected to report on the unfair discrimination corrective actions taken to reduce the pay inequality, if any, or to align procedures to comply with this equality provision (Oliphant, 2015:9). In cases where it is obvious that organisations are unwilling to take corrective actions, the Inspectorate issues a compliance order to the organisation, instructing the organisation to implement the corrective actions within a specified timeframe (Levy, 2015:3).

Reducing the salary gap in South Africa is critical to trade unions, and any opportunity to increase pay is welcomed, as they have experienced an increase in complaints regarding unfair discrimination in remuneration (Scheepers, 2014:10). Laubscher and Gilfillan (2015:53) have observed this trade union interest and project that, since pay equity is expressively provided for in legislation, it will spark claims, grievances and disputes in organisations because different stakeholders are bound to benefit differently.

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5 The ZYD company is involved in the energy business, and its operations stretch across the nine provinces in South Africa. It generates, transports, records, stores and distributes energy countrywide, including African neighbouring countries. It has 48 500 employees consisting of permanent and temporary employees with various skills and positions, ranging from unskilled to executives. The company’s head-office is kept anonymous as agreed with the company. The company’s core business uses technical and engineering skills while strategic functions such as finance, human resources, commercial and information technology also play an essential role.

Based on the anonymity requested by the company, the company to be researched will therefore use a pseudonym and be known as ZYD. As a state-owned enterprise (SOE), ZYD’s primary stakeholder is the government through the Department of Energy and the National Energy Regulator of South Africa (NERSA). The company is accountable to all South Africans. It annually requests NERSA for tariff increases for raising the price of the product.

Real interviews for data collection will be conducted and real financial data made available within the company will also be used. No negative impact to the research is expected as a result of the name anonymity and the data collection process.

The success of the ZYD company leads to the overall growth and development of South Africa. Of late though, the 3.2% reduction in the South African gross domestic product reported for June 2019 by Business Day was primarily placed on the low performance and unreliable product supply of the ZYD company. The SOE sources its strategic spares and material locally in South Africa as well as internationally. In terms of comparable work, the ZYD company has various roles that are of equal value, consisting of work which is the same or substantially the same which could require equal pay. The research will be conducted at head-office; however, for the focused employees it will be conducted across the country.

1.3 Problem Statement

The fact that the equal pay provision is expressively pronounced, the stakeholders, primarily employers and employees, are expected to use the provision going forward. Employees will ascertain that they gain more and lose less, while the

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6 employer will strive to lose less from the implementation of the provision. The employee losses are limited, as they stand to gain if the claim is favourable. However, the employer stands to lose if the claim is proven in favour of the employees (Tshetlo, 2015:3).

The failure of business to investigate employee claims of unfair pay and to comply with orders made by the Department of Labour, following an inspection on the implementation of the provision, could have negative lasting consequences (Van Heerden, 2015:1). These consequences include legal battles with employees, low team morale, employee absenteeism and turnover, financial challenges and losses resulting from fines for non-compliance, and company reputation damage.

From the preliminary literature review it is determined that the problem statement for the research is to determine how the state-owned enterprise ZYD deployed equal pay for work of equal value.

1.4 Purpose of the Study

The purpose of the study is to determine how a state-owned enterprise in South Africa deploys equal pay for work of equal value. An inductive research approach is used with a qualitative research for primary data and for secondary numeric data. The qualitative approach will be used to collect and analyse data in order to build a theory about equal pay for work of equal value. The research setting and environment where the investigation takes place are located in a state-owned enterprise (SOE) called ZYD. The research includes a population sample of eight participants who are involved in the primary research data collection. In addition, a company finance report is analysed for the secondary data collection. Equally, some qualitative primary research data are analysed quantitatively in order to make sense of the data (Saunders, Lewis & Thornhill, 2012:165).

1.5 Primary Objective

The primary objective of the research is to investigate how the South African state-owned enterprise ZYD has implemented equal pay for work of equal value, given the realities the organisation faces.

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7 1.6 Secondary Objectives

The secondary objectives of the research are the following:

 To determine to what extent the company is affected financially by deploying the provision.

 To determine to what extent the company understands the aim of the provision.

 To determine how business finds the provision to be an inclusive business imperative.

 To determine to what extent the organisation has actioned the plans in order to reduce and eliminate the unfair discrimination as pronounced by the provision.

1.7 Research Approach

An inductive research approach in the form of semi-structured interviews is used within the ZYD to collect primary data. The data are then analysed, including categorising the data, creating patterns and trends, as well as interpreting the data, which results in building a theory or understanding of the research rationale (Saunders et al., 2012:166). The logical choice of the research approach is embedded in the use of unknown premises and observations in the ZYD as to how the company has implemented equal pay for work of equal value in a cross-sectional time horizon as a snapshot at the time of implementing the provision (Bryman & Bell, 2015:27). This leads to various ZYD participant responses providing patterns and trends to generate themes, theories and untested conclusions, and then building a theory (Saunders et al., 2012:168). Inductive generalisibility considers whether ZYD specific findings are applicable to the general public’s usage of the product external to the research site.

