Deputy Speaker, in developed countries the debate about inequality is on the gap between those who earn the most and those who earn the least, as captured by that famous measure of statistical dispersion developed by the Italian mathematician Corrado Gini, income inequality among those who have jobs found in the European and North American context, in which the debate on executive pay is playing itself out.
However, in developing countries such as ours, the debate centres on the fact that we have 13,7 million South Africans who are employed and 6,7 million who are unemployed. The most compelling social problem, therefore, that defies our context and compels us to focus our minds is the problem of solving growth in joblessness.
Accordingly, in the DA's growth and jobs plan we offer proposals to do the following things: Firstly, create jobs by creating a favourable environment for investment and freeing up of our capital and labour markets. Secondly, by broadening ownership and distributing shares in state-owned enterprises to ordinary South Africans. Thirdly, promoting employee share-owner programmes. Fourthly, by reforming black economic empowerment, BEE, to focus it on job creation and make it truly broad-based. Fifthly, by promoting more charitable giving by radically increasing the threshold of tax deductibility from the current low of R150 000. Finally, by subjecting executive pay to more competitive pressure, greater transparency, more honesty and higher levels of self-regulation by way of heightened shareholder activism.
A number of ideas have been offered about how to deal with the issue of executive pay. These include: Firstly, a proposal to increase VAT on luxury items. International experience indicates that luxury goods-focused VAT is too costly and far too complex to administer.
A second proposal, the favourite of Minister Ebrahim Patel, is to put a wage cap on high-income earners. Wage caps have been tried in several countries, but to combat inflation, not to combat inequality. They have universally failed because they lead to shortages and resource misallocation.
Finally, there is a proposal to have a super-tax on high-income earners, and we must observe that South Africa's top personal income tax rate is 40%, while the global average for both developing and developed countries is 29%. More importantly, compare our 40% tax rate for top earners to middle-income countries growing at a much higher rate than ours. For example, Turkey sits at 35%, Colombia sits at 33%, Brazil sits at 27%, Malaysia at 26%, Uruguay at 25%, Egypt at 20%, the Czech Republic at 15% and Paraguay at a nice, low 10%.
These are there for proposals that are not viable in our view. Instead, we recommend the following: Firstly, that there be a new definition of total reward that represents a single amount paid to directors or prescribed officers; that represents the total monetary values of all fees, salaries, bonuses, performance-based payments, expense allowances, pension contributions, share options, financial assistance, soft loans and other relevant payments for the year, including exit payments where they are applicable.
Secondly, to have more transparent, better described and more fulsome justification for how total reward relates to the company's performance. It is fundamentally important that that link be made, to specify in an amendment to the Companies Act that annual financial statements must declare total reward as I have described it and include an explanation of how directors' remuneration relates to company performance. Justification must be given. Critical performance indicators used for pay needs have to be widely circulated both to shareholders and to citizens.
Thirdly, our immigration rules must be reformed. There are in the region of 901 800 unfilled positions for highly skilled professionals across a wide range of occupations, including senior management, in the professions such as medicine, engineering, accounting and the law; technical occupations consisting of specialised technicians and artisans, and agriculture. The shortage of skilled technicians has been artificially induced by the April 2011 amendments to the Immigration Act, which banned the use of immigration agents and quota work permits.
A cost reduction caucus must be established. It is a National Economic Development and Labour Council, Nedlac, of cost reduction, a body representing organised business, labour, government and the unemployed, whose task it is to reduce administered prices like electricity, inflation and wage increases that are not linked to productivity.
Finally, the influence of shareholders over remuneration policy must be significantly enhanced. Shareholders must heighten their interest in and the influence over pay by using critical performance information to exert pressure on corporate board remuneration policies and exit payments. Thank you very much. [Time expired.] [Applause.]