Paying it forward: Sustainable strategies for fair pay

Businesses are integrating fair pay and living wage into their strategies to drive equity and sustainable growth, with 67% recognising its importance.

Johannesburg, South Africa – The distinction between fair pay and a living wage is crucial for fostering equitable and sustainable employment practices. In fact, only 29% of the African workforce across the South African, Kenyan, Moroccan, Algerian and Nigerian regions are able to pay their bills monthly, compared to 45% globally. These insights are highlighted in PwC’s latest Paying it forward: Sustainable strategies for fair pay blog post, underscoring the urgent need for African businesses to shift towards fair pay practices to enhance their sustainability and resilience.

“Fair pay ensures equitable remuneration for similar work, reflecting the value of the employee’s contribution without discrimination,” says PwC’s People and Organisation, Reward Partner, Leila Ebrahimi.  “In contrast, a living wage indicates that employees earn enough to meet their basic needs and live with dignity”.

While fair pay focuses on justice, a living wage addresses essential living standards. By understanding and implementing both concepts, businesses can ensure that they are not only meeting ethical standards but also creating a more motivated and productive workforce. “This strategic approach can lead to reduced turnover, enhanced reputation and long-term sustainability and resilience in the competitive market,” says Ebrahimi.

The global push for living wages is integral to achieving Sustainable Development Goals

According to the UN Global Compact (UNGC), over a billion workers worldwide earn less than they need for a decent standard of living; however, according to PwC’s research, 53% of businesses now incorporate living wage considerations into their social ESG strategies. “This indicates a growing focus on fair compensation, which is crucial for meeting several UN Sustainable Development Goals (SDGs), including eradicating poverty, promoting decent work, achieving gender equality and reducing inequalities,” says PwC’s Remuneration Specialist Karen Crous. “By prioritising living wages, businesses are not only addressing fundamental human rights but also contributing to broader economic and social stability.”

South Africa mandates wage gap disclosure for corporate transparency

The upcoming South African Companies Amendments Act introduces significant changes to corporate remuneration practices, mandating public and state-owned companies to disclose wage gaps annually. This legislation requires detailed remuneration reports that cover the highest and lowest paid employees, average and median remuneration and the pay gaps between them. Makhosazana Mabaso, PwC’s People and Organisation, Reward Partner, says that “the aim for this is to promote transparency and accountability in corporate pay structures, ensuring that companies address pay disparities and foster equitable treatment of employees”. Non-compliance with these new regulations may lead to severe consequences.

“This regulatory shift underscores the importance of transparency in corporate governance. By making wage gap information public, companies are held accountable for their pay practices, which can build trust with employees and stakeholders,” says Mabaso.

The new disclosure requirements are a step towards greater equity in the workplace, encouraging businesses to adopt fair pay practices that reflect their commitment to social responsibility and ethical standards.