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8 1.8 Research Methods

1.8.1 Research philosophy

The study is an empirical research, and responds to research objectives and questions that evaluate and describe the situations that ZYD has faced in the past and is going to come across when implementing future equal pay provision.

The assumptions about human knowledge, realities faced and influences of own researcher values collectively shape the understanding of the research question, research design and methods used, and how the analysis is interpreted to realise key findings (Saunders et al., 2012:208) are applicable to this research. The research philosophy or system of beliefs and assumptions on the development of knowledge used is pragmatist, as the research strives to uncover findings that lead to practical consequences and actions in pursuance of resolving current and future problems in ZYD (Saunders et al., 2012:130). The rationale for choosing the pragmatist view is that it reconciles the facts and values, accurate and rigorous knowledge and differing contextualised experiences. It also considers theories, concepts and ideas from the perspective of the role they play as custodians of thought and action (Saunders et al., 2012:143), and in terms of their practical applications in specific situations; in this case, ZYD.

In order to conduct this research accordingly, a well thought out and consistent set of assumptions shape a credible research philosophy. This, in turn, delivers a research approach, methodological choice, a research strategy and data collection techniques and analysis procedures. It aids in delivering a coherent equal pay research project with all elements of the research fitting together appropriately (Saunders et al., 2012:126).

1.8.2 Research paradigm

The paradigm that will be used is embedded in the primary objective of the research and the snapshot research time horizon available to conduct the research. The paradigm is therefore interpretative and pragmatic in relation to data collection in ZYD.

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9 The research uses the worldview embodied in the pragmatism philosophy in that equal pay for work of equal value can have differing interpretations and no single view can ever provide an entire picture, as there are multiple realities (Kelemen & Rumens, 2008:19). As in this research, the pragmatist denounces one viewpoint to explain a picture, acknowledging that qualitative methodological choice will provide a richer data collection and analysis procedure (Creswell, 2009b:101). The pragmatist paradigm of research is adequate, as it is a preferred research method by business and management alike due to its effectiveness in overcoming weaknesses of single/mono choices (Mouton, 2009:154).

1.8.3 Research strategy

The interpretative and pragmatic paradigms used in this research provides a deliberate qualitative data collection to allow qualitative data collection by means of a survey to collect empirical primary data in response to evaluative and descriptive questions (Mouton, 2012:57), and for financial numeric secondary data.

The research strategies used in the research that will respond appropriately to the research objective of equal pay are firstly, a survey in the form of semi-structured and in-depth interviews with regard to the qualitative data collection. Secondly, numeric financial data available in ZYD company are collected, analysed and interpreted with regard and in response to the research objective (Creswell, 2009b:101).

In conducting the research on equal pay in ZYD, the assumptions adopted include that research rarely delivers unquestionable results and that the researcher’s total objectivity is never achievable (Saunders et al., 2012:202). The involvement of the researcher constitutes the subjectivity rather than the objectivity to the research.

1.9 Sampling Procedure and Sample Size

The non-probability sampling method is used on subject matter experts, management and beneficiaries within the ZYD company to collect primary data. The sample size is dependent on the research objective (Patton, 2002:38), consists of eight participants with whom interviews are conducted for primary data collection. In

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10 addition, existing financial numeric data within the ZYD company are collected and analysed, thus providing secondary data.

1.10 Data Collection

The techniques and procedures of the study for data collection constitute qualitative semi-structured and in-depth interviews for primary data as reflected in the research strategy (see Section 1.8.3 above), as well as the ZYD quantitative financial data for secondary data collection (Esterby-Smith, Thorpe & Jackson, 2008:323).

1.11 Data Analysis

Primary data collected from the participants within ZYD, together with the secondary financial numeric data of ZYD, are verified for correctness, then analysed and interpreted with regard to manageable themes and trends, as well as in relation to the literature review, the research objectives and research questions in connection with equal pay for work of equal value (Mouton, 2012:108). The findings and recommendations are made available to the research community later in the project.

1.12 Data Collection Instrument

The research into ZYD consists of a qualitative approach. The instruments of measure and for collecting data are a researcher-designed, semi-structured interview questionnaire to focus the interviews and ZYD archival financial report data for secondary data collection. However, due to time limitations of the study, no pilot study conducted to assess the correctness of the tool, although the designed questions are quality-checked with senior managers who are accustomed to research engagements of the employer ZYD.

