MNC Trend Report 2018 The Future of Work

Contents Acronyms...................................................................................................................................................... 3 List of Companies.......................................................................................................................................... 4 Introduction.................................................................................................................................................. 7 The Top Performers...................................................................................................................................... 8 Top 10 Employers..................................................................................................................................... 8 Top 10 Revenue........................................................................................................................................ 8 Top 10 Profit(before Tax)......................................................................................................................... 9 Top 10 CEOs.............................................................................................................................................. 9 Revenue& Profit within MNCs................................................................................................................... 11 Mining Sector: Revenue& Profit............................................................................................................ 12 Revenue.............................................................................................................................................. 12 Profit before Tax................................................................................................................................. 13 Construction Sector: Revenue& Profit................................................................................................... 15 Revenue.............................................................................................................................................. 15 Profit before Tax................................................................................................................................. 16 Food& Beverage Sector: Revenue& Profit............................................................................................ 18 Revenue.............................................................................................................................................. 18 Profit before Tax................................................................................................................................. 19 Industrial Sector: Revenue& Profit........................................................................................................ 21 Revenue.............................................................................................................................................. 21 Profit................................................................................................................................................... 22 Banking& Financial Services: Revenue& Profit..................................................................................... 24 Revenue.............................................................................................................................................. 24 Profit................................................................................................................................................... 25 Paper& Packaging Sector: Revenue& Profit......................................................................................... 27 Revenue.............................................................................................................................................. 27 Profit before Tax................................................................................................................................. 28 Transport Sector: Revenue& Profit........................................................................................................ 29 Revenue.............................................................................................................................................. 29 Profit................................................................................................................................................... 30 Diversified Holdings Sector: Revenue& Profit....................................................................................... 32 Revenue.............................................................................................................................................. 32 1

Profit................................................................................................................................................... 34 Health...................................................................................................................................................... 36 Revenue.............................................................................................................................................. 36 Profit................................................................................................................................................... 37 Hospitality............................................................................................................................................... 39 Revenue.............................................................................................................................................. 39 Profit................................................................................................................................................... 40 Retail Sector: Revenue& Profit.............................................................................................................. 41 Revenue.............................................................................................................................................. 41 Profit before Tax................................................................................................................................. 42 Technology and Telecommunications Sector: Revenue& Profit........................................................... 44 Revenue.............................................................................................................................................. 44 Profit................................................................................................................................................... 45 Media Sector& Education, Bus, Training& Employment...................................................................... 46 Revenue.............................................................................................................................................. 46 Profit................................................................................................................................................... 46 Directors’ Remuneration............................................................................................................................ 48 KING IV Continued.................................................................................................................................. 48 Mining Sector.......................................................................................................................................... 49 Construction............................................................................................................................................ 52 Food and Beverage................................................................................................................................. 54 Industrial................................................................................................................................................. 56 Paper& Packaging.................................................................................................................................. 58 Transport................................................................................................................................................. 60 Banking& financial Services................................................................................................................... 62 Diversified Holdings................................................................................................................................ 64 Education, Bus, Training& Employment................................................................................................ 66 Health...................................................................................................................................................... 68 Hospitality............................................................................................................................................... 70 Media...................................................................................................................................................... 72 Retail....................................................................................................................................................... 74 Technology& Telecommunications........................................................................................................ 76 Summary of Findings............................................................................................................................... 78 2

The Wage Gap......................................................................................................................................... 81 The Future of Work..................................................................................................................................... 82 Introduction............................................................................................................................................ 82 Technological Changes in the Retail Sector............................................................................................ 83 What Is The Reality In The Developing World?...................................................................................... 84 Flexibility in the Retail Sector.................................................................................................................. 86 A Response: The Broader Framework.................................................................................................... 88 A Response: Bargaining at the Workplace.............................................................................................. 89 Conclusion............................................................................................................................................... 90 Bibliography................................................................................................................................................ 92 Acronyms CEO FES-TUCC GUF HR LRS LTI MNC PBT STI AI HDI IT LSM OECD Chief Executive Officer Friedrich Ebert Stiftung Trade Union Competence Centre for Sub-Saharan Africa Global Union Federation Human Recourses Labour Research Service Long-Term Incentives Multinational Corporation Profit before Tax Short-Term Incentives Artificial Intelligence Human Development Index Information Technology Living Standards Measure Organisation for Economic Co-operation and Development 3

List of Companies Company Barclays Africa Group Discovery FirstRand Bank Investec Liberty Holdings Nedbank RMB Holdings Sanlam Standard Bank Group Aveng Basil Read Group Five Murray& Roberts Pretoria Portland Cement WBHO Barloworld Limited Bidvest Hosken Consolidated Investments Remgro Seardel Investments Adcorp Holdings limited Anglo-Vaal Industries Astral Foods Clover Industries Crookes Brothers Distell Pioneer Foods RCL Foods Tiger Brands Tongaat Hulett Adcock Ingram AfroCentric Investments Corporation Aspen Holdings Life Healthcare Group Mediclinic Network Healthcare Holdings City Lodge Hotels Sun International Tsogo Sun Holdings Financial Year End 12/31/2017 6/30/2017 6/30/2017 3/31/2017 12/31/2017 12/31/2017 6/30/2017 12/31/2017 12/31/2017 6/30/2017 12/31/2017 6/30/2017 6/30/2017 3/30/2017 6/30/2017 9/30/2017 6/30/2017 3/31/2017 6/30/2017 6/30/2017 2/28/2017 6/30/2017 9/30/2017 6/30/2017 3/31/2017 6/30/2017 9/30/2017 6/30/2017 9/30/2017 3/31/2017 6/30/2017 6/30/2017 6/30/2017 9/30/2017 3/31/2017 9/30/2017 6/30/2017 12/31/2017 3/31/2017 Sector Banking and Financial Services Construction Diversified Holdings Education, Bus Training& Employment Food and Beverage Health Hospitality 4

AECI African Oxygen Altron ArcelorMittal SA Denel Eskom Holdings Limited Invicta Holdings Reunert Sasol Caxton CTP Naspers African Rainbow Minerals Anglo American Platinum Anglo American plc AngloGold Ashanti Assore limited BHP Billiton Exxaro Glencore Xstrata Gold Fields Harmony Gold Impala Platinum Kumba Iron Ore Limited Lonmin plc Petra Diamonds Sibanye Gold Trans Hex Mondi Group Nampak Sappi Cashbuild Foschini Massmart Mr Price Pick n Pay Stores Ltd Shoprite Spar Truworths Woolworths MTN Group Telkom Vodacom Group Limited 12/31/2017 12/31/2017 2/28/2017 12/31/2017 3/31/2017 3/31/2017 3/31/2017 9/30/2017 6/30/2017 6/30/2017 3/31/2017 6/30/2017 12/31/2017 12/31/2017 12/31/2017 5/30/2017 6/30/2017 12/31/2017 12/31/2017 12/31/2017 6/30/2017 6/30/2017 12/31/2017 9/30/2017 6/30/2017 12/31/2017 3/31/2017 12/31/2017 9/30/2017 9/30/2017 6/30/2017 3/31/2017 12/31/2017 3/31/2017 2/26/2017 7/2/2017 9/30/2017 7/2/2017 6/25/2017 Industrial Media Mining Paper and Packaging Retail 3/31/2017 3/31/2017 Technology and Telecommunications 5

