adminthose in the highest paid echelon compared to those in the lowest.
The latest ZCTU survey, while flawed in the way it is presented and while drawing wrong conclusions from well-researched data, does capture the outline of that degree of inequality.
There are several reasons for this inequality.
First, and most critical, is the level of development of a country. Developed countries tend to have far less inequality than undeveloped countries, despite being home to most of the world’s US dollar billionaires.
The reason is fairly obvious, that the poorest in developed countries are generally speaking far better off than even middle upper income people in developing countries. It is important to note that these countries reduced inequality by raising standards of living of the poorest rather than trying to cap the earnings of the richest.
A second reason for greater inequality in developing countries is the lack of skills, and by that we mean more than just educational qualifications but rather that combination of education and experience that creates the valuable skilled worker.
Such workers are more mobile than the ordinary unskilled or semi-skilled worker and while their salaries in developing countries are considerably below what similar people earn in developed countries, the “north-south” gap is far less than for unskilled workers. Skilled people can emigrate; unskilled people are normally deported if they try.
The ZCTU’s own figures show that, in percentage terms, the gap is larger between skilled and unskilled people than between skilled people and senior managers.
The gap in gross pay, and the ZCTU’s figures are based on gross pay, is less in reality. Besides losing 35 percent of their salaries in income tax, compared to zero for the lowest paid, the CEOs also have to pay taxes out of their gross salary on their perks, such as the car. Most CEOs take home less than half of that gross salary once all taxes are factored in.
And those top salaries are paid to only 100 or so people. Most people who call themselves CEOs are in fact only a relatively skilled person running a modest business and earning far less than the high salaries of the top executive in a listed company.
And at the other end of the scale the numbers of people on the minimum wage for their sector is also very low, with most employers giving extra for experience at least even to the most unskilled labourers.
The dramatic rise in CEO pay over the past three decades in most countries has been a source of concern.
The reason appears to be that large companies need the sought of innovative people who could own and manage their own big firm and have to thus pay CEOs something comparable to what they could earn if they were on their own.
But because of that world trend it will be difficult for Zimbabwe to cut top pay; and in any case in a large company abolishing the CEO’s salary will increase the average worker’s salary by only a dollar or two each month.
The ZCTU is on stronger ground when it seeks to raise the salaries of the lowest paid.
This is, indeed, the way developed countries have reduced inequality. Of course economists point out that there have to be productivity gains for that to be possible, but that is often a function of management.
So we see the possible outline of a practical deal. If a highly paid CEO is raising productivity and boosting the business, then a high salary can be justified; but because of the higher productivity so can rising salaries for the lower paid.
Measuring the productivity and ability of a CEO of a major firm by how much his business can afford to pay the lowest-paid staff is not a bad idea; at the very least it is rational.
The ZCTU has a legal and moral function in pushing for better deals for its members. By commissioning competent research it acquires useful data that can be used to argue for more results-based pay scales that can only benefit its own members.
But, and the temptation is there, using that data to excite envy and anger will not help get what is needed, better pay for everyone. It will probably make everyone poorer as a result.
So we hope that the ZCTU will continue to press for better pay for the worst paid, and we hope that it will do so by demanding that everyone must at least justify what they earn through the wealth
they create, with one measure for CEOs being how well they beat the market when it comes to paying those who work for them.
Online Reporter