Why business leaders should care about inequality

Why you should care about inequality

With South Africa being one of the most unequal countries in the world, and with the situation only set to become worse as a result of our impending junk investment status looming, an unstable political climate and a plummeting Rand, it’s pertinent for us to talk about the elephant in the room.

The Gini Coefficient is a global measure of inequality, rating countries between zero and one. Zero is said to be a country with perfect equality, while one at the other end of the spectrum is a country with perfect inequality. South Africa has, since 1994, fallen between 0.660 and 0.696. This is bad news. In comparison, Norway has a coefficient of 0.227.

Our poverty gap grows larger by the day, with the rich becoming richer and the poor becoming poorer. But what can one expect in a capitalist society? And let’s face it, for those of us on the right side of the equation, it’s easy to turn a blind eye to the poverty gap and its negative effects.

Whether we like it or not, businesses in South Africa play an active role in strengthening the divide between the poor and wealthy. While unemployment is a hot topic at the moment, something that we fail to discuss finding a solution to, are the millions of people in the country with full time work who are struggling to put food on the table at the end of the day. These are people who work 8-5 jobs, adding another 2 hours (at a minimum) for transport to and from their place of work where rent is affordable. Transport often costs them a large portion of their already breadline-level salary.

Yes, it can be argued that these jobs are menial, and do not require a level of skill comparable to more highly compensated positions, but is it fair to expect someone whose average household income is R4 000 ($200) per month to survive when the average cost to feed a family of four will chew up at least half that.

The obvious answer is ‘no’. But it’s more complicated than that, isn’t it?

What does it mean for those who don’t benefit from our economy? What happens to them when there are unexpected speedbumps like medical bills, or funeral costs? How do they reconcile the job they do with their self-worth? How does an office cleaner feel when there are receipts in the rubbish bin for items that cost more than it did to pay her salary? These questions are difficult to ask and even more so to answer.

We as South African employers tell ourselves that we are ‘doing a good thing’ because we are helping a family to be able to have a monthly income, but what we really need to think about is whether we are further perpetuating inequality by supporting a minimum wage that is well below the breadline. If people are using all of their available resource to sustain themselves, it is impossible for them to improve themselves and therefore able to remove themselves from the cycle of poverty.

We should be doing more to make sure that the quality of life of our employees is such that they can go to bed every night with a full stomach and a conscience free of the anxiety that comes with the struggle to simply survive. Staff that are not financially stressed are far more productive.

If there was ever a question as to the real value that a cleaner provides to the business, wait for that person to be off sick for a couple of days, for the dishes to start piling up and toilets stop being cleaned. Market dynamics are important in determining wages but so is an understanding of the real cost of living.