Hon Deputy Speaker and hon members, parastatals and state- owned enterprises pay very close to private sector rates at executive level in respect of guaranteed pay and short-term incentives. It has been argued that government's state-owned enterprises are under pressure to match the private sector, because unless they do so, they risk the brain drain to the private sector.
Executive pay, both in government and in the private sector, remains relatively high according to global standards, yet we are a country with massive socioeconomic challenges that need redress. What the 2010 household survey revealed is that 10% of earners in South Africa took home salaries that were 101 times higher than the bottom 10%. This exposes the ridiculousness in determination of salaries in a country in which economic inequalities are compounded, where the gap between the rich and the poor continues to expand.
The disproportionality in pay, whether private or government, weakens social cohesion; and may lead to other problems, such as crime. South African executives continue to display double standards and get away with it. They advocate executive pay packages matching those in the developed world, while insisting on general labour being paid on a par with developing countries.
Top executives in South Africa earn 1 728 times that of the average worker in their respective companies, while this gap was only 319 times in the United States. Socioeconomic concerns in particular aggravate the issue in the South African context, as the gaping pay differentials impact on the resultant income inequalities found across society.
Recently, we have witnessed vocal calls for businesses to consider modesty in executive salaries. However, these calls received little or no support as government and parastatals must be seen to lead the way. Of note in this particular instance is what the President and the Minister of Public Enterprises said on the issue, and I quote:
Remuneration of executives is quite high and does not contribute to bridging the inequality gaps between the highest and the lowest paid.
However, in this particular case, government is trying to lock the stable after the horse has bolted. It is this government that said people were paid slave wages when it ascended to power. It is this government that said people were entitled to unbridled remuneration and it deployed undeserving cadres who run the enterprises such as SAA and SA Express into the ground.
Increases within the public sector continue to match or exceed private sector rates. Net wages after taxes in the South African government are higher than those in Germany, Sweden and Finland, on a dollar purchasing power per parity. I thank you. [Time expired.]