The interview protocol, consisting of a predetermined set of ten or more open-ended questions intended to guide the interviews about the primary research question to which every participant has to respond, is applied.

1.13 Ethical Considerations

The research reliability is dealt with ethically in order that interviewer and interviewee biases and influences, according to Saunders et al. (2012:202), are managed

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11 professionally in order that responses truly reflect what they are supposed to reflect. It is therefore, believed that the research data collection and data analysis have been handled sensibly and discreetly in order that they stay true to represent the respondents’ views (Mouton, 2012:101).

Permission to conduct the research and to access the SOE premises and resources has been granted. The terms for granting the permission have been agreed to, with the proviso that the company name be kept anonymous at all times during this research. In responding to the SOE’s request, the name of the company researched is changed to ZYD.

Ethical conduct relating to the anonymity, confidentiality and the right to privacy of respondents and the declaration of voluntary participation for prospective respondents are observed and pronounced accordingly. The freedom to participate in or withdraw from participating by respondents at any given time during the research and the informed consent have been handled prudently to facilitate a credible data collection (Saunders et al., 2012:210). This is exacerbated by the fact that respondents know the researcher and vice versa, providing more reasons why data need to be representative of respondents’ views.

Sources of data, ideas, contributions and theories of ownership are acknowledged by citing the references accordingly in the research.

1.14 Limitations of the Research

This research has been conducted prudently. There is no envisaged limitation that could stop or delay the continuation of the research. The anonymity of ZYD is acknowledged and provides no limitation to the study. The respondents are knowledgeable regarding the research topic of equal pay for work of equal value. Thus, the impact of their knowledge and the work done by the researcher are managed professionally to reflect a value-neutral research project in order to eliminate researcher biases and perceptual misrepresentations.

The generalisability of results will be analysed for general cross-sectional applicability, using findings in places external or other than where the study has taken place or under varying conditions in which the study has taken place. Different

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12 organisations may consider the implementation of equal pay for work of equal value differently due to the situation in which they find themselves, based on the defence they are prepared to provide (Mouton, 2012:150).

There are no deliberately imposed limitations on the research design by the researcher; thus, there are no delimitations to the research.

1.15 Benefits of the Research

There is a strong belief that the research findings provide relevant and fresh insight into and perspective on managing challenges regarding equal pay for work of equal value, both for organisations and employees, as the awareness levels are enhanced by the research. The benefit is distinctive from a new start-up company to an existing company that is expected to implement equal pay for work of equal value by enhancing better decision-making and improved policies.

Relevant stakeholders understand and utilise the provision better which may lead to supporting and promoting equal pay for work of equal value.

The study also serves as a building block to the academic literature for future reference, mainly in the South African context within which unfair discrimination is observed from both gender and racial perspectives and the economically excluded forms the majority in the country.

1.16 Demarcation and Scope of the Research

Chapter 1 provides the research background and introduces the research problem statement, the purpose of the study, the primary research objective, the secondary objectives, the research layout and the employer who is being researched.

Chapter 2 provides the literature review conducted with the view to understand what equal pay for work of equal value is all about, and what the rationale and intended spirit of this equality provision are. Various sources and contributions concerning the issue of equal pay for work of equal value, including legislative practical applications arising from the contestation of stakeholders of pieces of legislation, are analysed. This endeavor leads to the observation of commonly accepted findings, concepts and definitions from the researched literature and the research community at large.

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13 Chapter 3 provides the methodology and pathway indicating how the research is conducted. It discusses the research approach and philosophy with particular emphasis on the research paradigm for knowledge assumption. The methodological choice, consisting of qualitative research in response and aligned to the research questions, the strategies used to collect the primary data from a small sample of a non-probability sample and the available secondary data are also elucidated.

Chapter 4 provides the results of the data collected from participants of the employer ZYD in relation to the primary research objective and questions in the form of conclusions, key themes and findings, given the realities the organisation is facing. Chapter 5 provides the integration and interpretation of findings with the research objectives and the literature reviewed. It provides conclusions, recommendations, a discussion and an interpretation of the results in relation to the literature review, as well as a summary of the research project. Gaps, confirmations and variations are also discussed.

A review of available literature is required to scan as to what lessons are there about the equal pay for work of equal quality topic. This is discussed in the next chapter.

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CHAPTER 2: LITERATURE REVIEW

2.1 Introduction

Chapter 1 has provided the background with regard to day-to-day challenges that employees and employers find themselves facing when dealing with equal pay. This has led to the problem statement of how SOEs deploy equal pay for work of equal value. The ensued primary and secondary objectives and research methods used to unravel the equal pay have been discussed. Sample size, data collection techniques, measuring instruments, data analysis, ethical considerations, as well as the limitations, benefits, demarcation and scope of the research have also been discussed.

