Wages, Salaries and Sustainability - a critical perspective

Originally published in 'Professional Management Review' magazine (PMR) Volume 16 Issue 06 2005

John Capel, Director, Bench Marks Foundation of Southern Africa for CSR

In a country riddled with poverty, inequality and high unemployment rates, it is astounding that income differentials continue to grow at the expense of jobs - jobs that are much needed to stimulate economic growth.

In the USA, the rate of new jobs is used as an economic indicator. The theory goes that the more jobs there are, the more consumers demand, the higher the growth rate of the local economy.

In SA, we are encouraged to be more efficient, productive and competitive, and to recognise that we operate in a global economy that demands speed and efficiency. But what does this mean?

For many CEOs it means simply cutting back on jobs at the lower end while increasing the rewards at the top end. The argument goes that if this was not done, vital talent would be lost.

Whilst this might seem realistic if one considers the global nature of present capitalism, it is also naïve, in that it deals only with one aspect of the system - the global aspect, and ignores the development of the local economy.

Just how many jobs have been lost over the past 10 years? The answer depends on whom you talk to, whose statistics are correct and on what constitutes as work.

When CEOs and directors of corporations decide to reward themselves with handsome packages, often at the expense of workers, then moral issues are raised. Whilst capitalism is not necessarily a moral system, it nevertheless needs to be challenged to manage itself in a way that is seen to be just and that promotes the common good.

Capitalism as an ideology believes that if each individual fends for himself and is industrious, that the benefits will trickle down, create jobs and so spread benefits.

The reason given why some CEOs earn such exorbitant salaries is supposedly because they have increased profits. But if these profits have been made at the expense of jobs and the well-being of society, then it is not sustainable.

It is shortsighted for SA business to retrench workers, not caring about the social and economic consequences.

If we want to attract foreign investment, we must offer an attractive destination, and an attractive destination demands social stability and not rising crime and poverty, a direct result of unemployment.

To quell inflation, workers are asked to accept inflation rate wage adjustments.

Why are there no controls over wages at the higher level? And why is it permissible to make profits of 150%, at the expense of people's livelihoods?

Many businesses talk about sustainable development but more so economic sustainability. Sure, it is hard to compete when your competitors are cutting costs or pay lower wages than yourself. But is it workers that must always lose their jobs? Why not trim excessive benefits at the top?

Sustainability is not just about economic performance but also about social and environmental issues, and not philanthropy and good deeds born out of guilt. It is about building sustainable communities and livelihoods as well as access to economic and life and development.

Business interests need to be balanced with those of society. All businesses are given a social license to operate, but when the benefits only accrue to one segment of the population, then it is a recipe for social disintegration.

Businesses need to view jobs as central empowerment issues, crucial for their own survival and contributing to social stability.

The challenge for South Africa is to create sustainable jobs and to expand employment opportunities, a socially responsible way of doing business. It is not just the system but the individual that needs to be held accountable. Let us recognise workers, communities and society as a whole, and use equitable distribution as a business performance indicator.