Sep 28, 2012
Obvious questions, no obvious answersBack
© Reuse this
It’s not a new theme and it is most definitely not an uncom-plicated theme. But there is a definite sense of unease, even revulsion, about current executive-pay levels and the method-ologies used to inform these packages. There is particular anger that most bonus schemes seem to be entirely immune to poor performance.
Without doubt, this is not a uniquely South African dilemma. Serious questions are being asked globally about the impact inequality is having on economic performance and on social cohesion.
For instance, the ‘Trade and Development Report, 2012’, which was published by the United Nations Conference on Trade and Development (Unctad) earlier this month, dedicates a great deal of attention to the issue of inequality, its impact on growth and possible remedies.
The analysis shows that, over the past 30 years, income inequality has increased within countries and that in several instances, the richest one per cent of the population now accounts for 10% to 20% of national wealth.
One of Unctad’s key messages is that “there is nothing natural about rising inequality that requires society to allow or accept it, nor does it improve the efficiency of market outcomes”.
In fact, the authors assert that the current weak global economic performance has its roots in faltering demand, which, in turn, can be attributed to issues such as wage compression, deleveraging and unemployment.
There will be no significant recovery, Unctad avers, until low- and middle-income groups achieve sufficient earnings to spend on consumption, which will create the demand required to drive modern economies.
In other words, it argues that dealing with inequality through more even income distribution will be critical to future economic performance.
This argument is premised on a view that high inequality deprives people of access to education and credit, and prevents the expansion of domestic markets. “Thus, a better income distribution pattern would help stimulate and sustain economic growth in the short run and would provide stronger incentives for investment, innovation and job creation in the long run.”
Given the extreme nature of South Africa’s wealth–poverty divide, it is only natural that this issue should receive greater attention and should be a top-of-mind priority for government, business and labour.
But there is also a need to grapple with issues of remuneration and inequality within the highly contradictory context of skills shortages amid chronic unemployment. In other words, we should not expect the answers to be easy to come by, nor that the remedies will be straight- forward to formulate and implement.
Edited by: Terence Creamer© Reuse this Comment Guidelines (150 word limit)
Creamer Media Editor
Other Editorial Insight News
Article contains comments
Article contains comments
Updated 4 hours ago World-renowned fuel cell scientist Dr Sharon Blair would like to see South Africa supply 25% of the global demand for fuel cells by 2020, stating that the country has a tremendous opportunity to develop the industry and capture a share of the growing sector. However,...
Updated 4 hours ago Public Enterprises Minister Lynne Brown should table an uncensored contract agreement between Eskom and one of its coal suppliers owned by the Gupta family, the Democratic Alliance (DA) urged on Wednesday. The Sunday Times reported on September 13 that Gupta-owned...
Updated 4 hours ago Cosatu's provincial general secretary, Tony Ehrenreich, had strong words for government and higher income groups as union members marched to Parliament on Wednesday. “We want them to tax the people who live in Clifton and Sea Point,” he demanded, saying workers...
Recent Research Reports
Liquid Fuels 2015: A review of South Africa's liquid fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2015 Report examines these issues in the context of South Africa’s business environment; oil and gas exploration; fuel pricing; the development of the country’s biofuels industry; the logistics of transporting liquid fuels; and...
Road and Rail 2015: A review of South Africa's road and rail sectors (PDF Report)
Creamer Media’s Road and Rail 2015 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail infrastructure and network, the funding and maintenance of these respective networks, and...
Defence 2015: A review of South Africa's defence sector (PDF Report)
Creamer Media’s Coal 2015 report examines South Africa’s coal industry with regards to the business environment, the key participants in the sector, local demand, export sales and coal logistics, projects being undertaken by the large and smaller participants in the...
Real Economy Year Book 2015 (PDF Report)
There are very few beacons of hope on South Africa’s economic horizon. Economic growth is weak, unemployment is rising, electricity supply is insufficient to meet demand and/or spur growth, with poor prospects for many of the commodities mined and exported. However,...
Real Economy Insight: Automotive 2015 (PDF Report)
Creamer Media’s Real Economy Year Book comprises separate reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, gold, iron-ore and platinum sectors.
Real Economy Insight: Water 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
This Week's Magazine
Black-owned investment holding company Sphere Holdings plans to raise a further R1-billion in the coming months in support of its strategy to become a leading black industrial enterprise, which could ultimately seek a listing on the JSE.
Energy analyst and EE Publishers MD Chris Yelland warned recently against excessive optimism regarding timescales for the proposed construction of new nuclear power plants (NPPs) in South Africa. He was speaking at a Nuclear Roundtable in Johannesburg. “I think we...
Malawi’s Lilongwe Water Board (LWB) is inviting eligible bidders to prequalify for the board’s efficiency improvement works, which will be implemented as part of the E24-million Lilongwe Water Resources Efficiency Programme. LWB CEO Alfonso Chikuni explains that...
CROATIA, AN EU MEMBER BUT NOT A TDCA MEMBER On July 1, 2013, Croatia officially became the twenty-eighth member of the European Union (EU). Despite Croatia’s accession into the EU, it is yet to become party to the Trade, Development and Cooperation Agreement (TDCA)...
The Council for Scientific and Industrial Research (CSIR) has announced that its new Inundu airborne electronics testing, evaluation and training pod had made its first test flight on September 10. The successful flight was undertaken from Lanseria International...