PPC's Gordhan cuts his pay by R1m

© Anna – Fotolia.com

Gordhan said the gesture had been "very well received" by employees and that other companies should consider doing a similar thing.

Both the private and public sectors have come under pressure to narrow pay differentials between management and lower-paid workers.

President Jacob Zuma last year overlooked a recommendation that public office bearers earning more than R1m annually not receive pay hikes for the year. All public office bearers‚ barring himself‚ got a salary increase of 5% across the board for 2013/14‚ backdated to 1 April.

Gordhan says that in PPC's latest salary adjustment‚ effective from October last year‚ the top 60 people took a salary freeze. "I took a freeze and a cut. The culmination of this was that we basically were able to increase the salaries of about 1‚200 of the lowest-paid people by about R10‚000 (each) a year," he said.

Gordhan said combined with the usual annual pay increase‚ most workers at that end of the spectrum got increases of between 15%‚ and 17% increase. "This was the right thing to do to reduce the wage gap," he said.

The decision followed discussions with employees‚ who felt they were being underpaid. "We responded positively to what we thought was a legitimate complaint," said Gordhan.

A PwC report on trends in executive directors' pay‚ released last year‚ showed that the total guaranteed package (excluding bonuses and incentives) of a chief executive of a JSE-listed company was 53.53 times the average income of the lowest band of employees.

Gordhan said semi-skilled workers had welcomed the initiative not just for the money but because people felt that we listened to them.

"South Africa must find ways to reduce income inequality. Initiatives such as this boost the domestic economy as lower-income earners spent their disposable incomes on locally produced goods and services‚" Gordhan said. "Higher-income earners spent parts of their salaries on foreign-made goods and holidays," he added.