Greedflation: High-paid CEOs drive inflation in US says study. What about SA?
Paula Luckhoff | The Money Show interviews Andrew Woodburn, MD of executive search consultancy Amrop Woodburn Mann.
CEOs are driving inflation in the US, according to the annual report by its top labour union federation.
Salary increases for company bosses far outpaced wage gains for working people, which failed to keep up with inflation the group asserts.
“CEOs, not working people, are causing inflation” says the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO).
Is so-called "greedflation" also a trend in South Africa?
The pay of workers is a drag on inflation, it is not growing faster than prices, but look at whose pay is rising much more than prices--and therefore putting upward pressure on inflation? Read the report, examine the numbers: https://t.co/cgI11jb6lA pic.twitter.com/6ScAIgtzJM— William E. Spriggs (@WSpriggs) July 18, 2022
Bruce Whitfield interviews Andrew Woodburn, MD of Johannesburg-based executive search consultancy Amrop Woodburn Mann.
Woodburn outlines the "interesting" hypothesis of greedflation:
"The CEO raises prices to make more profits so that he can earn more. But... that doesn't translate into what I studied, called macroeconomics."
None of the experts discussing the inflation increase in radio interviews on Wednesday talked about CEOs doing this, Woodburn notes.
But South Africa does have the element of a huge wage divide, Whitfield retorts.
Woodburn sketches the local scenario as he sees it.
Let's say, number one, that super-compensated CEOs are nothing new... and number two, what used to happen is that investors used to make all the money and the workers didn't make so much.Andrew Woodburn, MD - Amrop Woodburn Mann
Over the last 10-15 years, what we've seen is that the workers, i.e. the CEOs to start with, began to partake in the upside, hence people now getting super-compensation... and the journey continues...Andrew Woodburn, MD - Amrop Woodburn Mann
He says it's known globally that investors (believe it or not) are starting to act against the remuneration policies that companies want to pass.
And, in my opinion, there is definitely a journey towards reducing what they call the multiplier effect between the most well-paid individual in the company and the most lowly-paid person in the company.Andrew Woodburn, MD - Amrop Woodburn Mann
Woodburn believes South Africa is at the forefront of this movement because government has in their mind "how to raise the lot" of the working class.
What people don't talk about he says, is the individuals on shared schemes who are actually participating in the wealth generation efforts of their companies.
Certainly it's totally unfair when executives do take home mega-rewards and investors have lost money... but in general, if investors are making a return and executives are getting a reward, and we hope the workers take part in that reward in some way or another, then we're heading towards a more equitable system.Andrew Woodburn, MD - Amrop Woodburn Mann
Listen to Woodburn's analysis below:
This article first appeared on CapeTalk : Greedflation: High-paid CEOs drive inflation in US says study. What about SA?