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Johannesburg - The capping of wages and bonuses should be carefully considered as it could affect productivity and South Africa's ability to attract and keep much-needed skills, Business Unity SA (Busa) said on Thursday.
The New Growth Path economic strategy released by government last week suggests capping wages and bonuses paid to executives.
"This has serious implications for investment and productivity," said Raymond Parsons, deputy CEO of Busa, at a media briefing on the New Growth Path document in Johannesburg.
"We must remember we are competing globally for talent," added Simi Siwisa, economic policy director at Busa.
Last week, Economic Development Minister Ebrahim Patel said the document proposes "moderate wage settlements" for those earning between R3 000 and R20 000 a month, "possibly to inflation plus a modest real increase", with "inflation-level increases for those earning over R20 000 a month".
It also suggests that pay and bonuses for senior managers and executives earning over R550 000 a year be capped.
The debate about bonuses emerged during the global economic crisis, said Jerry Vilakazi, CEO of Busa.
At that time, there was no way to justify huge bonuses while retrenching employees. However, generally bonuses were linked to performance and necessary to retain the most mobile commodity, human skills, he said.
Siwisa said Busa was taking the proposal on wage capping seriously, but said "we must caution against unintended consequences".
Busa also questioned some of the job creation targets set in the document.
Parsons said it was "perhaps a little too ambitious" to expect to be able to create 300 000 job opportunities through agriculture smallholder schemes or to create 30 000 engineers by 2014.
The business organisation asked whether the document sufficiently addressed the need to reduce the number of people on welfare and enlarge the tax base.
"We have 14 million people on welfare and five million taxpayers... growth means more taxpayers," Parsons said.
"There is no apparent recognition of the lessons to be learned from incentivised poverty reduction in Brazil, Chile and Malaysia."
The New Growth Path economic strategy released by government last week suggests capping wages and bonuses paid to executives.
"This has serious implications for investment and productivity," said Raymond Parsons, deputy CEO of Busa, at a media briefing on the New Growth Path document in Johannesburg.
"We must remember we are competing globally for talent," added Simi Siwisa, economic policy director at Busa.
Last week, Economic Development Minister Ebrahim Patel said the document proposes "moderate wage settlements" for those earning between R3 000 and R20 000 a month, "possibly to inflation plus a modest real increase", with "inflation-level increases for those earning over R20 000 a month".
It also suggests that pay and bonuses for senior managers and executives earning over R550 000 a year be capped.
The debate about bonuses emerged during the global economic crisis, said Jerry Vilakazi, CEO of Busa.
At that time, there was no way to justify huge bonuses while retrenching employees. However, generally bonuses were linked to performance and necessary to retain the most mobile commodity, human skills, he said.
Siwisa said Busa was taking the proposal on wage capping seriously, but said "we must caution against unintended consequences".
Busa also questioned some of the job creation targets set in the document.
Parsons said it was "perhaps a little too ambitious" to expect to be able to create 300 000 job opportunities through agriculture smallholder schemes or to create 30 000 engineers by 2014.
The business organisation asked whether the document sufficiently addressed the need to reduce the number of people on welfare and enlarge the tax base.
"We have 14 million people on welfare and five million taxpayers... growth means more taxpayers," Parsons said.
"There is no apparent recognition of the lessons to be learned from incentivised poverty reduction in Brazil, Chile and Malaysia."