ACSA Cargo Carriers Grindrod Imperial Holdings South African Airways Super Group Transnet 3/31/2017 2/28/2018 12/31/2017 6/30/2017 3/31/2017 6/30/2017 3/31/2017 Transport 6

Introduction The Labour Research Service(LRS) Multinational Corporation(MNC) Database was created in partnership with the Friedrich-Ebert-Stiftung Trade Union Competence Centre for Sub-Saharan Africa(FES-TUCC) and is now entering its eighth year of existence. The aims of this database and concomitant report have remained the same: The aim of the South African MNC Database and relevant MNC Trend Report is to broaden support for Global Union Federations(GUFs), national federations and unions to build alliances for regional and international campaigns; to support efforts of workers to transform Governance and Industrial Relations policies and practices of South African MNCs in which they organise through the provision of relevant information and by building capacity within the unions to research and monitor these companies. The 8 th MNC Trend Report provides an overview of the company information contained in the SA MNC Database. The database includes company finances, operations, remuneration and geographical spread of 91 South African MNCs that operate across Africa. The MNC Database has been populated with this information since 2008, which provides a unique dataset from which to analyse financial trends. This report is focused on two main areas of study. Firstly, the financial trends of the 91 sampled companies are analysed within 14 economic sectors, including revenue growth as well as revenue compared to competitors. In addition to this, each company’s profit before tax(PBT) is analysed compared to its sector and competitors. Within this context, the remuneration strategies of the top level of directors is analysed. Finally, we take a quick look at the total remuneration packages of directors compared to the lowest employees in the company. The last section of this report, tit led‘the Future of Work’, takes a closer look at the developments around the automation of jobs. This section aims to put this within the broader context of the developing world, as opposed to the developed world. It is questioned whether the reality in the developed world is a reality in Africa, and also makes some suggestions as to how unions and workers can use technology to further their own agendas. The LRS MNC Database can be found online – the information found in this report is available immediately for free download from the LRS and FES-TUCC websites at http://www.lrs.org.za/mnc and http://www.lrs.org.za/mnc/?set=info&fes 7

The Top Performers Top 10 Employers When listing the top employers by number of employees, Glencore Xstrata comes out on top. However, Glencore operates across the world, whereas Shoprite operates exclusively in Africa. This makes Shoprite the largest employer in Africa when compared to the other MNCs on our list. Many companies don’t specify between outsource and in house employees. So, while being t he top employer in Africa, it’s unclear whether Shoprite makes use of labour brokers, and to what extent. Company Glencore Xstrata Shoprite Bidvest Adcorp Holdings limited Anglo American plc Sibanye Gold BHP Billiton Transnet Pick n Pay Stores Ltd Standard Bank Group Sector Mining Retail Diversified Holdings Education, Bus Training& Employment Mining Mining Mining Transport Retail Banking and Financial Services Total Employees 154832 143802 117705 84056 69000 66472 60644 58828 54400 54047 Employees Employees ( In house)( Outsource d) 3758 53139 26146 53661 48322 80298 13278 34498 5167 5725 Top 10 Revenue The top 10 companies by revenue are dominated by mining and industrial, the top three being mining companies, followed by Eskom Holdings and Sasol, both in the Industrial sector. Shoprite remains a big player in sixth position, affirming its place as a retail giant on the continent. Company Name Glencore Xstrata BHP Billiton Anglo American plc Eskom Holdings Limited Sasol Shoprite MTN Group Standard Bank Group Sector Mining Mining Mining Industrial Industrial Retail Technology and Telecommunications Banking and Financial Services 2017 Revenue(ZAR) 2.78E+12 4.79E+11 3.75E+11 1.77E+11 1.72E+11 1.41E+11 1.33E+11 1.28E+11 8

Imperial Holdings Sanlam Transport Banking and Financial Services 1.2E+11 1.14E+11 Top 10 Profit(before Tax) The Mining and Banking and Financial services sectors are making large amounts of profit, with Naspers (in the Media sector) coming in fourth with a profit of over ZAR 41 billion. CompName BHP Billiton Glencore Xstrata Anglo American plc Naspers Standard Bank Group FirstRand Bank Sasol Kumba Iron Ore Limited Barclays Africa Group Vodacom Group Limited Sector Mining Mining Mining Media Banking and Financial Services Banking and Financial Services Industrial Mining Banking and Financial Services Technology and Telecommunications Profit before Tax ZAR 1.46913E+11 93527027027 78642857143 41243243243 41194000000 33157000000 30008000000 21688000000 20879000000 19228000000 Top 10 CEOs The top paid CEOs by total remuneration is led by Naspers CEO Bob van Dijk, whose total remuneration package was increased significantly because of a very large LTI payment. Cutifani of Anglo American PLC and Ralphs of Bidvest received large LTIs of ZAR 46 million and ZAR 89 million respectively. Neither Basson of Shoprite nor Munro of Liberty Holdings were paid an LTI, but both made it to the top ten with very large salaries. This is explored in more depth later in the report. Company Name Industry Naspers Media Anglo American plc Bidvest Mr Price BHP Billiton Mining Diversified Holdings Retail Mining Liberty Holdings Sibanye Gold Banking and Financial Services Mining CEO Dijk Cutifani Ralphs Bird Mackenzie Munro Froneman Salary ZAR 1491891 9 2143333 3 9164000 Cash bonus ZAR 13148649 34616667 7227000 Benefits ZAR 1689189 7000000 825000 Other payments ZAR 0 2133333 912000 LTI payment ZAR 1.41E+08 46383333 89606000 Total 1.7E+08 1.12E+08 1.08E+08 5859000 2125000 0 3919000 0 24025000 4125000 1448000 6437500 723000 0 475000 57107000 85336000 36937500 0 93366000 88650000 65626000 1026500 0 15158000 1103000 174000 25956000 52656000 9

Shoprite FirstRand Bank Assore limited Retail Banking and Financial Services Mining Basson Burger Cory 4965600 0 9328000 0 13900000 64000 4120000 394000 2446000 0 20250000 50114000 50044000 5666000 13777000 1531000 28778000 0 49752000 10

Revenue& Profit within MNCs Companies often cite a decrease in revenue or profit as a reason why wage and labour demands can’t be met. Companies can report revenue as a negative, for example, a 10% decrease in revenue. And while revenue may indeed have decreased, this could mean slower growth than the year before, as opposed to actual losses. In this way, numbers specifically related to growth can be misconstrued. This section looks at the revenue and profit of the MNCs included in the list above. The objective is to show information that will enable unions to establish to what extent claims of lowered revenue and profit are factual and to monitor company performance. The section also gives unions an overview of the performance of companies in their sector, which in turn provides a bigger picture within which to assess company performance. 11

