Last weekend COSATU held a march to demonstrate against high prices, particularly those of food and petrol. One has to have sympathy with those who earn moderate to poor wages at this time of rampant inflation. I use the word “rampant” intentionally, for the monthly figure released by Statistics SA does not begin to reveal the full impact of rising prices on ordinary consumers. For a start, the prices of petrol and food have risen by percentages way in excess of the CPI. Among the concerns of the Reserve Bank is the matter of so-called ‘administered prices’ which are those determined by forces, mainly ‘official’, which are imposed and are unavoidable. These include taxes of all types. While income taxes have been well-contained over recent years, other administered prices have not. The price of petrol, regulated as it is, is considered ‘administered’; so too is electricity. The jury is still out, it seems, on what we will have to pay for the privilege of lighting and heating, but if Eskom has its way a 53% increase would be imposed. School fees have escalated and some municipalities have used the transition from one rates system to another to swell their treasuries way beyond what is reasonable and necessary.

COSATU, as may be expected, had less to say about these prices than about profits in the private sector about which, as surely as night follows day, unions will always hold the view that Business exploits consumers unreasonably. The profit motive is abhorrent to unions in much the same way that nationalisation is anathema to the private sector.

I have a good deal of sympathy, however, with COSATU’s criticism of executive salaries which in some instances are quite beyond an ordinary person’s comprehension. I find it difficult to accept that a CEO’s hours of work, levels of responsibility and skills can collectively justify a salary nearly eight hundred times more than an employee in the same company. Moreover, if I were the employee earning eight hundred times less, I would be in a state of permanent disaffection. There is after all a limit to how much work a person can do and how much responsibility he or she can assume. When it comes to assessing the leader’s worth to the company can this be quantified, I wonder, when, in reality, success may depend on the collective ability of many others who work very hard for the company’s benefit.

These are market forces at their worst. Having been a public servant most of my working life, I believe that monetary value should be attached to the job, and not to the person who fills it. In the public sector, grades of jobs carry predetermined salaries and variations are based only on very justifiable variables such as qualification and experience. Ironically, this is also quite common in the private sector until one approaches the upper echelons of companies when, it seems, value is attached to the individual rather than the job. It is not surprising that government loses so many of its people, nor that executives commonly flit from one job to another making quite unreasonable salary demands as they go. The shortage of executive skills accounts for a good deal of these unfortunate modern trends, but I am in no doubt that in many instances, perhaps most in fact, a similar quality of leadership could be acquired at half the price if appointments were dealt with objectively and without the influences, essentially artificial, which have brought about the contemporary trends.

Andrew Layman: PCB CEO

This article appeared in the Public Eye on the 12 June 2008