File photo: INLSA
The discrepancy in pay ratio between CEOs and workers shows no sign of diminishing in the country. Hence why South Africa has the worst Gini coefficient (measuring income equality) in the world.

Chief executives of the largest companies in the country are earning, on average, 64 times the wages of workers, Fin24 reported. 

This figure, referred to by economists as a company's "pay ratio", is included in a new report on executive remuneration in South Africa, released on Thursday by PwC.

The report defines a pay ratio as the ratio between the total remuneration of the CEO of a company and the average of the total remuneration of all other employees of the company.

The report found the pay ratio at SA's largest companies had risen to 64.7 in 2018, up from 61.8 in 2017. It is slightly down from 64.8 in 2016. Pay ratios at smaller companies differed. The lower pay ratio was 12.4. 

The authors noted that while the pay ratios for South African company heads were lower than in the US – where more research has been carried out – the US also has a lower Gini coefficient and a lower unemployment rate. 

In March, the World Bank's Dr Paul Noumba Um told The Star more than 75% of South Africans slipped into poverty at least once between 2008 and 2015, with the poverty headcount being higher in rural areas.

“Half of South Africans during the 2008 to 2014/15 period were considered chronically poor or having average consumption below the upper bound poverty line. At least 78% of South Africans were in poverty at least once during this period,” Um said.

He said despite the overall positive trend on poverty reduction between 2006 and 2015, poverty had increased between 2011 and 2015, with at least 2.5million more South Africans slipping into poverty.

“About 40% of South Africans lived below the lower bound poverty line in 2015, up from 36.4% in 2011,” Um said.

With a Gini coefficient of 0.63 in 2015, the report described South Africa as the most unequal country on earth.

The report said high wealth inequality and low intergenerational mobility inherited from apartheid saw the disparities being passed down from generation to generation, with signs showing that the situation was worsening.

While the report stressed that education and skills were the main avenue to address the inequalities - as many poor South Africans were unemployable and unskilled - it stressed that wealth inequality was much higher than income inequality.