Conducting a literature review on the equal pay for work of equal value challenge provides answers as to why the equal pay provision has been promulgated in August 2014, since it was significant in reducing the pay gap. In addition, the literature review provides information as to what other companies have already discovered about equal pay, as well as to indicate where the ensued research features in the research realm, as stated by Dube (2017:20) and supported by Laubscher and Gilfillan (2015:53). Gill and Johnson (2010:23) assert this view by taking into account the capitalist approach on which the majority of organisations are based (McColgan, 1993:269) and the conflicting legislation. In conducting the literature review, care will be taken to avoid repeating already existing research primarily in that the research focusses on the South African SOE (Jankowicz, 2005:30).

A number of researchers across the world like Adelekan and Bussin (2018:3), Bakari (2014:41), Dube (2017:20), Khovera (2012:27), Lombardo, Meier and Verloo (2009:105) and Padayachie (2015:11), have focused their research on gender wage differentials, which is a natural exclusion in most countries. However, South Africa has race and disability as additional elements to the existing gender wage differentials. Investigating how the state-owned enterprise in South Africa employs equal pay fits very well and becomes the immediate next step.

This chapter explores the context of the literature available on this topic, both locally and internationally. It explores the legislation that gives rise to equal pay for work of

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15 equal value, given the nature of discourse it brings to the labour environment. A brief explanation of the company being researched is provided along with explaining the concept and purpose of equal pay, international labour organisations and legislation in South Africa. Market variables, complexities and the persistence of the pay gap, even long after the promulgation of the equity laws, are explored, leading to a summary of themes and conclusions.

The literature review includes journals, dissertations, books, peer review submissions, websites of professional institutions and government. These websites are sourced locally and internationally. It is from the above literature review that a better understanding of equal pay should emerge and, in turn, enhance the philosophical assumptions and perspectives used to observe how the SOE has implemented equal pay for work of equal value.

2.2 State-owned Enterprise ZYD

The research environment is the ZYD company which is an energy-production business. The company has recently celebrated its 96th year of existence and it operates across South Africa. It has 48 500 employees comprising permanent and temporary employees who work in all nine provinces. The skills within the company range from technical, engineering, procurement and sourcing, logistics, strategic planning, production, human resources, finance, information technology, horticulture, property and facility management. The large size of the organisation, the variety of the skills and many position profiles give rise to comparisons in terms of similar jobs, substantially similar jobs and jobs with comparable value as per the equal pay provision cited on the internal job evaluation of ZYD.

ZYD uses a job evaluation system to evaluate and grade all jobs that management requires, irrespective of whether these are permanent or temporary jobs. The job evaluation system is known as Tuned Assessment of Skills and Knowledge (TASK) as cited on its internal job evaluation.

The recruitment and selection policies of ZYD state that every employee and potential employee can apply for an advertised position, irrespective of colour, race, gender, disability, location of the job and where the candidate comes from as long as they meet the minimum requirements of the job description. A salary structure, which

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16 is aligned to the graded jobs, exists as per the job levels (TASK grades 04 to 18). The structure comprises a minimum and maximum of the scale per grade with six different salary zones between the minimum and the maximum, giving rise to discriminatory pay for work of equal value, whether it be fair or unfair.

2.3 The Concept of Equal Pay for Work of Equal Value

During the week of 17 April 2019 the National Union of Mineworkers of South Africa (NUMSA) engaged in an unprotected strike over a dispute of salary disparity with the employer COMAIR, an airline company. It was alleged that COMAIR paid employees inequitable salaries, citing unfair discrimination. COMAIR is a large company and it is unsettling to note that by 2019, the company should be alleged of such an unfair labour practice of discrimination.

Almost five years after the equal pay provision has been in place companies still struggle with salary discrepancies, with allegations of unfair discriminatory practices based on gender, racial and/or disability (Rospabe, 2002:185). Rospabe (2002:185) regards the turning of the revolution of discrimination in South Africa as the period between 1993 and 1999 during which discrimination in labour participation has decreased, whereas wage and occupational discrimination have increased. What is required, according to Adelekan and Bussin (2018:3), is also a reduction in occupation and wage discrimination in order to allow a good representation of the South African workforce across all occupational jobs as well as of improved wages. The dawn and onset of democracy in South Africa has formally discontinued decades of discriminatory practices, policies and legislation which deeply influenced the structure and efficiencies of the labour market (Rospabe, 2002:185). This is evidenced by the apartheid legacy that is characterised by a labour market with large racial inequalities in the form of lower access to labour market participation and well-established racial occupational and wage systems (South African Human Rights Commission, 2017:16).

