The government says its push to advance employee ownership is bearing fruit as more than 500,000 workers have benefited from share ownership plans in the past 20 years.
The schemes enabling staff to take up stakes in the companies they work for has gathered momentum as business strives to meet broad-based BEE as well as Competition Commission requirements for mergers and takeovers which consider levels of employee ownership. It also contributes to scores under the BBBEE codes of good practice.
Share ownership schemes have seen employees benefit from dividends, and share buybacks in sectors including mining, food and beverage production, manufacturing, agriculture, and retail. In the past year alone, R3.3bn in dividends was paid to workers, mostly in mining where beneficiaries received an average of R12,800 each.
Speaking at the inaugural worker share ownership conference in Johannesburg this week, President Cyril Ramaphosa said SA’s economy would have been in much better shape if all the people of the country had been allowed to participate in it instead of being excluded under apartheid.
Yes, the funding institutions need to come to the party, but I am hoping that government can also come to the party in terms of incentives. Can such funding structures be tax-exempt?
— Busi Mabuza, Industrial Development Corporation CEO
“If our economy was made to operate on all cylinders, and all the people of this country were involved meaningfully, directly and deliberately to play a role of ownership, management or directing the economy, our country’s economy would have been far bigger, it would have grown much more exponentially as to be able to create jobs”.
Trade, industry & competition minister Ebrahim Patel said 2024 marks 20 years since share ownership scheme regulations were updated for the benefit of employees.
“Worker shareholding is one way to build shop-floor cohesion and strategic partnerships as we grow our economy and navigate a complex terrain,” he said.
The conference acknowledged share ownership schemes of companies including ABSA, Shoprite, Coca-Cola Beverages South Africa, PepsiCo, Anglo American Platinum, Sibanye-Stillwater, Palabora Copper and Impala Platinum.
Impala Platinum chair Thandi Orleyn told the conference that employee ownership schemes are one of the company’s mechanisms to support fair and equitable pay, and increase economic inclusion.
She said that between August 2021 and September 2023, R1.1bn was paid to 32,000 employees thanks to record platinum prices. This amounts to more than R36,000 a year per employee, meaning each received more than R100,000 during that three-year period.
“We know that shareholders and investment ratings agencies have rightly placed an increased focus on fair and responsible play processes, and we agree with this emphasis. Our remuneration journey [over] the past five years is nothing short of remarkable. The percentage of employees with a cost to company [package] of up to R250,000 a year decreased from 63% in 2018 to 0% in 2022. In other words, no Implats employee earns less than R250,000 a year before tax,” Orleyn said.
Also speaking at the conference, commissioner for the Competition Commission Doris Tshepe said more should be done to improve employee representation on company boards.
She said funding institutions need to step up to assist employees to get a slice of the businesses they work for.
“Workers would not have [to have the] amounts required to acquire these shares, which has meant lower shareholding levels. I think this is where we should have conversations with funding institutions,” Tshepe added.
Industrial Development Corporation CEO Busi Mabuza flagged those share ownership schemes that have been unveiled by companies but have yet to benefit workers.
“They have been created; people have been promised, but nothing is coming because the funding is so onerous. In that respect, yes, the funding institutions need to come to the party, but I am hoping that government can also come to the party in terms of incentives. Can such funding structures be tax-exempt?” she asked.
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