President Cyril Ramaphosa signed into law this week two critical Bills amending the Companies Act seeking to shine a bright light onto often hidden corporate corruption and much less hidden obscene wage gaps.
Tragically few media houses bothered to cover this important development for workers, shareholders and the economy.
The Companies Amendment Acts were a critical and long overdue intervention by former Minister for Trade, Industry and Competition, Ebrahim Patel, on behalf of the ANC-led government, to modernise the Companies Act, to introduce a culture of ownership transparency and wage accountability.
Extensive engagements were held on the Bills among government, business and labour at Nedlac, which after robust engagements and sober compromises, produced considerable consensus on key issues.
Further robust discussions were held during Parliament’s public hearings.
These amendments are important for workers and the country for several reasons.
South Africa was grey-listed by the United Nations’ International Financial Action Task Force (FATF) two years ago, for several reasons, including our outdated and inadequate legislation which did not provide sufficient transparency with regards to company ownership.
This was mostly addressed through earlier legislation expedited by Parliament in 2022, yet further amendments were needed in the Companies Act to ensure that companies are required to disclose their full owners and not simply a trust in whom it may have been registered.
This is critical to enabling the state and other watchdogs to know who owns a company, to better trace the channelling of monies illegally obtained, to tackle money laundering or financing for terrorist or other criminal activities.
South Africa remains grey-listed as the FATF assesses our progress in resolving our legislative and other gaps. It is urgent that we exit our grey listing status as soon as possible, as many investors will not, and some cannot, legally invest in countries that are grey-listed.
In simple terms, workers who are already struggling to find and keep work in an economy with a 42% unemployment rate, cannot afford any obstacles to attracting and retaining investment.
The recent discovery of a possible Libyan terrorist training camp in Mpumalanga is a brutal reminder that we take lax laws and grey listing at our own risk.
The second important aspect of the Companies Amendment Acts are the requirement for listed and state-owned companies or Enterprises, to disclose their financial reports to their employees.
This benefits workers and the company itself, as it will allow employees a better understanding of their workplaces’ financial circumstances. This will boost labour market stability and help engender positive wage negotiations and collective bargaining as workers will have a better understanding of what their employer can and cannot afford.
It will also make it difficult for employers to refuse workers’ demands for their salaries to keep pace with inflation, when workers will have a thorough understanding of the companies’ financial health.
Transparency will help workers have a better understanding of the links between productivity, workplace performance and the ability of the employer to offer healthy increases.
Workers too will be able to make proposals on how to improve productivity if they can see where resources are being squandered and how they could be better utilised.
The third key aspect of the amendments are requiring listed and state-owned companies to disclose in their annual reports, and thus to their workers, shareholders and the public, the gap between their highest and lowest paid employees as well as the actual salaries of their lowest paid staff.
This is key to begin nudging employers to addressing the still prevalent apartheid wage gap, particularly in the banking sector where CEOs are paid on average R2 million a week, while bank tellers may take 20 years to earn that! Similar obscenities have been seen in the mining industry where one CEO was paid more than R300 million in a single year yet found no shame in seeking to deny mine workers a meagre additional R150 a month!
If we are to overcome our apartheid legacies of inequality and tackle entrenched levels of poverty, then we need to compel employers to pay workers a living wage. Equally if we are to grow the economy, then workers need to be able to afford the goods businesses produce.
We are pleased the President has now assented to these badly needed and progressive laws. The government now needs to move with speed to implement them, to ensure the relevant organs are sufficiently resourced and officials well trained.
We have seen all too often Parliament pass progressive laws, and then different organs of state are found badly wanting when it comes to implementing them. Equally Parliament needs to exercise its authority and hold the state accountable for ensuring employers comply with the law.
As per the Nedlac Agreement, Cosatu will soon be tabling proposals at Nedlac for further legislative reforms on three key long-standing matters, namely:
– Tightening the checks and balances for business rescue practitioners, who all too often become a law unto themselves, helping themselves to generous packages from depleted company coffers and leave workers waiting for months to be paid outstanding salaries.
– Allowing workers to elect representatives to company boards. This will enable workers’ views and proposals to be heard, challenges facing productivity to be identified and resolved, and for workers too to be capacitated to better understand ways to boost productivity.
– Setting a maximum wage gap to set boundaries on what is and is not acceptable and to begin nudging us away from our world record levels of inequality to a more equal society where workers are paid a living wage.
Cosatu is pleased with the progress we have made with the ANC-led government in taking these progressive amendments from discussion to legislation. We will continue to engage government to ensure implementation and to compel employers to comply.
This includes the Federation training and empowering shop stewards and ordinary workers to understand these new tools in building a fairer workplace and society.
Cosatu General Secretary Solly Phetoe.
BUSINESS REPORT