The dawn of democracy has led to the promulgation of the equal pay for work of equal value provision into law on 1 August 2014. However, and according to Rospabe (2002:186), supported by Erichsen and Wakeford (2001:32), differences in human capital investment are the results of varying incidents of unemployment and

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17 inequality across racial groups, with small proportions of African workers in highly skilled jobs and relatively lower remuneration. Employers’ continued discriminatory practices, whether voluntary or involuntary, are likely to reinforce the labour workforce’s individual differences in productivity, which, in turn, perpetuate the pay gap (Rospabe, 2002:186).

The meaning of ‘work of equal value’, as per Section 6(4) of the Employment Equity Act, states the following (Scheepers, 2014:16):

 Work carried out by an employee is observed to be the same or identical or interchangeable to the work of another employee within the same employer.

 Work carried out by an employee is observed to be substantially the same or sufficiently similar compared to that of another employee within the same employer, such that these jobs can be considered to be reasonably the same irrespective of whether identical or interchangeable.

 Work carried out by an employee is observed to be of the same value as work of another employee within the same employer; however, doing a different job, as both jobs are evaluated and accorded the same value.

Figure 2.1: Equal pay for work of equal value

Source: Adapted from De Wet, 2018

Employees who suspect that they are been compensated below someone whose job relates to the comparison, as shown in Figure 2.1 above, may institute a claim of unfair discrimination (Ebrahim, 2016:3). On the other hand, employers who suspect

EQU

AL

PA

Y

WORK: Same, identical or interchangeable

WORK: Substantially the same or sufficiently similar

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18 that there is a potential claim arising from the above comparison should start analysing jobs and pay structures in order to align pay accordingly (Levy, 2015:3). Tufarolo (2016:317) asserts that, in order to achieve equal pay, employers are expected to increase remuneration of affected individuals without reducing anyone’s remuneration.

The equal pay for work of equal value provision promulgated on 1 August 2014 introduced Section 6(4) which states that a difference in conditions of employment between employees of the same employer, where these employees perform the same, or substantially the same work, or work of equal value. In addition, the difference is directly or indirectly based on any one or more grounds listed in Section 6(1) or any other arbitrary grounds will constitute unfair discrimination (Laubscher & Gilfillan, 2015:1). Listed grounds are race, gender, sex, pregnancy, marital status, family responsibility, ethnic or social origin, colour, sexual orientation, religion, disability, age, HIV status, belief, political opinion, culture, language, birth and conscience (Dube, 2017:18).

According to Dube (2017:1) and Laubscher and Gilfillan (2015:3), the concept of equal pay for work of equal value initially focused on gender discrimination practices that were unfair, and in South Africa, included racial and disability-based discrimination. The South African economic landscape is, like those of other countries, discriminatory on gender, as well as discriminatory in terms of race and disability, with low levels of participation in occupational jobs and wage from a racially segregated labour market (South African Human Rights Commission, 2017:13).

The pay equity provision initially focused on gender and the comparator was expected to be from an opposite gender with whom comparisons should be made. Brown (2017:497) and Scheepers (2014:16) state that equal pay of late and mainly in South Africa, focus on gender, race and disability, while the comparator can be anyone, including but not limited to, the same gender, same race and same disability with a focus on comparable jobs.

Laubscher and Gilfillan (2015:2) affirm that the information regarding the equality provision in South Africa has been lagging behind and now the promulgation of equal

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19 pay follows what other countries have experienced in dealing with equality across gender discrimination, including obligations to the ILO. Ebrahim (2016:20) explains that the South African equality provision on equal pay attempts to address the criticism from the ILO. The ILO requires South Africa to express statutory provision, which deals with wage discrimination based on gender and race, in acknowledgement of economic and developmental constructive exclusions from past apartheid practices (Dube, 2017:6). Adelekan and Bussin (2018:3) and Rospabe (2002:186) agree that the exclusions, as evidenced in the South African labour market, is characterised by limited inclusive participation and development resulting in the experienced pay inequality.

Some global organisations, including some in South Africa, continues to discriminate unfairly on arbitrary grounds such as gender, race and/or disability (Ebrahim, 2016:20), even long after the promulgation of the equal pay for work of equal value provision, including the adoption of the International Labour Organization Convention.

Promulgating the equality provision should be seen and understood as providing a South African solution to the economic environment primarily on employment conditions, including how it should be managed in alignment to ILO standards.

2.4 Purpose of Equal Pay for Work of Equal Value 2.4.1 Pay equity

Oliphant (2015:3) states that the equal pay for work of equal value provision is there to strengthen the objectives of the Employment Equity Act 55 of 1998, achieving equity in the workplace by:

 Promoting equal opportunities and fair treatment.

 Implementing affirmative action intended to redress the ills within the employment experienced by designated groups.

