JOHANNESBURG – The 2018 World Economic Forum (WEF) Global Gender Report has been released, and it’s not good news for South Africa. The country ranks a respectable 19th in gender equality, but disappoints greatly in gender wage equality, where it ranks 117th out of 149 countries.
“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,” said Anita Bosch, an associate professor at the University of Stellenbosch Business School and chair of Women at Work.
In the past, gender wage inequality has been blamed on women’s lower level of education. However, according to Bosch, women in South Africa are graduating at the same rate as men, if not better, in fields, such as technology, engineering, and commerce, which are considered high paying. “Which renders the argument that women do not have the right types of qualifications null and void.”
In her latest research on the subject, she urges investors and corporate board members to practice “responsible activism” to address the issue of gender-based pay inequality in companies they invest in and lead.
“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 South African Constitution.”
Bosch explained that board members and shareholders have an oversight role, and therefore, they can confirm the compliance of companies with legislative and corporate policies on equal pay for same work. Companies ought to have remuneration policies that explain pay differentials.
Such legislative policies include the Employment Equity Act (EEA), which is supposed to enforce gender wage equality by requiring businesses that employ more than 50 people to report on income differentials. Another policy that should be enforced is the King IV Codes on Corporate Governance. This policy dictates that a company’s board of directors should approve a remuneration policy and a report of its implementation should be part of the annual report. The report should show that the company remunerates fairly, responsibly, and transparently.
The implementation of the Kings IV Codes is optional. However, the Johannesburg Stock Exchange (JSE) listing requirements make some of its rules compulsory. These include having a remuneration policy and having an implementation report of the policy to be voted at the AGM by shareholders.
“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,” Bosch said.
She also added that shareholders could practice responsible activism by involving the remuneration and social and ethics sub-committees to “drive the quality, quantity and transparency of gender pay reporting.” According to her such practices in countries such as Iceland, UK, and Australia have worked in ensuring employers considered equality.
“Research has shown that the gender pay gap does shift when pay equality reporting is required by legislation and must be publicly disclosed, or when concerted efforts are made to close the gap.”
“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.”
In her opinion, directors and investors could also lobby for legislative changes in gender pay equality so that there is more transparency. The law should change to make reporting mandatory and increase the number of indicators used in remuneration reporting.
In the EEA guidelines, reporting on payments in the form of incentives and discretionary bonuses or profit sharing is not compulsory. Such forms of payments are common in executive positions.
“The absence of reporting requirements for these types of remuneration could negatively influence the gender pay gap and hide important indicators of pay inequality,” Bosch said.
For gender pay equality, another area that needs changes is tax law. It should take into account the financial responsibility brought by caring for children.
Additionally, trade union representatives need to focus on the pay gap between men and women when engaging in negotiations with employers.
According to Bosch, company policies, such as maternity, childcare, recruitment and selection, performance management, parental leave, reward schemes, and employee educational support, need to be put under the spotlight. These policies should support the family obligations of both genders as opposed to discriminating against women due to pregnancy and the burden of childcare.