Mining Sector: Revenue& Profit Revenue The mining sector has shown a significant increase in revenue, at 22% from 2016 to 2017. Big players like Glencore Xstrata, BHP Billiton and Anglo American Platinum have had significant increases in revenue during this time. This is in contrast to the previous year when both Glencore and BHP Billiton showed limited or no growth. Gold Fields, African Rainbow Minerals Petra Diamonds and Trans Hex decreased in revenue. Sibanye Gold saw the largest growth in revenue by almost 46%. Mining Sector Revenue(ZAR) Trans Hex Petra Diamonds Assore limited African Rainbow Minerals Lonmin plc Harmony Gold Exxaro Impala Platinum Gold Fields Sibanye Gold Kumba Iron Ore Limited AngloGold Ashanti Anglo American Platinum Anglo American plc BHP Billiton Glencore Xstrata 0 5E+11 2017 1E+12 2016 2015 1.5E+12 2014 2013 2E+12 2.5E+12 3E+12 12

6E+11 5E+11 4E+11 3E+11 2E+11 1E+11 0 Mining Sector Average Revenue(ZAR) 4.35097E+11 4.63326E+11 3.98394E+11 4.09795E+11 2013 2014 2015 average 2016 5.00662E+11 2017 Profit before Tax As a percentage of revenue, Kumba Iron Ore limited has made significant PBT. While having a significant increase in revenue, Sibanye Gold is operating at a loss of ZAR 7 Billion. Lonmin plc operated at a loss of 0ver ZAR 16 Billion. On average the mining sector seems to have increased its PBT significantly from 2016 when on average these MNCs were operating at a loss. Mining Sector PBT -40% Trans Hex Sibanye Gold Petra Diamonds Lonmin plc Kumba Iron Ore Limited Impala Platinum Harmony Gold Gold Fields Glencore Xstrata Exxaro BHP Billiton Assore limited AngloGold Ashanti Anglo American plc Anglo American Platinum African Rainbow Minerals -20% 0% 20% 40% 60% 80% 100% Average Profit before Tax ZAR Cost of Operations 13

2.5E+10 Mining MNC Average PBT(ZAR) 2E+10 1.5E+10 1E+10 5E+09 0 -5E+09 2012 2013 2014 2015 2016 2017 -1E+10 2012 2013 2014 2015 2016 2017 14

Construction Sector: Revenue& Profit Revenue Average revenue in the construction sector has been decreasing incrementally since 2014. In the period 2016- 2017, revenue decreased by around 10.7% on average. All companies in this sector have seen a decrease in revenue, with the exception of Pretoria Portland Cement, which grew by a significant 114%, and WBHO which has been steadily growing since 2012(2016 – 2017 growth: 4.10%). Construction MNC Revenue(2013-2017) Basil Read Pretoria Portland Cement Group Five Murray& Roberts Aveng WBHO 0 1E+10 2017 2E+10 3E+10 2016 2015 2014 4E+10 2013 5E+10 6E+10 15

3E+10 2.5E+10 2E+10 1.5E+10 1E+10 5E+09 0 18678165667 2012 Average Revenue 22619351333 24280520500 22124091833 2013 2014 Average 2015 18992335333 2016 16963801000 2017 Profit before Tax While PBT in the construction sector has seen a steady decrease since 2009, 2016 experienced a 24% average increase. This increase in PBT can be explained by the growth in profit within WBHO, Murray& Roberts, Group Five and Aveng. Constuction MNC PBT WBHO Pretoria Portland Cement Murray& Roberts Group Five Basil Read Aveng -20% 0% 20% 40% 60% 80% Average Profit before Tax ZAR Cost of Operations 100% 16

1.5E+09 Construction MNC Average PBT 1E+09 500000000 0 -5E+08 2013 2014 2015 2016 2017 -1E+09 -1.5E+09 2013 2014 2015 2016 2017 17

Food& Beverage Sector: Revenue& Profit Revenue There has been a steady increase in average revenue in this sector over the last five years, with a 1.5% increase from 2016 to 2017. Crooks Brothers increased their revenue by over 22%, while Pioneer Foods, Tiger Brands and RCL Foods saw small decreases. Food& Beverage MNC Revenue(ZAR) Crookes Brothers Clover Industries Astral Foods Anglo-Vaal Industries Tongaat Hulett Pioneer Foods Distell RCL Foods Tiger Brands 0 5E+09 1E+10 2017 2016 1.5E+10 2015 2014 2E+10 2013 2.5E+10 2012 3E+10 3.5E+10 18

Food& Beverage MNC Average Revenue 1.8E+10 1.6E+10 1.4E+10 1.2E+10 1E+10 8E+09 6E+09 4E+09 2E+09 0 2012 2013 2014 2015 2016 2017 Average Profit before Tax The PBT in the food and beverage sector shows a small decrease from 2016(3.56%). Both Astral Foods and RCL Foods have increased their PBT significantly from 2016. Tongaat Hulett Tiger Brands RCL Foods Pioneer Foods Distell Crookes Brothers Clover Industries Astral Foods Anglo-Vaal Industries 0% Food& Beverage MNC PBT 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Revenue ZAR Cost of Operations 19

Food& Beverage MNC Average PBT 1.6E+09 1.4E+09 1.2E+09 1E+09 800000000 600000000 400000000 200000000 0 2012 2013 2014 2015 2016 2017 Average 20

Industrial Sector: Revenue& Profit Revenue MNCs in the industrial sector have in average had a revenue increase of just over 3%. State-owned entity Eskom continues to grow with a revenue increase of 8.41% in this period, while Denel saw a loss in revenue of around 2%. Altron saw a big drop in revenue of almost 26%. Industrail MNC Revenue(ZAR) African Oxygen Denel Reunert Invicta Holdings AECI Altron ArcelorMittal SA Sasol Eskom Holdings Limited 0 5E+10 2017 2016 1E+11 2015 1.5E+11 2014 2013 2E+11 2.5E+11 21

Average 5.2E+10 5.1E+10 5E+10 4.9E+10 4.8E+10 4.7E+10 4.6E+10 4.5E+10 4.4E+10 4.3E+10 4.2E+10 2013 2014 2015 2016 2017 Average Profit On average, companies in this sector have increased their profit by about 5%. Altron and ArcelorMittal SA continue to operate at a loss. Eskom took a big hit in terms of PBT decreasing profit by over 80%. Both Sasol and AECI grew PBT by over 20%. Altron saw a huge increase of 84%, while Invicta grew it’s PBT by 59.51%. Industrail MNC PBT(ZAR) ArcelorMittal SA Altron Denel African Oxygen Invicta Holdings Eskom Holdings Limited AECI Reunert Sasol -20% 0% 20% 40% 60% 80% Average Profit before Tax ZAR Cost of Operations 100% 22

Industrial MNC Average PBT 7E+09 6E+09 5E+09 4E+09 3E+09 2E+09 1E+09 0 2012 2013 2014 2015 2016 2017 Average 23

Banking& Financial Services: Revenue& Profit Revenue The banking and financial sector has shown positive growth in revenue since 2007 despite a slight decrease in 2015. The revenue growth rate for 2016 – 2017 was, on average, just over 5%. Sanlam and Liberty Holdings bank have both shown considerable increases in revenue between 2015 and 2016. Banking& Financial Services Revenue 2013-2017 RMB Holdings Discovery Investec FirstRand Bank Nedbank Barclays Africa Group Liberty Holdings Sanlam Standard Bank Group 0 5E+10 2017 2016 1E+11 2015 2014 2013 1.5E+11 2E+11 24