The right to equality in South Africa is enshrined in Section 9(3-4) of the Constitution where it states that no person or the state may unfairly, directly or indirectly discriminate against any person on one or more grounds. The listed grounds

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20 includes race, gender, sex, marital status, pregnancy, colour, age, sexual orientation, disability, conscience, language, belief, religion, birth, or ethnic or social origin. National legislation in the form of the Employment Equity Act was enacted to prevent and prohibit unfair discrimination in the workplace as cited in the Constitution (Oliphant, 2015:9). In addition, Laubscher and Gilfillan (2015:10) point out that the protection and prohibition of unfair labour practices was acknowledged even before the promulgation of equal pay for work of equal value, in Schedule 7 of the Labour Relations Act 66 of 1995. South Africa has ratified the International Labour Organization Equal Remuneration Convention number 100 in 2000, which obliges member organisations or states to give effect to, promote and deliver on equal pay for work of equal value (De Wet, 2018:14).

The provision allows business to discriminate fairly when applying affirmative action and where the preference or exclusion are because of an inherent job requirement (Steyn & Jackson, 2015:190). This confirms that affirmative action and inherent job requirement are the legally acceptable reasons for fair discrimination as they are removed from arbitrary grounds such as gender, race, age, ethnicity, affiliations and any unsubstantiated discrimination (Scheepers, 2014:9).

The purpose of including equal pay provision is therefore to deal explicitly with unfair discrimination within workplaces in terms of conditions of employment where employees are likely performing work which is the same, similar or work accorded with equal value, therefore providing the work environment as an explicit basis for equal pay claims (Laubscher & Gilfillan, 2015:2). Barrick (2018:38) affirms that the direction will achieve the protection of equality, as well as comply with the international labour standard that South Africa is obligated to uphold.

2.4.2 Eliminating unfair discrimination in the workplace

Organisations must strive to eliminate unfair employment barriers and discrimination, and promote fair treatment of all employees (De Wet, 2018:9). Employers are expected to take positive steps to eliminate unfair discrimination in the workplace by reviewing, among others, their appointment policies, procedures, practices and processes. The literature review in this research project is conducted in order to

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21 ascertain whether unfair discrimination is explicitly eliminated, and everyone receives equal opportunities and fair treatment (Oliphant, 2015:9).

Scheepers (20145:12) pronounces that employers are expected to eliminate existing internal unfair practices as a self-correcting step. Fair treatment is required and should be promoted within the workplace. Unequal treatment constitutes unfair discrimination if the reason for such unequal treatment is one or more of the grounds listed in Section 6(1) of the Employment Equity Act 55 of 1998. There must be a causal link between the prohibited ground and the different unequal treatment. Furthermore, the prohibited ground must be responsible for causing the different unequal treatment, as supported by Scheepers (2014:11) and Laubscher and Gilfillan (2015:26). This means that paying different wages for equal work or work of equal value constitutes fair treatment.

Regulation 7 of the Employment Equity Regulations provides various grounds that justify unequal treatment regarded as fair treatment. If employees perform work that is of equal value, the same or substantially the same, and it is proven that the difference existing is fair, rational and because of any one or a combination of these listed grounds, such unequal treatment constitutes fair treatment; thus, no finding of unfair discrimination will be made (Laubscher & Gilfillan, 2015:26).

The grounds that justify different treatment to be fair are as follows (Oliphant, 2015:13):

 The applicant and the comparator seniority and/or length in service.

 The applicant and the comparator qualifications, ability, competence or potential above the minimum acceptable level that is required for performing the job.

 The applicant and the comparator performance, quantity or quality of work, provided that the employees are both subjected to the employer’s performance management system, and that the performance evaluation system is applied consistently.

 Where the comparator employee has been demoted because of organisational restructuring or any other legitimate reason without a reduction

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22 in pay, such that the employee salary is fixed at this level until the remuneration of other employees in the same job category reaches this pay level.

 Where an employee is temporarily employed in a position for purposes of gaining experience or training and as a result receives different remuneration or enjoys different terms and conditions of employment.

 The existence of a shortage of a relevant skill or a market value in a particular job classification.

 Any other relevant factor that is fair and aligned to Section 6(1) listed grounds. The above grounds shift the focus from the actual compared jobs to the individual employees performing the jobs (Laubscher & Gilfillan, 2015:26).

The provision expects business to derive a plan of action that is intended to actively engage in efforts of eliminating unfair practices and bring along fair treatment to all employees within the workplace.

2.4.3 Addressing identified pay gaps

Employers are required by law to work on plans in order to reduce the pay gap and inequalities that are observed as unfair over a period of time (Levy, 2015:3). The reduction of the pay gap is expected to include reviews of organisational policies, procedures and practices in order for the reduction of the pay gap to become effective; thus, prohibiting employer actions that would perpetuate a pay gap after efforts to reduce or close the gap (Oliphant, 2015:9). Dube (2017:1) stresses that equal pay for work of equal value initially has its roots in pay disparities between men and women, and that women generally earn less than their male colleagues do. The South African position on salary disparities is apparent between the races, with Africans trailing their white, coloured and Indian colleagues (Laubscher & Gilfillan, 2015:3).

