News in South Africa 10th August:
1. Inflation worsens gender pay gap:
Women across the world are feeling the pinch as inflation rockets while the gender pay gap persists.
South Africa is ranked at number 123 out of 146 countries in the Global Gender Gap Report for 2022.
In South Africa, the issue was pushed firmly back into the spotlight after Banyana Banyana were crowned 2022 Women’s African Cup of Nations (Wafcon) champions.
The women’s soccer team far outperforms Bafana Bafana and government has now promised to address the pay disparity between the two national sides.
What can organisations do to address this perennial problem of gender pay disparity?
The Money Show interviewed Zanele Njapha, famously known in her field as ‘the Unlearning Lady’.
Njapha is an unlearning expert and innovation facilitator at specialist business consultancy TomorrowToday.
It really feels like one of those conversations that we’re always going to be having, and especially in South Africa. – Zanele Njapha, Unlearning Expert & Innovation Facilitator – TomorrowToday
We are still sitting at between 23% and 35% with our median gender pay gap at the moment. It is exacerbated in the local context by the fact that more than 40% of South African mothers are single parents. – Zanele Njapha, Unlearning Expert & Innovation Facilitator – TomorrowToday
I think that contextually, as a country, we’ve got all of these underlying systems that almost make it just a little bit harder for us to navigate this as individuals, but also as organisations. – Zanele Njapha, Unlearning Expert & Innovation Facilitator – TomorrowToday
She agrees that, considering there are so many single mother-headed households in South Africa, the priority is often to hold on to a job, rather than pushing for higher pay.
But, with that being the bigger conversation, women are constantly losing. – Zanele Njapha, Unlearning Expert & Innovation Facilitator – TomorrowToday
Another factor is that women in South Africa are living a lot longer than men, she says.
As a result, women will need more healthcare over the almost ten years they live longer than their male counterparts.
You’re also seeing that woman-headed households are about 40% poorer than those that are headed by males in South Africa. So all of the context really causes women in the workplace today to go ‘It’s better for me to just keep quiet’. – Zanele Njapha, Unlearning Expert & Innovation Facilitator – TomorrowToday
But what starts to happen when we hold the shorter end of the stick is you really start to feel the pinch of not asking for more, of not having the conversation and of not taking this almost leadership role around what it means to earn, but also to be well-compensated, in the workplace. – Zanele Njapha, Unlearning Expert & Innovation Facilitator – TomorrowToday
2. Radical Eskom tariffs:
Eskom has proposed that households pay a far greater portion of their bills in the form of fixed charges related to the supply of electricity (currently these are bundled into the price per unit of power).
This would see many of the suburban residential customers serviced directly by the utility, (e.g. Sandton and Soweto) paying hundreds of rands per month before using a single kilowatt-hour (kWh) of electricity.
In a major overhaul of its tariff structure, it plans to reintroduce a service and administration charge levied per day for the provision of its service.
While Eskom doesn’t state explicitly that the changes are due to the increasing proliferation of rooftop solar at residential properties, it will force those customers on to a new time-of-use tariff.
These changes are included in its 121-page submission to energy regulator Nersa for the restructuring of its tariffs from its next fiscal (2023/24).
Time to ‘modernise’
It says “existing tariff structures are outdated and need to be modernised to reflect the changing electricity environment and crucial decisions in this regard need to be made to protect the electricity industry”.
“For example, it is no longer appropriate to recover fixed costs only through variable kWh-based charges.”
It argues that the unbundling and restructuring of tariffs “will remove artificial subsidies, provide greater transparency of costs, ensure the correct economic signal, and reflect a more accurate payback period by comparing the energy cost of the utility versus the energy cost of the alternative and not including network cost bundled with the energy in the analysis”.
One can see from the following charts that low-consumption residential customers will pay more under the proposed tariffs.
At 0kWh, indicative charges (based on current tariffs) are R938, R1508, R3408, and R562 on each of the Homepower tariffs (1/2/3/4), respectively. Homepower tariffs are based on supply sizes. Suburban households would likely be on Homepower 1, with even larger properties on Homepower 2 or 3. Homepower 4 is for smaller/lower income households*.
Following its proposed changes, Eskom says that average monthly bills on its Homepower tariffs for residential customers will be 4% cheaper on its proposed unbundled tariffs.
It says “to make network charges more reflective of the cost drivers, there will be a gradual increase in the fixed network charge”.
“For this submission, the fixed network charge increased to 60% and the variable network charge reduced to 40%,” it adds.
Eskom says all rates in its proposed new tariff structure “will be updated based on the price increase process for the year of application”. In other words, the Nersa-approved increase for 2023/24 under the separate multi-year price determination will continue and be applied to the new structure, if approved.
3. Retirement law shake-up:
The National Treasury’s proposed amendments to South Africa’s retirement laws could spell a major shake-up in how people access their pension funds.
Joon Chong, a partner at law firm Webber Wentzel, said that under the draft reforms the National Treasury will introduce a ‘two-pot’ system for retirement savings allowing members of retirement funds to access one-third of their pension savings once a year, in the event of an emergency – while preserving the other two-thirds for retirement.
The new reforms are proposed in the 2022 Draft Revenue Laws Amendment Bill and are currently open for public comment until 29 August, said Chong. The new system is planned for 1 March 2023, although the Treasury said that this is probably optimistic.