Banking& Financial Services Average Revenue 7E+10 6E+10 5E+10 4E+10 3E+10 2E+10 1E+10 0 2012 2013 2014 2015 2016 2017 Profit All the companies in the banking and financial services sector had positive PBT levels and there was an average overall increase of 11.45%. Barclays Africa saw a small decrease in profit of around 3.7%, while Liberty Holdings grew their profit by over 66%. PBT as% of Revenue Standard Bank Group Sanlam RMB Holdings Nedbank Liberty Holdings Investec FirstRand Bank Discovery Barclays Africa Group 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Average Profit before Tax ZAR Cost of Operations 25

Banking& Financial MNC Average PBT 2E+10 1.8E+10 1.6E+10 1.4E+10 1.2E+10 1E+10 8E+09 6E+09 4E+09 2E+09 0 2012 2013 2014 2015 2016 2017 Average 26

Paper& Packaging Sector: Revenue& Profit Revenue In the paper and packaging sector, Mondi Group showed the highest revenue growth in the time period, growing by 6.51%. It’s further noted that there has been an overall 4% increase in average revenue between 2016 and 2017. This increase builds on the increasing revenue levels experienced since 2008. Paper& Packaging Revenue(ZAR) Nampak Sappi Mondi Group 0 7E+10 6E+10 5E+10 4E+10 3E+10 2E+10 1E+10 0 2012 2E+10 2017 4E+10 2016 6E+10 2015 2014 8E+10 2013 2012 Paper& Packaging Average Revenue 1E+11 1.2E+11 2013 2014 average 2015 2016 2017 27

Profit before Tax The PBT in the Paper and Packaging sector slowed down growth in 2017, increasing by 0.88% on average. However, this is largely due to Nampak seeing a decrease of over 66% in PBT. Paper& Packaging PBT Sappi Nampak Mondi Group 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Average Profit before Tax ZAR Cost of Operations Paper& Packaging Average PBT 8E+09 7E+09 6E+09 5E+09 4E+09 3E+09 2E+09 1E+09 0 2012 2013 2014 2015 2016 2017 average 28

Transport Sector: Revenue& Profit Revenue Average revenue in the transport sector has been increasing steadily since 2007. In the 2016/17 period, a 1% increase in the revenue growth rate took place. On an individual basis, the only company that experienced a decrease in revenue was Grindrod, sustaining more losses in 2016. Transport MNCs Revenue(ZAR) Cargo Carriers Grindrod ACSA Super Group South African Airways Transnet Imperial Holdings 0 5E+10 1E+11 2017 2016 2015 2014 2013 2012 1.5E+11 29

Transport Average Revenue 4E+10 3.5E+10 3E+10 2.5E+10 2E+10 1.5E+10 1E+10 5E+09 0 2012 2013 2014 2015 2016 2017 average Profit The overall PBT within the MNCs sampled in the transport sector has shown a decrease of 26%. This is largely due to the fact that South African Airways(SAA) decreased their PBT by almost 300%. Transnet and Super Group are the only MNCs that increased their PBT from 2016 to 2017. Transnet Super Group South African Airways Imperial Holdings Grindrod Cargo Carriers -20% ACSA 0% Transport MNC PBT 20% 40% 60% 80% Average Profit before Tax ZAR Cost of Operations 100% 30

2.5E+09 Transport PBT Average 2E+09 1.5E+09 1E+09 500000000 0 2012 2013 2014 average 2015 2016 2017 31

Diversified Holdings Sector: Revenue& Profit Revenue On average the companies within the diversified holdings sector experienced a revenue decrease of 1.11%. Both Bidvest and Seardel investments saw 4% and 6% revenue increase respectively, while the other companies in this group saw small losses. *The group of companies studied this year does not include Steinhoff due to irregularities. 32

Revenue(2012-2017) Seardel Investments Hosken Consolidated Investments Remgro Barloworld Limited Bidvest 0 5E+10 1E+11 2017 2016 2015 2014 2013 2012 1.5E+11 2E+11 33

Average Revenue(2012-2017) 6E+10 5E+10 4E+10 3E+10 2E+10 1E+10 0 2012 2013 2014 average 2015 2016 2017 Profit PBT of companies within the diversified holdings sector increased by over 60% on average. This is partly due to Remgro’s significant PBT growth from negative growth to over ZAR 1.1 billion. Both Bidvest and Hosken Consolidated Investments grew, while Seardel investments and Barloworld limited lost 4.49% and 11.20% respectively. Diversified Holdings PBT Seardel Investments Remgro Barloworld Limited Hosken Consolidated Investments Bidvest 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Average Profit before Tax ZAR Cost of Operations 34

Diversified Holdings MNC Average PBT 4E+09 3.5E+09 3E+09 2.5E+09 2E+09 1.5E+09 1E+09 500000000 0 2012 2013 2014 2015 2016 2017 average 35

Health Revenue In the health sector, Mediclinic showed the highest revenue margins. There has been an average increase in revenue of 20.22%. This increase builds on the increasing revenue levels experienced since 2007. Network Healthcare Holdings lost just over 9% in revenue, the only MNC in this sector to do so. Health MNC Revenue AfroCentric Investments Corporation Adcock Ingram Life Healthcare Group Network Healthcare Holdings Aspen Holdings Mediclinic 0 2017 1E+10 2016 2015 2E+10 3E+10 2014 2013 2012 4E+10 5E+10 36

Health MNC Average Revenue 3E+10 2.5E+10 2E+10 1.5E+10 1E+10 5E+09 0 2012 2013 2014 average 2015 2016 2017 Profit During 2012 there was a sharp decrease in the average profit made in this sector as a result of Network Healthcare Holdings making a ZAR 11 billion loss in this year. Both Life Healthcare and Network Healthcare Holdings made significant losses to profit in 2017, which makes the average PBT loss from 2016 to 2017 24.1%. Health MNC Profit Network Healthcare Holdings Mediclinic Life Healthcare Group Aspen Holdings AfroCentric Investments Corporation Adcock Ingram -20% 0% 20% 40% 60% 80% 100% Average Profit before Tax ZAR Cost of Operations 37

Health MNC Average PBT 3.5E+09 3E+09 2.5E+09 2E+09 1.5E+09 1E+09 500000000 0 -5E+08 -1E+09 2012 2013 2014 2015 2016 2017 average 38

Hospitality Revenue In this sector, on average, revenue grew by 16.91%. Sun International grew an impressive 28.09% in revenue, while Tsogo Sun Holdings and City Lodge Hotels grew by 7.64% and 1.82% respectively. Hospitality MNC Revenue City Lodge Hotels Tsogo Sun Holdings Sun International 0 1.2E+10 1E+10 8E+09 6E+09 4E+09 2E+09 0 2012 5E+09 2017 2016 2015 1E+10 2014 2013 1.5E+10 2012 Hospitality Sector Revenue(ZAR) 2013 2014 average 2015 2016 2E+10 2017 39