2.4.4 Annual employee remuneration report

The employment equity provision expects employers to derive a plan of action that is intended to actively engage in efforts of eliminating unfair discrimination and

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23 practices. The plan seeks to reduce and eliminate these barriers over time, as the gap might be difficult to deal with in an instant. The employer plans of action are regarded as voluntary due to the plans being internally driven to promote fair treatment for all employees.

Externally driven and through Section 27 of the Employment Equity Act 55 of 1998, in South Africa, it is required that designated employers submit a report of employee earnings/remuneration and benefits to the Department of Labour. It is submitted annually by business, and it entails earnings and benefits received by employees in each occupational level of the employer’s workforce (Laubscher & Gilfillan, 2015:8). Where this report bears distinctive income differentials or unfair discrimination by a mere difference in terms and conditions of employment, employers must take action to reduce these differentials progressively (Oliphant, 2015:9). The annual report to the Department of Labour should also include a progress report indicating the efforts made in the interim, endeavouring to reduce the gap on various organisational items progressively in order to make the employment workplace an inclusive equitable place (Bussin & Smit, 2015:28).

2.4.5 Organisational report on pay differentials

According to Hlongwane (2007:81), the aim and objective of the provision, as indicated above, are creating a climate of inclusivity and equality within organisations; thus, indicating a new direction for employers going forward. Stated differently, the reasons why the Department of Labour requires an annual report from employers containing employees’ remuneration information seeks to review and adjust current injustices and unfair discriminatory practices perpetuated covertly within organisations (Makhunga, 2015:13).

The Department of Labour hopes to achieve this objective by making sure that companies are provided with feedback resulting from the annual remuneration report, indicating whether the company is compliant or noncompliant. This means the company needs to take specific planned steps to readdress the discrimination discovered. In cases of inadequate, unacceptable and/or the absence of a progressive report from an employer, the Department of Labour informs the employer of a disproportionate income differential. The Department then instructs the

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24 employer to take measures to reduce the pay gap progressively over a period of time (Laubscher & Gilfillan, 2015:8).

2.5 The Pillars of Equal Pay

2.5.1 International Labour Organization (ILO)

Countries have adopted equal pay differently and at different times. Through globalisation and digitalisation that disregard formal boundaries, people in different countries have started sharing information, including equal pay and pay discrimination information. Such international efforts included the League of Nations, now called the United Nations and the International Labour Organization. The latter was founded at the Paris Peace Conference held in 1919.

All of the following USA Acts and commissions have transformed women’s workplace and workforce, according to Timpson (2019:49):

 The 1950 U.S. census.

 The Equal Pay Act of 1963.

 The Pregnancy Discrimination Act of 1978.

 The Paycheck Fairness Act of 2019 providing more women access to bring about Equal Pay Act claims, as well as pronouncing a ban on the use of salary history in order to determine the new salary.

 The Equal Employment Opportunity Commission which focuses mainly on sex-based discrimination in the workplace.

According to Watkins (2019:1068), the workforce has increased exponentially due to the workplace environment that is accommodative, and cherishes and protects the rights of women. The U.S. Congress continues to use its law-development power to adopt equal pay legislation to the new employee landscape (Watkins, 2019:1051). The evolvement of equal pay according to Figart (2000:1) and Vartiainen (2001:19), with efforts to erase explicit pay discrimination are observed, yet it has reproduced new gender and equal pay unfair practices. Trade unions in South Africa, and internationally in 1919, seek to explore extreme and seemingly unattainable improvements to this piece of legislation, such that pay equity becomes a reality sooner than later (Dube, 2017:13).

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25 The establishment of the ILO, through various equal pay conventions and declarations, intends that party members adopt and comply with, promote and protect this legislation (Tufarolo, 2016:321). The international conventions and declarations are important cornerstones of equal pay, as they seek to make companies comply, promote and protect the equal pay provision (Dube, 2017:14). Based on the lead of the Equal Pay Act, legislation in various countries has significantly improved and led to today’s equal pay for work of equal value statutory framework (Watkins, 2019:1051).

When dealing with equal pay case claims, a possible remedy that can be awarded to the employer is to increase the applicant’s remuneration to the level of the comparator; thus achieving pay equity without reducing the comparator’s remuneration (Oliphant, 2015:14). Such provision is included in the Canadian Human Rights Act of 1978, where it is provisioned expressively that the employer may not reduce the remuneration of a comparator in order to eliminate discrimination and achieve pay equity (Laubscher & Gilfillan, 2015:40).