The proposal is to split contributions into two pots for all retirement funds. However, in practice, members of longer-standing retirement funds will have three pots:
- The vested pot (amounts accumulated before the implementation date);
- 1/3 accessible savings pot, and;
- 2/3 retirement pot subject to full preservation until retirement (contributions after 1 March 2023 that have to be preserved until the retirement date).
This is regarded as a better alternative to people resigning their jobs to access their pensions or provident funds, said Chong.
Webber Wentzel provided ten important aspects of the proposed changes:
- Do not need to re-enrol: Existing members of funds do not have to re-enrol to access the two-pot system, as existing funds will be adapted to accommodate it. Each fund will have to review its rules to do so.
- Contributions will remain deductible: Up to specified caps contributions will remain deductible, but any contributions that are more than 27.5% of taxable income or R350,000 a year can only flow into the “retirement pot”.
- Vested pot valued immediately: All contributions and growth that are accumulated before 1 March 2023 (the “vested pot”) will have to be valued at the date immediately prior to implementation to enable the vesting of rights. The conditions that were attached to those contributions will remain in place.
- Savings pot starts in March: The “savings pot” will start to be accumulated from 1 March 2023, together with the “retirement pot”.
- Withdrawals taxable: Any amounts withdrawn from the savings pot will be included in the member’s taxable income for that tax year and taxed at the relevant marginal rate.
- Withdrawal limit: Only one withdrawal from the savings pot can be made a year, at a minimum of R2,000. All, or part of the amount accumulated in the savings pot up to the allowable withdrawal date each year can be taken out.
- Adding the pots together: On reaching retirement age, the member can add the savings pot to the retirement pot to purchase an annuity or can withdraw the full amount in the savings pot as cash, which will be taxed according to the retirement lump sum tables. The lump sum tables have more favourable tax rates (maximum of 36%) relative to the marginal rate tables that apply to annual withdrawals pre-retirement from the savings pot (maximum of 45%).
- Annuity purchase: On retirement, the total amount in the retirement pot must be used to purchase an annuity. The minimum amount that can be used to purchase an annuity is R165,000, amounts less than R165,000 in the retirement pot can be withdrawn as a lump sum.
- Vested pot withdrawals: Before retirement, it is still possible for a member to withdraw funds from the vested pot, and, as before, this withdrawal will be taxed according to the retirement lump sum tables.
- Transfers: Although no amounts can be transferred out of the retirement pot, transfers can be made into it from other pots (vesting, savings or retirement). No transfers can be made into the savings pot, unless from other savings pots. The retirement pot and the savings pot must be held in the same retirement fund (e.g., you cannot hold the savings pot in your old employer’s fund and the retirement pot in your new employer’s fund).
4. Defense Force troops on standby:
The South African National Defence Force (SANDF) has clarified its reported intention to deploy soldiers to certain streets in South Africa amid security concerns “that require an urgent and more robust intervention to calm the situation and protect [citizens]”.
In a statement issued on Monday night, Brigadier-General Andries Mokoena Mahapa said the ultimate decision on whether soldiers were deployed lay with President Cyril Ramaphosa, who had the executive authority to deploy SANDF personnel in support of other stakeholders to curb instability.
This comes after it was reported by TimesLIVE that Major-General Patrick Dube issued an order at the weekend for 200 soldiers to be on standby.
The leaked order, dated 6 August, stated that soldiers might be called “to play their secondary role… to support or cooperate with the South African Police Service (SAPS)”.
“The situation in the Republic of South Africa is gradually deteriorating into unrest due to criminality that is taking place within the borders. This is also exacerbated by a perceived lack of action from the security forces to combat criminality,” read the order.
Even if the 200 soldiers are deployed, they will not make much of a difference as the figure also includes support and logistical staff. “You need a whole lot more people to contain violence and ensure the safety of people in South Africa,” said Marais.
Before ordering such a deployment, President Ramaphosa is obliged to inform Parliament.
5. Pothole app launched:
Transport Minister, Fikile Mbalula, is encouraging the public to report potholes on a newly launched app so they can notify government where road repair needs to be done.
Addressing the launch of Operation Vala Zonke – a comprehensive programme to address potholes across all spheres of government, the minister said the app can be downloaded on Google Playstore and the Apple app store, reported SAnews.gov.za.
“The app will work in conjunction with the South African National Roads Agency (SANRAL) pothole management and will allow the public to raise any issues, upload pictures of potholes, and provide real-time location of the road on an interactive map that will show the owners of the different roads,” Mbalula said.
He added: “The app will also provide status updates on issues raised using a pothole ticketing system.”
The information will then get assigned to the relevant authority, depending on where the road is, and the maintenance depot responsible for that road attends to fixing the pothole, Mbalula said on Monday in Vanderbijlpark, Gauteng.
SANRAL will closely monitor and assess the impact of the interventions over the next six months, which is the duration of the campaign.
Mbalula said a monitoring and evaluation capability has been put in place, which will enable SANRAL to generate audit reports. SANRAL will co-ordinate the effort of working with the provinces and municipalities to ensure potholes are attended to.
“SANRAL has a policy of fixing any reported potholes within 48 hours. While national roads are overwhelmingly in a pristine condition, we recognise that provincial and municipal roads require a decisive strategy and active support to augment capacity gaps.
All information sourced from articles posted by: EWN, Moneyweb, Business Insider, BusinessTech and Daily Maverick.
