South Africa's ZA SOE Executive Salaries Exceed Treasury Guidelines

• Top managers at 35 state-owned enterprises (SOEs) earn about 14 times as much as lowest-paid employees.
• The Executive Director of the SA Civil Aviation Authority earned R9.7-million on average in 2024/25, which is 93 times the average annual salary of the lowest-paid workers.
• Six SOEs have above-average income inequality between employees and top managers.
• SOEs' high executive salaries are not subject to Treasury guidelines due to their diverse revenue sources.
• The pay inequality at SOEs may trigger a review of executive compensation structures, potentially exposing them to compliance risks.

The Executive Director of the SA Civil Aviation Authority earned R9.7-million on average in 2024/25, which is 93 times the average annual salary of the lowest-paid workers.

A recent analysis of 35 state-owned enterprises (SOEs) in South Africa revealed significant pay inequality among top managers and lowest-paid employees. The study found that, on average, top managers earn about 14 times as much as the lowest-paid employees. This disparity is particularly striking at six SOEs where the gap between lowest and highest employees is above average. For instance, the Executive Director of the SA Civil Aviation Authority earned R9.7-million on average in 2024/25, which is 93 times the average annual salary of the 102 workers in the lowest salary band (R104,000). Similarly, the Road Traffic Management Corporation's CEO was paid R7.7-million, almost three times what those in the next highest salary scale earned on average (R2.7-million), and 53 times the average pay of the lowest salary band (R143k).

The SOEs' high executive salaries are not subject to Treasury guidelines, as a large portion of their revenue comes from sources other than the government. This allows them to negotiate salaries based on market rates, previous pay, and experience. However, this flexibility also raises concerns about excessive pay and income inequality. The SOEs compete with the private sector for highly skilled executives, which can drive up salaries. As a result, some SOEs have implemented executive salary caps, but these are not universally applied across all entities. The Treasury's guidelines on salary scales are intended to promote fairness and equity in remuneration practices.

The pay inequality at SOEs has significant implications for the country's economy and society. Excessive executive salaries can lead to compliance risks related to excessive pay and income inequality. Lawyers advising these entities should review their remuneration policies to ensure they align with relevant laws and regulations. This development may trigger a review of executive compensation structures at SOEs, potentially exposing them to further scrutiny. The aviation sector regulation in South Africa is also affected by the high salaries paid to executives at the SA Civil Aviation Authority.

This development may trigger a review of executive compensation structures at SOEs, potentially exposing them to compliance risks related to excessive pay and income inequality. Lawyers advising these entities should consider reviewing their remuneration policies to ensure they align with relevant laws and regulations.

Source: Original reporting via GroundUp