Profit Sun International operated at a loss in 2016 but regained significant ground on PBT in 2017, making over ZAR 1.3 billion in PBT in 2017. City Lodge Hotels lost around 6% in PBT, while Tsogo Sun Holdings increased its PBT by 43.96%. Hospitality MNV PBT Tsogo Sun Holdings Sun International City Lodge Hotels 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Average Profit before Tax ZAR Cost of Operations Hospitality Average PBT 2E+09 1.8E+09 1.6E+09 1.4E+09 1.2E+09 1E+09 800000000 600000000 400000000 200000000 0 2012 2013 2014 2015 2016 2017 average 40

Retail Sector: Revenue& Profit Revenue Revenue across the retail sector reflects a positive picture of growth across all companies, with the exception of Mr Price which made a revenue loss of 1.2%. Between 2016 and 2017, there was an average increase in revenue of 6.02%, building on the growth from the previous year. Shoprite continues to dominate in terms of revenue with over ZAR 141 billion and growth of 8.44%. Retail MNC Revenue(ZAR) Cashbuild Mr Price Truworths Foschini Woolworths Pick n Pay Stores Ltd Massmart Spar Shoprite 0 2017 5E+10 2016 2015 2014 2013 1E+11 2012 1.5E+11 41

9E+09 8E+09 7E+09 6E+09 5E+09 4E+09 3E+09 2E+09 1E+09 0 Retail Average Revenue(ZAR) 2012 2013 average 2014 2015 2016 2017 Profit before Tax The table below illustrates PBT as a percentage of total revenue. While Shoprite operates at a small PBT percentage, this small percentage still mean a profit of ZAR 7,615,000,000 or ZAR 7.6 billion. Mr Price and Truworths both saw small losses in PBT, while Woolworths, Shoprite, Pick& Pay and Massmart each had over 10% growth in PBT. Retail PBT Woolworths Truworths Spar Shoprite Pick n Pay Stores Ltd Mr Price Massmart Foschini Cashbuild 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Average Profit before Tax ZAR Cost of Operations 42

Retail Average PBT 4E+09 3.5E+09 3E+09 2.5E+09 2E+09 1.5E+09 1E+09 500000000 0 2012 2013 2014 2015 2016 2017 average 43

Technology and Telecommunications Sector: Revenue& Profit Revenue Average revenue growth within the technology and telecommunications sector was found to be 3% between 2015 and 2016. None of the relevant companies saw any decreases in their revenue streams. Revenue(2013-2017) Telkom Vodacom Group Limited MTN Group 0 9E+10 8.8E+10 8.6E+10 8.4E+10 8.2E+10 8E+10 7.8E+10 7.6E+10 7.4E+10 7.2E+10 2012 5E+10 2017 2016 2015 1E+11 2014 2013 Average 2013 2014 Average 2015 1.5E+11 2016 2E+11 2017 44

Profit The average PBT levels in the technology and telecommunications sector reached 23.50% in 2017. All three companies have seen growth, with MTN Group most significantly increasing its PBT. In the below graph, we can see that Vodacom Group Limited takes a larger percentage of revenue as profit, and made PBT of over ZAR 19 billion in 2017. MTN Group, which took the smallest percentage of revenue as PBT, made over ZAR 9.5 billion in PBT. Technology& Communication PBT Vodacom Group Limited Telkom MTN Group 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Average Profit before Tax ZAR Cost of Operations Technology& Telecommunications Average PBT 3E+10 2.5E+10 2E+10 1.5E+10 1E+10 5E+09 0 2012 2013 2014 average 2015 2016 2017 45

Media Sector& Education, Bus, Training& Employment Revenue The only company currently in the Education, Bus, Training& Employment sector, Adcorp Holdings Limited, continues to see year on year revenue growth. From 2016 to 2017, the company’s revenue grew by 3.13%. Adcorp Holdings limited Revenue 1.8E+10 1.6E+10 1.4E+10 1.2E+10 1E+10 8E+09 6E+09 4E+09 2E+09 0 2010 2011 2012 2013 2014 2015 2016 2017 Of two companies in the media sector, Naspers by far exceeds Caxton CTP in revenue. Naspers saw a marginal loss of 2.73% in revenue, while Caxton grew by a marginal 0.03%. Media Sector Revenue Caxton CTP Naspers 0 2E+10 4E+10 6E+10 8E+10 1E+11 2017 2016 2015 2014 2013 2012 Profit Naspers has increased their PBT by more than 128%- resulting in PBT of over ZAR 41 billion. This far exceeds its competitor Caxton CTP of ZAR 610 million. Adcorp operated at a PBT loss of 76.04%. 46

Adcorp Holdings limited Education& Media PBT Caxton CTP Naspers 0 Caxton CTP 1E+10 2017 2016 2E+10 2015 2014 3E+10 2013 2012 Media Sector PBT 4E+10 5E+10 Naspers 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Average Profit before Tax ZAR Cost of Operations 47

Directors’ Remuneration The largest part of directors’ remuneration is made up of additional benefits – contrary to how workers get paid. These benefits include pension, medical aid, car allowances and also bonuses linked to performance. Performance bonuses are usually in the form of short-term incentives(STIs) or long-term incentives(LTIs). STIs and LTIs are linked to financial performance – this could include metrics like earnings per share, profit, and revenue or market performance. LTIs are often hard to determine for an outsider as there is a lack of transparency associated with this kind of payment. These kinds of payments can be hidden in longer term share incentives. Some companies exclude LTIs from remuneration packages. LTIs often make a large percentage of directors’ total remuneration. Companies increasingly use bonuses as long-term retention plans where a portion of the bonus earned is deferred, or increase after a certain amount of years(as well as linked to performance conditions).The reporting on this is not clear, and this could prohibit the public as well as unions from seeing the full picture of directors pay. 1 Similar to 2016, few companies report adequately if at all on the remuneration of employees. This makes it difficult to determine the wage gap between the higher levels(directors) and workers. This section takes a closer look at director remuneration, removing some of the guesswork for each sector. KING IV Continued The previous MNC Trend Report took a closer look at King IV – the set of principles guiding reporting for listed MNCs in South Africa: The King Report on Corporate Governance is a ground-breaking booklet of guidelines for the governance structures and operation of companies in South Africa(MNC Report, 2017). Remuneration of directors is one of the most debated topics in the corporate governance arena, due to the tension between stakeholders demanding to understand directors’ remuneration and the directors’ desire for the privacy of their financial affairs. In line with internatio nal developments, remuneration is receiving far greater prominence in King IV(Institute of Directors Southern Africa, 2016). King IV specifically notes the gap between executive directors’ remuneration and that of workers. King IV compels companies to address this gap, noting that executive remuneration should be‘fair and responsible’. 1 METHODOLOGICAL NOTE: Within this report, remuneration is considered including and excluding LTI. This is done given the fact that LTIs are not exercised to the same extent in every year and could, therefore, distort the true nature of remuneration packages and trends. 48

