Business Leadership SA - whose members include the CEOs and chairmen of SA’s largest corporations and multinationals - says it is committed to devising a code of conduct on remuneration and labour practices for its members that will include "sacrifices by management".
This undertaking is in line with international concern about high executive remuneration, even when performance is below par, and may address the trade unions' objection to wage restraint as a tool for job creation.
Business Leadership SA yesterday published its response to the national development plan produced by the National Planning Commission.
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It broadly embraced the plan and outlined several areas where the government and business, working in partnership, could achieve "quick successes" and "build confidence" in the plan.
On executive remuneration, Business Leadership SA acknowledged that "improvements to the labour market will need to involve give and take".
"Wage moderation should be pursued at all levels, including some sacrifices by management".
The CEO of Business Leadership SA, Thero Setiloane, said the group acknowledged the need to examine the issue of executive compensation. "We are working on broad principles. One thing we agree is that people cannot be rewarded for failure," he said.
Mr Setiloane said shareholders needed to be empowered to deal with issues related to management and director compensation. "This is not just an issue for SA, it’s a global issue. It is coming, whether we like it or not."
The Congress of South African Trade Unions (Cosatu) has repeatedly raised the issue of high executive pay, arguing that this is excessive, has risen disproportionately, and cannot be justified. It is a key argument for Cosatu’s refusal to countenance its members considering wage restraint.
Economic Development Minister Ebrahim Patel has called for pay restraint from workers and executives to contain inflation.
Other suggestions calculated to open the door to a more fruitful interaction and partnership between business and government are contained in Business Leadership SA’s response to the national development plan.
The group proposed that it be involved in preparing "a national proposal" to facilitate investment by retirement and savings funds in infrastructure projects.
While the idea of prescribed asset classes - which would make investments in government infrastructure or bonds obligatory - has been mooted by the African National Congress (ANC), the business group said "voluntary participation in infrastructure finance" was preferable.
"We suggest a task team of industry and government be set up to explore the private sector’s role in the financing of infrastructure. This team will look at all the options, including modified versions of the development bond, and investments which generate financial returns on the ‘user pays’ model," the document reads.
The group’s biggest criticism of the plan was the lack of attention to the role of the private sector as an enabler and partner in economic growth.
In a significant proposal aimed at building bridges with the government, Business Leadership SA proposed a "warts and all" analysis of SA’s public-private partnerships to date. This should be done by a committee involving the business group, the government and a neutral third party.
Mr Patel recently expressed unhappiness that public-private partnerships had the government taking all the risk, while business reaped the benefits. The Business Leadership SA document acknowledges "there have been significant failures in this area".
Mr Setiloane said he hoped for a dialogue with the government before the ANC’s December conference in Mangaung, where a number of key policy issues are expected to be settled.