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South Africa's fat cats!!

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Old 12-09-2005, 05:02 AM   #1
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South Africa's fat cats!!

As the wage gap between chief executives and their tea ladies widens, a series of costly strikes across South Africa has raised the debate about lucrative packages for executives.

Workers from municipalities, retail giants and airlines rebelled en masse in 2005, holding strikes that cost the economy hundreds of millions of rands.

But the strikes were often more about lucrative executive pay packages than poor wage increases, with unions demanding their cut of the profits they say they have worked hard to make.

Solidarity general secretary Flip Buys says his union believes top management and shareholders are entitled to a fair share on a return on their investments.

"But we also believe our members should be given their share of the growing prosperity that results from their labours."

Buys says Solidarity does not favour strikes and less than one percent of pay negotiations result in industrial action. But companies are sometimes unreasonable and offer only three percent increases while posting large profits -- with management claiming 20% more for itself.

He says many companies waste time and money with poor negotiating tactics.

"Some companies are astounded when we arrive at the negotiation table with incisive analyses of their financial statements," he says.

"Instead of tabling a fair offer during negotiations they try to get away with murder, tabling a fair offer only once a strike has been declared."

The turmoil in the ranks of the workers has prompted the question: will a share in the company reduce strife and improve productivity? Views vary.

A recent study of 1 500 US companies from 1992 to 2002 by the Rutgers University School of Management and Labour Relations, found companies that provided options to all employees outperformed those that gave options to executives only.

Could the same be true of South Africa?

It has been estimated that if all Pick 'n Pay union related funds were combined, their holding in the company would be about 28 percent.

Andre Venter, a manager at the United Association of South Africa (Uasa) union says that shareholding in a company might initially be met with enthusiasm and commitment but somewhere along the line unpopular management decisions would have to be made.

"Tough management decisions are likely to impact negatively on the workers and that would be the beginning of the end," he says.

"There is a concern that workers would feel betrayed by their former colleagues who would now be part of management. Executive directors in a company will always be the more powerful in decision making -- even in the presence of worker directors."

There is also a belief that in a country such as South Africa where many workers do not earn much, the incentive to sell their shares for cash would be great.

Venter believers that for strikes to be avoided in future, unions and management have to increase their level of debate.

"Negotiations nowadays are characterised by a quick and dirty firing of opening shots and reaching deadlock when negotiation positions are still poles apart instead of trying to explore ways of means of finding solutions and areas of settlement," he says.

"Strikes can be avoided if skilled negotiators are properly prepared and mandated to engage with a view to reaching agreement on realistic grounds."

SAB Miller employee relations manager Kobus Burger says his company has had a stable relationship with its 4 500 local employees who have not gone on strike since 1997.

"We don't have share options or schemes or fancy stuff like that," he says.

"There are very clear procedures both sides follow and both sides respect these. Both sides avoid petty and personal stuff. We talk a lot. Both parties agree where the general settlement lies."

PE Corporate Services, a company which does an annual survey on salaries at round 900 companies, has found that the wage gap between top corporate executives and lower level employees in South Africa is at its widest in more than a decade.

Managing director Martin Westcott says 10 to 12 years ago a chief executive at an intermediate sized company was earning 38 times more than the lowest paid worker. Today that chief executive is earning more than 50 times more.

"This seems to confirm that the rich are getting richer and the poor are getting poorer," he says.

In South Africa top executive salaries are now made public, a factor which has inflamed worker demands.

While workers are often criticised for being unproductive, it is difficult to measure the productivity of executives other than to look at results and share prices.

"If you assess the performance of companies by looking at their results over the past few years, then yes, you could say our executives are productive," he says.

"South African managers are well trained and have a good work ethic and, yes, they are well paid."

A factor that has impacted on the ever-widening wage gap is the public disclosure of remuneration. This means, he says, that boards involved in setting pay levels for top teams are having to look carefully at their competitor companies. They don't want their executives to earn less than in other companies.

Globalisation, too, has had a substantial impact. South African executives are more mobile these days and their skills are in demand worldwide.

"There is a great deal of movement and pay is equalising round the world," he says.

Westcott believes that if South Africa wants to stick to its strategy of growing the economy to six percent, it has to attract top talent.

"We are striving for a six percent growth rate," he says. "We really need that top talent in the country and we are going to have to pay the price." - Sapa
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Old 12-09-2005, 06:19 AM   #2
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I must say, I do notice the gap between the very rich and the very poor widening each time we go home.Some of these holiday houses are more than 600 square metres in size with all the usual trimmings, like Italian marble tiles, three to four bathrooms, a pool outside, etc, etc.

It is unsettling to see such beautiful holiday homes that are occupied for three weeks a year............. and not too far from it, people living in tin shacks.

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