Letter: Government has no business in executive pay debate

Whether executives' salaries are "excessive" is not a matter for government to decide ("Patel bill seeks pay gap transparency," May 19). It is a matter for shareholders to decide what they expect from executives and, based on relevant performance, what their compensation should be.

Matters of this sort must be left for businesses to decide; any legislative push by the government to become intimately involved simply opens the door to more onerous interference and will contribute to SA's anti-business, anti-job creation climate.

Consumers "vote" with their purchases: if they decide a given company's CEO is paid "too much", or behaves or comments on matters in a manner with which they disagree, they will respond accordingly and change their spending behaviour.

There is no moral reason for the state to be involved in this matter; companies that respond better to customers' needs and signals will perform better, and if there is no force or fraud involved in these voluntary transactions, increased pay for those in charge of those companies is just.

No matter the accumulated knowledge and feeling of moral righteousness on the part of bureaucrats, trying to centrally plan an economy — and millions of people's daily economic decisions — is a recipe for mass unemployment, poverty, immovable inequality and no real societal progress.

It is often said that SA is one of the most unequal societies in the world; what is left out of the discussion is any mention of the numerous barriers imposed on economic activity by the government. And, while larger corporates have the necessary resources to handle new impositions and compliance requirements, small- and medium-sized entities do not have the requisite bandwidth to devote to such matters. Better to rather avoid trying to start a business and employ others than to risk dealing with an overzealous state.

Dealing with onerous state interference, demands and unnecessary legislation takes away from the time and resources that could be devoted to growing a business and possibly employing more people. In a country with an unemployment rate of more than 42% (on the expanded definition), surely the government should be removing as many barriers to activity as possible?

We are heading further down the "wealth is fixed", "wealth can only be taken" path in SA. With less economic freedom it has become more a case of who you know, politically speaking, that determines whether you ultimately become successful. Bills and legislation such as this latest proposal by trade, industry and competition minister Ebrahim Patel will only increase the role the state plays in the economy and business activity, to the ultimate cost of workers and consumers.

There can be no "inclusive" economy that is not, in the first instance, at least growing at a robust pace.

This letter was first published on BusinessDay on 26 May 2021.