Reducing Wage Inequality

The document argues that South Africa's wage inequality is among the highest globally and cannot be solved by voluntarism alone. It proposes strengthening Section 27 of the Employment Equity Act to mandate the disclosure and reduction of pay ratios, specifically suggesting a maximum ratio of 25:1 between the top 5% and bottom 5% of earners. The brief also recommends capping executive pay, linking state procurement and incentives to wage equity, and using the public sector as a model employer to flatten wage hierarchies.

• Wage inequality is the primary driver of overall income inequality in South Africa, accounting for 90.65 percent of the total.
• Section 27 of the Employment Equity Act (EEA) already requires employers to report on income differentials and take measures to reduce them, but this provision has not been enforced.
• The document proposes a legislated maximum wage ratio between the top 5% and bottom 5% of earners, suggesting an initial realistic ratio of 25:1 to be reduced over 5 to 10 years.
• There is significant public support for state intervention to limit executive compensation, with 75% of a surveyed group either agreeing with or not opposing legislation to impose limits on executive pay.
• The state can promote wage equity by attaching conditions to procurement, government incentives, and assistance from Development Finance Institutions (DFIs) like the IDC.
• The private sector company PPC provides a model for wage restructuring; in 2013/2014, it reduced its pay gap from 120:1 to 40:1 by cutting executive pay and raising salaries for the bottom 1,000 workers.

APA

Coleman, N. (2018). Reducing Wage Inequality. Institute for Economic Justice. https://iej.org.za/wp-content/uploads/2020/07/Stream-2-Policy-Brief-2-Reducing-Wage-Inequality.pdf

Chicago

Coleman, Neil. Reducing Wage Inequality. Institute for Economic Justice, 2018. https://iej.org.za/wp-content/uploads/2020/07/Stream-2-Policy-Brief-2-Reducing-Wage-Inequality.pdf.

Wikipedia

{{cite report |last1=Coleman |first1=Neil |title=Reducing Wage Inequality |publisher=Institute for Economic Justice |date=August 2018 |url=https://iej.org.za/wp-content/uploads/2020/07/Stream-2-Policy-Brief-2-Reducing-Wage-Inequality.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{coleman2018reducing, author = {Coleman, Neil}, title = {{Reducing Wage Inequality}}, institution = {Institute for Economic Justice}, year = {2018}, month = aug, url = {https://iej.org.za/wp-content/uploads/2020/07/Stream-2-Policy-Brief-2-Reducing-Wage-Inequality.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }