Madam Deputy Speaker, hon Ministers, Deputy Ministers, hon members, this debate that the ANC has agreed to enter into must be engaged with for the correct reasons and not the incorrect reasons. Comrade Borman, my colleague, has outlined the statistical facts before this House and debunked particular myths that have been created for political, opportunistic and expedient reasons. The objective reality has been laid before this House with empirical data. What I shall outline, Deputy Speaker, is the essence of the problems, the driver of the distortions in the market, the private sector itself.
Deputy Speaker, let us examine the extent of the problem we face. The 15 highest paid directors of the Johannesburg Stock Exchange-listed companies that earned a total of R622 million in 2011, according to the 2011 edition of Who owns Whom averaged more than R41 million each per annum. In comparison, for the purposes of this debate, the top 15 high earners from the state-owned enterprises earned R103 million, an average of about R7 million each per annum. The highest-paid director in the private sector earned R63 million per annum.
To contextualise the issues of this debate, we have a country that, according to the UN Development Programme, has the greatest levels of inequality in the world; the gap between the wealthy and the poor. Within the demographics of our society and between racially defined groups, the gap is widening between the propertied class and other wage earners and, of course, the unemployed. The key, and principal, driver of this is the private sector. This raises questions about the nature and type of society that we are trying to build.
The major and immediate task of the national democratic revolution in this phase is the building of a national democratic society, elaborating on the broad principles of a democratic, nonracial, nonsexist, united and prosperous South Africa. To successfully build a national democratic society, we must eliminate the main antagonisms of colonialism of a special type. These antagonisms are the three interrelated contradictions and legacies, namely, national oppression based on race; super-exploitation of black workers; and the triple oppression of women based on their race, class and gender.
If this constitutes the character of the national democratic society that we are trying to build, we should be acting decisively where practices and behaviours that are both foreign and alien to this concept are taken as the norms and standards.
The threat to social cohesion and nation-building through the continued practices of remuneration packages in the private sector has brought about severe criticism from within the private sector itself, and even more so from outside the private sector. This takes place at a time when international scrutiny of executive remuneration has resulted in both legislative and regulatory intervention. A number of initiatives have been embarked upon to address this issue.
These can best be reflected in the Code For Responsible Investing in South Africa, which was introduced in late 2011, aimed at the attention of institutional investors, lending institutions, public investment corporations, and so on. Business leadership South Africa also announced its intent to release a code on remuneration and labour practices for its members, King III-enhanced remuneration practices for private sector and listed companies.
What is imperative for the ANC is that the private sector begins to demonstrate social consciousness and solidarity with the plight of all South Africans, the majority of whom are poor, with limited access to basic necessities and who have lost jobs due to the current global economic downturn. Anything else would merely be insensitive and this is exactly what we meant in the New Growth Path when we argued for a social compact around executive salaries.
If we are to examine global trends in Britain, for instance, legislation is being proposed to amend the current practices, following the exposure in the banking sector of corrupt practices and obscene remuneration packages.
In the US, a Bill has been introduced in the Senate that brings about further reforms in remuneration practices. In the EU regulatory guidance was introduced and further reform is being considered to provide for the shareholder mandatory vote on executive remuneration. Such are the steps that are being taken internationally and with good reason.
International best practice regarding directors' remuneration informs us that the main principles that should govern the remuneration of executive directors are as follows: The level of variable pay should be reasonable in relation to total pay level; variable pay should be linked to factors that represent real growth of the company and real creation of wealth for the company and its shareholders; and the severance pay for executive directors should be restricted to two years' annual remuneration and should not be paid if the termination is due to poor performance.
In conclusion, we urgently need, at the national level, to bring into line policies on recruitment, remuneration and retention of personnel across sectors of our economy without compromising the principles of equity and fairness. It is important that these principles are not distorted by market values and that work should not be treated simply on the basis of a commodity that can be bought and sold on the open market. Market-related salaries will always be prone to distortions and certainly what has been developed in state-owned enterprises and the public sector in terms of guidelines is to be welcomed. The strict adherence to these are necessary. These, Deputy Speaker, are important lessons for us. [Applause.]