Pay literacy crucial for South Africa’s future
South Africa’s pay transparency rules have shifted from voluntary best practice to legal obligation, raising the stakes for businesses, investors, and employees.
New rules force disclosure, not just discussion
Sections 30A and 30B of the amended Companies Act took effect on May 22 for public and state-owned companies whose annual general meetings fall under the new framework. These provisions require businesses to present remuneration policies for shareholder approval every three years—or sooner if material changes occur—and submit annual remuneration reports at AGMs. The reports must include mandated pay gap details.
If shareholders reject the report, the company must explain how concerns were addressed. A second consecutive rejection triggers statutory consequences for nonexecutive directors on the remuneration committee, as outlined in section 30B.
King V, the latest corporate governance code, reinforces this by treating fair and transparent remuneration as a board responsibility. The combination of legal and governance pressure means pay decisions now carry legal, investor, and workforce consequences.
Proposed laws could push transparency further
The Fair Pay Bill, still in draft form, would restrict reliance on salary history, require pay ranges in job postings, and protect employees who discuss wages. While not yet law, its direction aligns with global trends, including the EU Pay Transparency Directive, which demands salary range disclosures, pay information rights, and corrective action for unjustified gender pay gaps.
Regulation alone cannot bridge the gap between disclosure and understanding. Companies may publish pay ratios, but without context, those figures may spark outrage rather than informed discussion. A stark pay gap might reflect industry standards, scarce skills, or a deliberate talent strategy—but without explanation, it risks being interpreted as evidence of inequity rather than a technical requirement.
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Pay literacy becomes essential here. It involves more than knowing what someone earns; it requires understanding how pay is structured, how decisions are made, and what defines fairness. Without this knowledge, transparency can backfire, turning data into sensationalism rather than a tool for progress.
Pay literacy as a workplace competency
Fair pay isn’t determined by a single number—whether an executive’s salary, a colleague’s wage, or a job offer. It depends on remuneration philosophy, job evaluation, market benchmarking, salary bands, affordability, and performance. Even salary surveys are only useful when based on proper job matching, validated data, and consistent methodology.
Understanding pay means seeing remuneration in its full context. It includes recognizing that total reward covers retirement contributions, risk benefits, and incentives—not just take-home pay. Job titles can be misleading, and role value depends on requirements, contribution, and impact.
Most workers have never been taught to assess pay fairness. In a country with 33.6% unemployment and 47.4% youth unemployment, financial insecurity is widespread. Even above-inflation wage increases don’t guarantee stability when living costs, emergencies, and debt reduce earnings.
Pay disclosures won’t arrive in a neutral environment. They will enter a society where inequality is stark, trust in institutions is fragile, and many workers lack the tools to interpret what they see.
Who bears responsibility for pay literacy?
Improving pay literacy is a shared responsibility. Boards must test remuneration policies and ensure job grades and salary bands are justifiable. Managers need training to discuss pay confidently, and employees should understand how their total reward package works.
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Shareholders now hold binding voting power on remuneration policies, and their votes can affect committee members. Unions must build analytical skills to negotiate based on evidence rather than instinct. Regulators need to ensure compliance drives meaningful change, not just procedural compliance, through clear guidance and sector-specific benchmarks.
Educators and professional bodies also play a role. Pay literacy should be part of curricula so new workers understand remuneration before negotiating it.
The impact of pay illiteracy falls hardest on those already disadvantaged—women, young workers, and historically marginalized groups. These groups are often least able to challenge unfair outcomes and most vulnerable to the long-term effects of poor pay decisions.
South Africa has spent years debating whether companies should disclose more about pay. The real challenge now is whether that information will be understood, trusted, and used to create meaningful change. Pay literacy isn’t a niche skill—it’s a fundamental workplace competency that affects economic participation, dignity, and agency from the boardroom to the shop floor.
As local leaders address urban challenges, fair pay practices could help rebuild trust in institutions.
