In June 2023, both the World Economic Forum and the Employment Equity Commission released the most recent data on gender pay information in South Africa.
Since 2006, the World Economic Forum has produced the annual Global Gender Gap Report, setting out the performance of participating countries against the Global Gender Gap Index. The Global Gender Gap Index benchmarks the current state and evolution of gender parity across four key dimensions: economic participation and opportunity; educational attainment; health and survival; and political empowerment.
Although no country has yet achieved full gender parity, in 2023, the top nine economies had closed at least 80% of their gender gaps, with Iceland leading the global ranking by being the only economy to have closed more than 90% of its gender gap at 91.2%. The only Sub-Saharan African country to reach the top 10 is Namibia (80.2%), moving from 8th to 10th place. Rwanda (79.4%) has dropped out of the top 10 (in 2022, it was in 6th place). South Africa is currently sitting at 20th out of the 146 countries that participated in 2023. South Africa's ranking, however, is not reflective of its pay parity score. South Africa ranked 111th out of 146 in respect of pay parity.
For at least the last decade, there has been a global focus on gender pay parity and gender pay gap transparency with a number of countries introducing gender pay audit and/or reporting requirements. These countries include Iceland, Finland, the United Kingdom, Canada and Australia. Existing and potential investors, shareholders and employees pore over the annual reports, which often become the subject of "name and shame" campaigns in the press.
The question that may be on your mind is why this is relevant to South Africa. On the face of it, it's not that South Africa does not have similar public reporting requirements. However, there are a number of reasons why South African organisations should be taking note of (and heeding) what is happening on the global stage:
- South Africa has its own pay reporting regime (the importance of which is often ignored or disregarded); and
- There is increased investor and shareholder focus on gender pay issues.
What is the gender pay gap, actually?
The gender pay gap relates to the percentage difference between average hourly earnings for men and women. The pay gap is not the same as equal pay. Equal pay relates to the question of whether men and women are paid equally for equal work (or work of equal value).
So, a company might have a gender pay gap if a majority of men are in senior roles, despite paying male and female employees the same amount for similar roles.
Why does it exist?
Research has shown that there are generally four key reasons why the gender pay gap exists:
- There are more men in senior roles than women;
- Caring responsibilities and part-time roles are shared unequally;
- Women choose to work in low-paid roles and sectors; and
- Women are paid less than men for the same role.
Without delving too deep into the vast body of research which distilled these four reasons, the first three are largely informed by societal expectations and cultural bias relating to what roles women should fulfil at home and in the workplace. This, in turn, informs their career progression (or lack thereof) and occupational and career choices.
What are the reporting obligations in South Africa?
Section 27 of the Employment Equity Act, 1998 requires designated employers to report on remuneration and benefits received in each occupational level, per each race and gender group, to the Employment Conditions Commission. Where disproportionate income differentials or unfair discrimination exists, an employer must take positive measures to progressively reduce such differentials. Presently, the income differential statement is a confidential document and the Employment Conditions Commission is not permitted to disclose any (identifiable) information contained in the statement.
However, presumably the data will reflect that which is contained in the Global Gender Gap Report. The 2022 Report shows that women earn between 23% and 35% less than men doing the same job. One has to wonder whether, if the income differentials statement was a public document, subject to public scrutiny, an improvement would be seen in the pay gap.
Interestingly, the Employment Equity Commission's Annual Report 2022/2023, which analyses employment equity data from the 2022/2023 reporting year, indicates that only 16.6% of designated employers reported barriers to equality in remuneration and benefits in their employment equity reports for the relevant reporting period. This likely means that designated employers are not properly scrutinising their pay practices and/or are attempting to justify them through other means.
Why is closing the gap important?
Currently, the press and public are not poring over employers' income differentials, but this should not be a reason for South African organisations to be complacent with regard to the pay gap. This is particularly true where organisations are part of international groups of companies, (which are subject to more stringent gender pay regulations). Globally, more and more multinationals are opting to disclose their group pay gap data, even in the absence of statutory obligations in certain regions to do so. In South Africa, we have seen an increase in international companies calling for pay information from their South African subsidiaries and it won't be long before South Africa sets the wheels in motion to follow the international trends on pay gap reporting, especially where we are seeing the introduction of more stringent regulation of progress to achieve the objectives of the EEA.
There is also research that indicates a direct link between gender diversity (specifically at senior levels) and the bottom line, with more diverse companies being more profitable. Gender diversity and pay parity also make organisations more attractive from a talent acquisition and retention perspective. Incoming Millennials and Gen Zs have made it known that they want to work for employers who are purpose-driven; value diversity and inclusion; and pay fairly. If organisations want to win the war on talent, they should be judiciously looking at the makeup of their organisation and the reasons for their pay gap.
How must employers mind the gap?
... Carefully.
- Know your gap: Organisations should start out by identifying their pay gap and the reasons for it. For instance, the gap may be as a result of a lack of female graduates from technical colleges, or inflexible working arrangements.
- Adapt your solution to the problem: There is no one-size-fits-all solution for resolving the pay gap problem. If the gap arises as a result of a lack of female graduates, the solution should be to promote female intake at tertiary level, through the use of scholarships, bursaries, apprenticeship programmes etc. If the gap arises because women drop out of the workforce at a certain age or stage of their life, consider whether it is because: they are unable to work part-time, flexibly or remotely; the workplace is unfriendly to new mothers (eg, there are no areas for them to express breast milk); or there is an unconscious bias that feeds into the organisation's expectations of them, stunting their progression.
- Be constantly mindful of the gap: Set timelines. Implement strategies. Record progression.
An organisation that proactively manages its gap has everything to gain – profit and talent. With the release of the Global Gender Gap Report and the Employment Equity Commission's Annual Report for 2023 and the increased focus on employment equity compliance, organisations should consider what they would want their headline in the press to read on this ever-topical issue.
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