Authors such as Causevic (2018: 741), Dube (2017:15), Laubscher and Gilfillan (2015:4), and Timpson (2019:49) share the view that the availability of legislation allows claims to arise from different reasoning, where employees continue to compare themselves with others. The action can become institutionalised to such an extent that the equal pay provision is developed and improved constantly to eliminate unfair discrimination faced by excluded groups. This is evidenced by improvements of international labour conventions and legislation. Laubscher and Gilfillan (2015:9), assert that after the case of Hayward versus Cammell Laird Shipbuilders Ltd, a claim for equal pay for work of equal value was made and found to be successful. The equal pay provision has been revolutionalised such that it has become a constant employer agenda item, irrespective of whether this is done for compliance, to promote equal pay or to protect it.

Equal pay legislation promulgated fifty years ago would address fewer of the women or excluded groups’ issues of today than it does today (Watkins, 2019:1058). Some declarations and instruments of international conventions are merely undertaken to pursue equal pay; however, they have no binding effect on member countries and governments (Dube, 2017:15). Barrick (2018:38) claims that countries and

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26 employers are caught with salary disparities of great magnitude, whereas South Africa has dropped from being 79th in 2006 to 89th in 2017 based on the gender-wage gap. Women in South Africa earn 27% less than their male counterparts, as cited by the Global Gender Gap Report issued by the World Economic Forum. The heightened international legislation on equal pay has improved the workplace for women and increased the female workforce; however, even after more than 55 years of enactment, pay equity is still a challenge in most countries.

2.5.2 Legislation in South Africa

The South African Constitution states that any international agreement that has been enacted into law by national legislation becomes law in South Africa, unless it is inconsistent with the Constitution. It further states that when courts interpret any legislation, every court must prefer any reasonable interpretation of the legislation that is consistent with international law on any alternative interpretation that is inconsistent with international law (Section 233).

Considering the above obligations and commitments, South Africa has signed to be a member of the ILO. Therefore, South Africa is obliged to align with agreements made internationally (Dube, 2017:17). It is evident that international law plays a significant role in South African courts, as South Africans are protected locally by international law. Where the law is approved internally and ratified locally or not ratified locally, there is no local legislation enacted to give effect to the member’s obligations (Dube, 2017:17). It is this International Labour Organization Convention 100 on remuneration that South Africa has ratified on 30 March 2000.

The Constitution protects the rights and dignity of everyone in South Africa. Before 1994, the Labour Relations Act of South Africa, Section 2(1)(a) of Schedule 7 has prohibited unfair discrimination in remuneration practices. Individuals who have been aggrieved by discriminatory practices in the workplace should use this legislation to demand recourse. The Act stipulates that an unfair labour practice means any unfair labour act or omission that arises between an employee on any arbitrary ground, including but not limited to race, gender, sex, ethnic or social origin, colour, sexual orientation, age or disability (Dube, 2017:18). Accordingly, individual rights have

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27 already existed and been protected by this piece of legislation (Laubscher & Gilfillan, 2015:2).

The Employment Equity Act 55 of 1998 has been enacted to give effect to the promotion of equality in the workplace where individuals with equal pay grievances who sought to challenge employer remuneration practices could use this piece of legislation in their claims. The purpose of this Act is to achieve equity in the workplace by promoting equal opportunities and fair treatment in employment through eliminating unfair discrimination and implementing affirmative action measures to redress the disadvantages in employment experienced by designated groups. In addition, this Act stipulates that no person may discriminate unfairly, directly or indirectly, against an employee in any employment policy or practice on a variety of grounds, among others, race, gender, disability and culture (Dube, 2017:18). Laubscher and Gilfillan (2015:2) assert that the enactment of the Employment Equity Act has resulted in the Labour Relations Act, Section 2(1)(a) of Schedule 7 being repealed, as its purpose is included in the Act itself.

The definition of equal pay, according to the legislative scope includes employment policy on remuneration, contractual terms and conditions, which employers and employees would use in dealing with claims at the courts (Dube, 2017:18). Equal pay for work of equal value was evidenced in the case of Hayward versus Cammell Laird where a claim was put forth and found to be successful in comparing a female cook with three joiners, two painters and an insulation engineer. In the past, women could only make claims for equal pay with a comparable male where work was similar or substantially similar. This case was the first to be adjudicated following the enactment of the Pay Equity Act Amendment Regulations, which came into effect from 1 January 1984. Therefore, it had far-reaching implications, broadening the equal pay context.

2.6 Variables Influencing Pay Equity 2.6.1 Pay transparency

Policy development in terms of equal pay has made it easy and possible to access the courts, thus facilitating initiation of claims comparing work of equal value or similar work held by other employees. To genuine a claim, an employee must know