Govt proposes salary caps

[xrapidx]

If this applies to the private sector, I think its my sign to leave. How are you supposed to afford a decent house on R550,000?

http://www.news24.com/SouthAfrica/Politics/Higher-earners-targeted-in-govt-plan-20101123

Cape Town - The government tabled its new growth path in Parliament on Tuesday, part of which proposes a cap on salaries and bonuses for senior managers and executives earning more than R550 000 a year.

The document, unveiled by Economic Development Minister Ebrahim Patel, also suggests a cap on increases for all those earning more than R20 000 a month.

It proposes "moderate wage settlements" for those earning between R3 000 and R20 000 a month, "possibly to inflation plus a modest real increase", with "inflation-level increases for those earning over R20 000 a month".

Patel said the document also called for a broad pact between business, labour and government.

Such a pact would include commitments on wages, prices, savings and jobs.

There was a proposal, for discussion with business and labour, for moderate wage settlements linked to clear commitments by business to save jobs, create new jobs and address inequality, he said.

 

[Archer]

Already been posted, mods merge or delete thread please

 

[grok]

First my bandwidth, now my salary?

 

[Bronzed_Skarab]

Wow - you know that none of Manuel, Gordhan or Patel have economics qualifications? You really have to think a couple of steps ahead when setting economic policy, and it just seems Patel is more blinded than most. Here's some analysis of potential, slightly tongue in cheek, implications of salary caps.

http://twentythirdfloor.co.za/2010/11/24/bust-a-cap-in-your-economic-policy/

 

[technofool]

Poor suckers

I'm a banker, it's not a particularly skilled job or particularly difficult and I don't produce anything. I am merely a custodian of your money and that is a very powerful position to exploit. For that I earn an obscene amount every month and I don't pay much tax either because I pay someone to 'structure' my income. All legal.

And why not? Laywers and estate agents get paid a small percentage of the value of their transactions. Why are we prepared to pay 10 times more to wind up a R10 million estate than a R1 million estate? Or pay the estate agent 10 times more for a R10 million house as opposed to a R1 million house? The jobs are of similar complexity, we should pay similar fees, makes no sense to me.

The striking correlation in all these examples is how accurately the countries' GINI coefficients (level of inequality) predict the levels of violent crime. High income inequality countries (South Africa, USA) have high violent crime levels, and low income inequality countries (Japan, Cuba) have low crime levels.

So I'm sorry to say that it is my (and the other 2% of SA Super Earners) insistence on Super Salaries that determines that all South Africans live in fear of violent crime. Actually I'm not that sorry, I have the electric fence, the 24 hour security patrols, private school and Au Pair for the kids but it must be a bit of a bugger for you guys. It happens all over the world so it must be OK.

The doctors are also part of this Super Earner racket but at least they admit it. I'm not admitting anything, I like taking the family skiing overseas every year, and the 5 star Bushmanskloof safaris and my Hermanus holiday house.

South African Community Service doctors earn around R20 000 a month, which puts them (and hence most doctors) in the top 5% of earners in a country which is one of the most unequal in the world. There is compelling evidence that income inequality has a severe effect not only on violent crime but also on a broad range of diseases. (2) If it is a doctor's duty to promote the health of the population, then it necessarily follows that we should campaign for more egalitarian social policies and therefore to earn relatively less than we currently do. It is my belief that this conclusion, though perfectly logical, is so unpalatable to our luxurious lifestyles that we would rather suspend our logic than our payments on our BMWs.

When I read this I should feel a bit guilty but I don't because it's a free market and everybody gets what they deserve. If you want to sit around in the sun not working you get nothing, if you take risks and work hard you make a fortune.

 

[xrapidx]

Ummm... R20,000 puts you in the top 5%?

 

[technofool]

2008 figures, scary hey?

About 48 percent of South Africans live on less than R322 (47 dollars/35 euros) a month, while 25 percent survive on grants, he said.

 

[xrapidx]

Well I suppose if you have a population that breeds like rabbits - then the figures will end up like that with most people not having work...and those that do are labour related jobs.

 

[syntax]

Ummm... R20,000 puts you in the top 5%?

yeah, i thought that was a little weird as well...

As for not being able to afford a decent house on 550k a year? are u kidding? u can get plenty nice places on that salary?

 

[xrapidx]

Well - it puts in the entry level middle class area of housing. (talking houses, not flats), in Cape Town anyway.

 

[syntax]

Well - it puts in the entry level middle class area of housing. (talking houses, not flats), in Cape Town anyway.

geez thats crazy, you can get some decent places here on a salary of 400k p/a

 

[Ono'rach]

Can they not see the forest for the trees?

I do not have a degree in economics, but logically this can surely only damage the economy?

Here is an example: If you put a cap on salaries at R20000 then nobody can afford to buy products such as a Mercedes Benz (random example) or a 40inch Sony LCD (random example). Yes, these are luxury purchases, but if nobody can afford products like these then surely it will not be economically viable for these companies to carry on business in South Africa.

As a result, these companies may pull out of the country. This means that all of their employees are now unemployed and broke. Now, none of these employees can afford to make any purchases, which means the economy slips a little more....

Placing a cap on salaries will stop a large portion of money from flowing back into the economy, resulting in job losses and the economy weakening...

And it would negatively affect more than the retail industry I'm sure...

This is probably not a great example and I'm sure it could have been put far more eloquently!

I would very much like to hear the input from a more qualified person.

 

[hj007]

Salary cap implies we get paid another way, like subsidised company housing. Very difficult to stop highly skilled people getting paid.