Mining Sector In the mining sector, executive salary on average decreased by 4.73%, while total remuneration increased by 2.65%. Non-Executive salaries decreased on average by just over 10%, however total annual salaries decreased by only 2.51%. Anglo American plc CEO Mark Cutifani is the highest paid CEO in this sector, with over ZAR 111 million as total remuneration package, ZAR 46 million of which was paid as an LTI. BHP Billiton CEO Andrew Stewart Mackenzie’s annual remuneration package cam e to over ZAR 51 million. Mackenzie was also paid an LTI of ZAR 36.9 million, making him the second highest paid in this sector. Lonmin plc, Impala Platinum, Trans Hex, Sibanye Gold, Harmony Gold and Anglo Gold Ashanti all operated at a loss, but still managed to pay their CEOs respectively: ZAR 18.4 million; ZAR 12.4 million; ZAR 65 million; ZAR 52.6 million; ZAR 11 million; and ZAR 28 million. Mining ceo remuneration 120000000 110000000 100000000 90000000 80000000 70000000 60000000 50000000 40000000 30000000 20000000 10000000 0 Anglo America n plc BHP Billiton Assore limited AngloGo ld Ashanti Anglo America n Platinu m Sibanye Gold Glencor e Xstrata Gold Fields Lonmin plc African Rainbow Minerals LTI payment ZAR 46383333 36937500 0 0 5195092 25956000 0 6349315.1 0 0 Other payments ZAR 2133333.3 0 28778000 0 1076719 174000 837837.84 0 0 153000 Benefits ZAR 7000000 6437500 1531000 6684000 1420503 1103000 54054.054360273.972954966.7 456000 Cash bonus ZAR 34616667 24025000 13777000 8382000 17100363 15158000 0 2932876.77782216.7 6022000 Salary ZAR 21433333 21250000 5666000 13318000 8094849 10265000 19554054 16258904 7702500 6741000 49

30000000 Mining ceo Remuneration 20000000 10000000 0 Impala Platinum LTI payment ZAR Other payments ZAR Benefits ZAR Cash bonus ZAR Salary ZAR 0 10004000 142000 0 2297000 Kumba Iron Ore Limited 9525000 36000 233000 4439000 6924000 Harmony Gold 0 1188000 0 2784000 7260000 Exxaro 0 550135 225121 3598366 5728207 African Rainbow Minerals Petra Diamond Trans Hex s 0 1085866.67 0 0 1056783.33 443000 2000 772133.333 787000 0 0 1866000 9181000 6180000 3487000 Assore limited 0 311000 110000 355000 4264000 Impala Platinum 7677000 5000 62000 0 3291000 16000000 Executive Remuneration(ZAR) 14000000 12000000 10000000 8000000 6000000 4000000 2000000 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 AvgOfDShip Salary AvgOfDship Total Annual 50

Non-Executive Remuneration(ZAR) 1800000 1600000 1400000 1200000 1000000 800000 600000 400000 200000 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 AvgOfDShip Salary AvgOfDship Total Annual 51

Construction The highest paid CEO in this sector was Eric Vemer of group Five, at ZAR 16,810,000. His salary is mostly made up of an LTI of over ZAR 11 million. Only CEOs in this sector received LTIs – Vemer of Group Five, and Henry Johannes Laas of Murray& Roberts who received an LTI of ZAR 4 million on top of his annual remuneration package of ZAR 10.4 million. Construction sector Non-Executive Directors: 29% average increase in year-on-year total remuneration growth rate between 2016 and 2017. Construction sector Executive Directors:-26% average decrease in year-on-year total remuneration growth rate between 2016 and 2017. 20000000 CEO Remuneration(ZAR) 10000000 0 Murray& Roberts LTI payment ZAR Other payments ZAR Benefits ZAR Cash bonus ZAR Salary ZAR 4212000 90000 0 4200000 6195000 WBHO 0 291000 550000 7470000 1855000 WBHO 0 277000 485000 5479000 1318000 Aveng 0 127000 258000 0 6003000 Pretoria Portland Cement 0 8000 700000 0 5230000 Group Five Basil Read 11157000 0 0 2137000 3516000 0 0 550759 0 2692241 Basil Read 0 0 50000 0 2152000 52

9000000 Executive Remuneration(ZAR) 8000000 7000000 6000000 5000000 4000000 3000000 2000000 1000000 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 AvgOfDShip Salary AvgOfDship Total Annual 900000 Non-executive remuneration(ZAR) 800000 700000 600000 500000 400000 300000 200000 100000 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 AvgOfDShip Salary AvgOfDship Total Annual 53

Food and Beverage Non-executive total remuneration decreased by 20% from 2016 to 2017. Executive remuneration, in turn, increased by just over 8%. All CEOs in this sector served a full year in 2017, and Anglo-Vaal Industries CEO Simon Crutchly was the highest paid at a total remuneration package of ZAR 38.9 million. Cructhly was not paid an LTI, but rather received non- itemised‘other payments’ of over ZAR 24 million. 50000000 CEO Remuneration 40000000 30000000 20000000 10000000 0 LTI payment ZAR Other payments ZAR Benefits ZAR Cash bonus ZAR Salary ZAR AngloVaal Industries 0 24062000 550000 7304000 7078000 Tongaat Hulett 7010000 0 1276000 6626000 8799000 Astral Foods Pioneer Foods RCL Foods 6425000 0 1013000 7747000 6420000 17757000 8177000 1127000 0 5790000 1020000 0 751000 3114000 7954000 Distell 0 0 1036000 3392000 6354000 Tiger Clover Crookes Brands Industries Brothers 0 339000 149000 0 8059000 0 283000 628000 0 5500000 0 180000 529000 1117000 2742000 54

10000000 Executive Remuneration 9000000 8000000 7000000 6000000 5000000 4000000 3000000 2000000 1000000 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 AvgOfDShip Salary AvgOfDship Total Annual 800000 Non-executive Remuneration 700000 600000 500000 400000 300000 200000 100000 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 AvgOfDShip Salary AvgOfDship Total Annual 55

Industrial Executive and Non- Executive Director’s total remuneration increased 19% and 10% respectively between 2016 and 2017. The highest remuneration package(excluding and including LTIs) was awarded to the Sasol CEO, Stephen Cornell, who only served for part of the year, to the amount of ZAR 37,231,000. This includes an LTI payment of ZAR 2 million. Sasol, Denel and Eskom Holdings Limited changed CEO’s in the year under review. 40000000 CEO Remuneration(ZAR) 30000000 20000000 10000000 0 Arcelor Eskom Invicta Eskom Sasol Sasol AECI Altron Reuner Mittal Holding African Holding Denel Holding Denel t SA s Oxygen s s Limited Limited LTI payment ZAR 210700012013000 0 307700036510001192646 0 437000 0 0 711000 0 Other payments ZAR 0 0 3505000 0 1544000 54812 732000 1867000 0 2362000 0 684000 Benefits ZAR 13250000817300020920001368000 433000 2121151 0 489000 284000 107000 79000 193000 Cash bonus ZAR 92910007318000519800053250004630000 680000 211000021030005000000 0 14960001470000 Salary ZAR 1258300085050004388000695600049090008458833602900033590002173000393800038850002074000 56

10000000 Executive Remuneration(ZAR) 9000000 8000000 7000000 6000000 5000000 4000000 3000000 2000000 1000000 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 AvgOfDShip Salary AvgOfDship Total Annual 800000 NED Remuneration(ZAR) 700000 600000 500000 400000 300000 200000 100000 0 2007 2008 2009 2010 2011 AvgOfDShip Salary 2012 2013 2014 AvgOfDship Total Annual 2015 2016 2017 57

