There is widespread concern globally about rising income inequality. There is a common perception that there is an unnecessary large gap between CEO-executive remuneration and general staff pay and that this gap is widening every year. The wage gap is defined as the ratio between a company’s CEO pay and general staff pay. For example, if the CEO earns R100,000 a month and a general worker earns R10,000 a month then the wage gap is 10 – the CEO earns 10 times what the general worker earns. Although the definition appears straightforward, there are several factors that significantly affect the reporting of the results of these measures.
There are differences in the definition of general worker pay. First, a wage gap is generally calculated in two different ways — comparing the CEO’s pay with that of the lowest-paid employee; or comparing the CEO’s salary with median general staff pay. These reporting methods can influence the wage gap hugely as the lowest-paid worker will earn a...
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