Wealth gap: Gordhan made the circle a little bigger

2015-03-08 15:00

In 2013 Ketso Gordhan, then CEO at cement maker PPC, called his 60 top executives to a meeting and made an extraordinary announcement – and an extraordinary request.

He said he had cut his annual salary by R1?million and given up his increase. This money would be shared among the company’s 1?000 lowest-paid workers. He then asked startled executives to join his one-man salary freeze and give up their increases too. “Go home and think about it,” he told them. “Discuss it with your families.”

“The overwhelming majority,” says Gordhan, “came back and agreed to give up between 50% and 100% of their increases.”

Overnight, the annual take-home pay of 1?000 individual PPC workers rose by around R10?000. It is telling that about two years later – even after Gordhan’s acrimonious departure from PPC – the story has become corporate legend.

People still talk about it, even though the grand gesture – which significantly shrank the salary gap between the highest- and lowest-paid employees – may turn out to be just that: a grand gesture, no more enduring than passing the hat around.

By his own admission, Gordhan did not lock down his “Robin Hood thing” and it was never adopted as company policy. So what are the chances of those same workers continuing to get a salary top-up now that he’s gone? In the muddy aftermath of Gordhan’s failed bid to get his job back, the answer is not yet clear. But it’s safe to say that any new CEO who tries to reverse this decision is going to look pretty bad.

In his short 20 months at PPC, Gordhan started similar initiatives. These included helping employees – “300 people who were not living in proper houses” – to become homeowners by offering a R50?000 housing grant, conditional on the amount being matched by the employee through “shares, savings, second incomes, loans, whatever”.

But it is the Ketso Gordhan “here, take some of my money, I can spare it” model, with its human touch and good-guy gloss, that has been universally admired and is frequently cited as a bold example of how inequality can be addressed by tangible action.

On cutting his own salary from R6?million to R5?million a year: “Did it make a difference to my lifestyle? No. I can still go skiing at the end of the year. Did it make a difference to the lifestyles of the people who pocketed R10?000 a year more? Hell yes.” It is lines such as these that enhance Gordhan’s reputation as a straight shooter with guts and vision.

He admits to “being paid more than I’m worth” and states: “I don’t feel at all guilty about my wealth. Making money is not a bad thing. I drive a Porsche and live in Sandton.”

Gordhan (53) grew up in Durban in a family he describes as “lower middle class, rather than poor”. His father sold fabric for saris. A political animal, in the early days Gordhan cut his own coat according to the United Democratic Front’s cloth. The party was the legal face of the then banned ANC.

He was the ANC’s elections coordinator in the historic 1994 power switch, but it was only when he joined the transport ministry at age 33 that he earned his first salary.

“I felt very rich,” he says. He and a colleague in the same salary-virgins boat decided to give 5% of their monthly earnings to the Nelson Mandela Children’s Fund.

Twenty years on, he’s “disappointed” with the governing party – and is most concerned about what he sees as the root cause of inequality.

“Forget about the Gini coefficient,” he says, “Our Grade 3 pass rate is 30%. If a child can’t read, write or count by the age of nine, they have little future. This is my personal measure of how we’re doing as a country.”

Is inequality curable? “Of course it is – if two things change. We need consistent economic policy and strong leadership – someone with vision and balls. We have neither.

“What I achieved was not rocket science. It was leadership.”

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