Excessive pay for South African executives is concerning

There has been praise and concern for Shoprite/Checkers chief executive Whitey Basson's recent R100m pay packet.  Those who praise it say he is a “major employer and his and his employees' tax contributions contribute to SA’s growth (sic)”. 

This glib, uninformed and obsequious praise of SA’s cartel-like companies and their CEOs hides the fact the concentrated, uncompetitive and inefficient SA economy is harming growth, development and job creation. 

Linda Ensor’s article in BDlive Lack of competition in SA enables cartel conduct quoted Competition Commission acting deputy commissioner Hardin Ratshisusu: “Cartels in SA are particularly damaging. They impose price premiums much higher than the world average of about 10%, sometimes reaching 100%”.

In July the IMF’s David Lipton warned it’s not only government policy that’s harming growth.   High barriers to entry, protected industries and labour and protective subsidies harm consumers and competition.  There is widespread anti-competitive behaviour in industries. There are few retail banks and high bank charges, and SA companies have high profit margins, often 50 percent higher than in other countries.

It’s in this unstable environment people like Basson earn their stupendous salaries and their silly remuneration committees thinks there’s nothing out of kilter.  While company profits climb – 50 percent more than elsewhere – the South African consumer is facing increasing debt, unemployment and social unrest. The article SA’s formal economy continues to shed jobs shows a snapshot of the real economic and social picture Cheiman, Basson, Shoprite et al refuse to face, at their peril.

In SA’s current environment it’s outrageous for Shoprite and other companies to pay their officers these sums.  It’s not that they allegedly earned it, but that it’s deemed an entitlement in an economy that’s not free, where the poor are screwed by monopolistic prices and only the financial elite and connected are benefitting. 

While not agreeing with the fees must fall movement and their methods, they’re showing a storm is coming.  So I’m still amazed by the insensitivity and ignorance still in our society people like Cheiman, Basson and Christo Wiese (“I’m a businessman, not a politician”) are displaying.

Nothing prevents Basson from refusing the R50m bonus, which it can reinvest to benefit its business, employees and society at large, but I guess that's against their "white" monopoly capital hearts.

PS see my letters to Cape Argus “See Shoprite ought to hang its head in shame”, and “Shoprite sees error of its ways”.