Worldwide, gender equality continues to remain a focus area for many organisations as the awareness around the gender pay gap gains momentum.
There is consensus regarding the need to transform boards and companies to bridge the gender pay gap, both from a representational perspective and in terms of pay. There is also a need for more diverse representation on boards in South Africa. This is according to the 11th edition of PwC’s Executive directors: Practices and remuneration trends report.
Women in the workforce
Anastacia Tshesane, Diversity & Inclusion Leader for PwC Southern Africa, says: “Achieving gender parity throughout the workplace is one of the most critical challenges that business leaders face today. The quality of women’s talent and leadership is very important to business - the skills and experience that they bring, including that gained outside of the workplace, has proven to be essential in strategic decision-making and in ethical, sustainable enterprise.”
The participation by both men and women in the workforce is essential for the viability of businesses and economies. Companies that effectively use female talent are 45% more likely to report improved market share, according to worldwide research.
Currently, the World Economic Forum (WEF) suggests that projecting current trends into the future, the overall global gender gap will close in 108 years; the most challenging gender gaps to close are the economic and political empowerment dimensions, which will take 202 and 107 years to close respectively. In South Africa for every ten men, only eight women are employed or actively looking for work, although women make up more than half of the working-age population. In its 2018 Gender Pay Gap Report, the WEF ranked South Africa 19th overall in terms of gender gap equality, with a slight decline in gender wage equality where South Africa was ranked 117th (from 114th in 2017).
Anelisa Keke, Senior Manager of PwC’s People and Organisation division, says: “There is a need for diverse representation in boardrooms throughout corporate South Africa. Despite the broad acknowledgement that gender and diversity concerns should be addressed there is a lack of clarity as to what steps should be taken to effect lasting change in this regard. Bridging the gender pay gap has been a slow process, but by enabling women to succeed in the marketplace, society can reap the benefits of women’s talents and skills.”
PwC’s report explores the progress being made based on recent financial reporting results on a global and local level, regulatory reform, as well an analysis of the gender pay gap in South Africa.
In April 2019, the JSE released proposed amendments to its Listings Requirements which include extending the scope of 3.84(ii) requiring that companies must adopt a policy on the “promotion of broader diversity at board level, specifically focusing on the promotion of the diversity attributes of gender, race, culture, age, field of knowledge, skills and experience.” These amendments would align South Africa to the requirements contained in the UK Corporate Governance Code.
If one looks at the composition of top leadership at JSE-listed companies, there were no female CEOs in the top 40 at the cut-off date of the Executive directors: Practices and remuneration trends report. It is notable that out of the total number of listed companies on the JSE at 30 April 2019, only 3.31% of CEOs were female.
Quartile analysis of representation for men and women in South Africa
Our report analyses gender representation in listed companies across all sectors. It is notable that 96.6% of all CEOs on the JSE are male, 87.2% of CFOs are male, and 91% of executive directors are male. Women continue to remain under-represented in leadership positions.
It is suggested that companies keep track of internal pay disparities based on gender at all levels within their organisations and take steps to question (i) how these gaps arise and persist within their companies, and (ii) actively take measures to reduce these gaps over time, in line with the principles of equal pay for work of equal value.
Despite the increased focus from institutional investors and boards, the female representation at senior management and executive levels in South Africa is still on average only at 20% as reported in PwC’s REMchannel® July 2018 publication. The survey consists of remuneration data for more than 550 participating organisations and just over 4000 senior managers and executives. The data also indicates that 61% of the females are remunerated below the median of the sample in comparison to 39% of males. In contrast, 63% of males are remunerated above the median in comparison to 37% of females in the sample.
Improving female participation
According to the PwC UK Women in Work Index 2019, improving female participation in work across the OECD could boost total GDP by US$6 trillion. Through developing an environment that allows women to thrive in the labour market, we can eliminate many of the economic inequalities that still exist between men and women. A recent PwC Strategy& analysis based on economic data from Statistics South Africa and the WEF suggests that closing the gender pay gap in both pay and representation by just 10% could deliver an additional 3.2% in GDP growth and a 6.5% reduction in the number of unemployed job seekers.
Keke goes on to comment: “Corporate South Africa needs to focus more on ensuring that the number of women at executive and managerial level are increased, in addition to addressing gender pay gap inequalities. Although bridging the gender pay gap in South Africa remains a focal point, it is important that equal consideration be paid to the distribution of income among all demographic groups to drive diversity on all fronts. To bring about real change, companies should not view gender parity and diversity concerns as a means of appeasing individuals or organisations, but rather as an essential component in their long-term success.”