Paper& Packaging Peter Oswald of Mondi Group earned the top spot in total remuneration in this sector. He earned over ZAR 37 million, including an LTI of ZAR 20.4 million. He did not serve a full year. 40000000 Chart Title 30000000 20000000 10000000 0 LTI payment ZAR Other payments ZAR Benefits ZAR Cash bonus ZAR Salary ZAR Mondi Group 2040214.286 2228971.429 4234214.286 14176000 14517057.14 Nampak 285324 7277200 271130 8165018 7028250 Mondi Group 0 3476414.286 1935614.286 5130942.857 5622142.857 Sappi 0 1094000 184914.286 6287700 6636614.286 NED Remuneration 1800000 1600000 1400000 1200000 1000000 800000 600000 400000 200000 0 2012 2013 2014 2015 2016 2017 AvgOfDShip Salary AvgOfDship Total Annual 58

25000000 Exxecutive Remunetration 20000000 15000000 10000000 5000000 0 2012 2013 2014 2015 AvgOfDShip Salary AvgOfDship Total Annual 2016 2017 59

Transport On average, annual growth in Executive Director remuneration increased for the first time since 2014 by 22.3%. Non-Executive remuneration increased between 2016 and 2017(4.94%). The highest remuneration package was awarded to Grindrod CEO, Alan Olivier, to the amount of R 14,903,000. Olivier took early retirement in July 2017. The only reported LTI payment was made to the CEO of Transnet who received ZAR 3 million. In the case of Imperial Holdings, it was reported that CEO Mark Lamberti was paid in total ZAR 16 million, with no information on particulars(however, this is an improvement from not disclosing any CEO remuneration information in 2016. SAA also had no clear indication of any payments aside from salary. 20000000 CEO Remuneration(ZAR) 10000000 0 Grindrod LTI payment ZAR Other payments ZAR Benefits ZAR Cash bonus ZAR Salary ZAR 0 0 964000 9795000 4144000 Super Group 0 280073 1546047 6990000 4972160 Grindrod 0 0 1395000 4895000 3500000 Transnet 3185000 2000 654000 1571000 6792000 ACSA 0 2085000 311000 0 3526000 Cargo Carriers 0 0 413000 196000 2355000 Imperial Holdings 0 0 0 0 1600000 South African Airways 0 0 0 0 611000 60

8000000 Executive Remuneration(ZAR) 7000000 6000000 5000000 4000000 3000000 2000000 1000000 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 AvgOfDShip Salary AvgOfDship Total Annual 600000 NED Remuneration(ZAR) 500000 400000 300000 200000 100000 0 2007 2008 2009 2010 2011 AvgOfDShip Salary 2012 2013 2014 AvgOfDship Total Annual 2015 2016 2017 61

Banking& financial Services Banking and financial services sector Non-Executive Directors: 13.27% increase in average year-on-year remuneration growth rate between 2016 and 2017. Banking and financial services sector Executive Directors: 12.47% increase in average year-on-year remuneration growth rate between 2016 and 2017. Liberty Holdings changed CEO during the year. CEO Thabo Dloti resigned with immediate effect in May 2017 and was replaced by David Munro. David Munro was the highest paid CEO of 2017 with ZAR 65,626,000 in total remuneration. In this sector, FirstRand’s CEO Joh an Burger(set to retire in 2018) received the biggest LTI at ZAR 20 million. 70000000 CEO Remuneration 60000000 50000000 40000000 30000000 20000000 10000000 0 LTI payment ZAR Other payments ZAR Benefits ZAR Cash bonus ZAR Salary ZAR Liberty Holdings Investec FirstRand Nedbank Bank Barclays Africa Group Standard Bank Group Sanlam 0 0 20250000 14500000 4500000 0 4089000 57107000 16666667 2446000 160000 46981 128000 0 475000 1341166.7 4120000 1001000 281476 1076000 201000 4125000 19320267 13900000 13750000 6000000 11350000 10000000 3919000 6658833.3 9328000 7014000 14630855 7899000 8407000 Discover y 6141000 287000 935000 3569000 6233000 Liberty Holdings 19096000 1531000 581000 0 3767000 RMB Holdings 0 0 306000 0 2244000 62

25000000 Executive Remuneration 20000000 15000000 10000000 5000000 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 AvgOfDShip Salary AvgOfDship Total Annual 2500000 Non-executive Remuneration 2000000 1500000 1000000 500000 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 AvgOfDShip Salary AvgOfDship Total Annual 63

Diversified Holdings The highest paid CEO in this sector was Bidvest CEO, Lindsay Peter Ralphs, who was paid an LTI of ZAR 89 million, making his total annual remuneration ZAR 107,734,000. Barloworld CEO, Clive Thomson, was replaced by Dominic Sewela in March 2017. Some big LTIs were paid out in this sector, including the Remgro CEO who received an LTI of ZAR 73 million. The average annual growth rate of Executive and Non- Executive Director’s remuneration h as been decreasing at-34.81% and-37.53% respectively between 2016 and 2017. This year’s group of companies does not include Steinhoff due to irregularities. This has greatly affected the year on year averages and does not give an accurate reflection of the changes. 120000000 110000000 100000000 90000000 80000000 70000000 60000000 50000000 40000000 30000000 20000000 10000000 0 LTI payment ZAR Other payments ZAR Benefits ZAR Cash bonus ZAR Salary ZAR Barloworld Limited 0 32847000 798000 5852000 3490000 CEO Remuneration Bidvest 89606000 912000 825000 7227000 9164000 Barloworld Limited 0 3000 1364000 7079000 7121000 Remgro 7338000 344000 2147000 321000 10506000 Hosken Consolidated Investments 3803000 833000 0 4870000 6493000 Seardel Investments 1934000 585000 0 1690000 3380000 64

18000000 Executive Remuneration 16000000 14000000 12000000 10000000 8000000 6000000 4000000 2000000 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 AvgOfDShip Salary AvgOfDship Total Annual 1800000 Non-executive Remuneration 1600000 1400000 1200000 1000000 800000 600000 400000 200000 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 AvgOfDShip Salary AvgOfDship Total Annual 65

Education, Bus, Training& Employment Richard Pike of Adcorp Holding Limited is the only CEO in this sector. He resigned from this position in July 2017, and was replaced by acting CEO, Nelis Swart. Pike was paid a salary of ZAR 3,812,000, and total remuneration of ZAR 4,820,000. Executive Directors’ remuneration in this sector decreased by 50%, while non-executive directors saw a small decrease of 0.29%. ADCORP HOLDINGS LIMITED 10000000 0 LTI payment ZAR Other payments ZAR Benefits ZAR Cash bonus ZAR Salary ZAR Adcorp Holdings limited 0 787000 221000 0 3812000 66

9000000 Executive Remuneration 8000000 7000000 6000000 5000000 4000000 3000000 2000000 1000000 0 2012 2013 2014 2015 2016 2017 AvgOfDShip Salary AvgOfDship Total Annual 450000 Non-Executive Remuneration 400000 350000 300000 250000 200000 150000 100000 50000 0 2012 2013 2014 2015 2016 2017 AvgOfDShip Salary AvgOfDship Total Annual 67

Health In the health sector, non-executive remuneration increased by 7.84% while executive remuneration decreased by 15.47%. The highest paid CEO in this sector was Network Healthcare Holdings CEO, Richard Friedland, who was paid in total ZAR 23,293,000, including an LTI of ZAR 8.9 million. 30000000 CEO REMUNERATION 20000000 10000000 0 Mediclinic LTI payment ZAR Other payments ZAR Benefits ZAR Cash bonus ZAR Salary ZAR 0 133333.333 683333.333 7316666.667 9016666.667 Network Healthcare Holdings 8858000 0 723000 5500000 8212000 Aspen Holdings 2890000 0 1117000 5671000 6828000 Adcock Ingram 872131 3000000 319000 0 4473000 Life Healthcare Group 1295000 371000 191000 1333000 3377000 AfroCentric Investments Corporation 0 0 198000 1533000 3313000 Executive Remuneration 10000000 9000000 8000000 7000000 6000000 5000000 4000000 3000000 2000000 1000000 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 AvgOfDShip Salary AvgOfDship Total Annual 68

800000 NED Remuneration 700000 600000 500000 400000 300000 200000 100000 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 AvgOfDShip Salary AvgOfDship Total Annual 69

Hospitality In the hospitality sector, non-executive remuneration increased by just over 5%, while executive remuneration decreased by 11.64%. The highest paid CEO in this sector, Marcel von Aulock of Tsogo Sun Holdings, was paid ZAR25,460,000, which includes an LTI payment of just over ZAR 13 million. 30000000 CEO Remuneration(ZAR) 20000000 10000000 0 LTI payment ZAR Other payments ZAR Benefits ZAR Cash bonus ZAR Salary ZAR Tsogo Sun Holdings 13175000 0 572000 5237000 6476000 Sun International 2895000 210000 851000 2832000 6213000 City Lodge Hotels 3084000 717000 439000 1801000 4478000 35000000 Executive Remuneration(ZAR) 30000000 25000000 20000000 15000000 10000000 5000000 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 AvgOfDShip Salary AvgOfDship Total Annual 70

1600000 NED Remuneration(ZAR) 1400000 1200000 1000000 800000 600000 400000 200000 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 AvgOfDShip Salary AvgOfDship Total Annual 71

Media Naspers and Caxton CTP are the only two MNCs in the media sector. Naspers by far exceeds Caxton CTP in revenue and in executive pay. Naspers CEO, Bob van Dijk, was paid a salary just short of ZAR 15 million, and an LTI of ZAR 140,581,081.081(the biggest LTI of all the CEOs on our list). Executive remuneration in this sector increased by 18.13%, and non-executive remuneration increased by 26%. CEO REMUNERATION(ZAR) 180000000 170000000 160000000 150000000 140000000 130000000 120000000 110000000 100000000 90000000 80000000 70000000 60000000 50000000 40000000 30000000 20000000 10000000 0 LTI payment ZAR Other payments ZAR Benefits ZAR Cash bonus ZAR Salary ZAR Naspers 140581081.1 0 1689189.189 13148648.65 14918918.92 Caxton CTP 0 0 0 0 3600000 72

Executive Remuneration(ZAR) 18000000 16000000 14000000 12000000 10000000 8000000 6000000 4000000 2000000 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 AvgOfDShip Salary AvgOfDship Total Annual 4000000 NED Remuneration(ZAR) 3500000 3000000 2500000 2000000 1500000 1000000 500000 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 AvgOfDShip Salary AvgOfDship Total Annual 73

Retail In 2017, the highest paid CEO in the sector was Stuart Bird of Mr Price, who was paid a total remuneration of ZAR 93,366,000, including a big LTI of over ZAR 80 million. In this year, Shoprite, usually at the top of CEO pay checks, changed CEOs from Whitey Basson to Pieter Engelbrecht. Basson received total remuneration of ZAR 50 million, while Engelbrecht received ZAR 31 million in total. Retail sector Non-Executive Directors: 17.29% average increase in year-on-year remuneration growth rate between 2016 and 2017. Retail sector Executive Directors: 26.96% average decrease in year-on-year remuneration growth rate between 2016 and 2017. CEO Remuneration 100000000 90000000 80000000 70000000 60000000 50000000 40000000 30000000 20000000 10000000 0 LTI payment ZAR Other payments ZAR Benefits ZAR Cash bonus ZAR Salary ZAR Shoprite 0 394000 64000 0 49656000 Woolwort hs 15867000 0 135000 0 18673000 Shoprite 16006000 527000 685000 4324000 9713000 Foschini 13734200 455900 1181700 4500000 8362900 Truworths 9658000 3460000 76000 0 9100000 Massmart 10177410 341000 783000 3149000 5909000 Pick n Pay Stores Ltd 23754300 1500 1084400 0 8945900 Mr Price 85336000 723000 1448000 0 5859000 Spar 0 429000 599000 1582000 5053000 Cashbuild 0 72000 448000 385000 3334000 74

NED Remuneration(ZAR) 900000 800000 700000 600000 500000 400000 300000 200000 100000 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 AvgOfDShip Salary AvgOfDship Total Annual 12000000 Executive Remuneration(ZAR) 10000000 8000000 6000000 4000000 2000000 0 2007 2008 2009 2010 2011 AvgOfDShip Salary 2012 2013 2014 AvgOfDship Total Annual 2015 2016 2017 75

Technology& Telecommunications Non-Executive Directors: 7.67% average decrease in annual remuneration between 2016 and 2017. Executive Directors: 15.34% average increase in annual remuneration between 2016 and 201. Rob Shuter of MTN Group did not serve a full year, but started in March 2017. He did not receive an LTI payment, but is still the highest paid CEO in this sector. The CEOs of Vodacom Group Limited and Telkom received LTIs of ZAR 14 million and ZAR 9.6 million respectively. 50000000 40000000 30000000 20000000 10000000 0 LTI payment ZAR Other payments ZAR Benefits ZAR Cash bonus ZAR Salary ZAR CEO Remuneration(ZAR) MTN Group 0 1225000 10581000 17122000 11528000 Vodacom Group Limited 14290569 493867 804300 10860000 9200500 Telkom 9637818 0 11997 8813911 7441200 25000000 Executive Remuneration(ZAR) 20000000 15000000 10000000 5000000 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 AvgOfDShip Salary AvgOfDship Total Annual 76

1200000 NED Remuneration(ZAR) 1000000 800000 600000 400000 200000 0 2007 2008 2009 2010 2011 AvgOfDShip Salary 2012 2013 2014 AvgOfDship Total Annual 2015 2016 2017 77

Summary of Findings The SA MNC Database makes it possible to compare the changes in revenue and profit compared to that of directors’ remuneration. The table below illustrates there results in an attempt towards interpreting the changes in revenue and remuneration. Revenue and profit year-on-year growth rates compared to Executive Director Remuneration changes: 2016-2017 Banking and Financial Services Construction Diversified Holdings Education, Bus Training& Employment Food and Beverage Health Hospitality Industrial Media Mining Paper and Packaging Retail Technology and Telecommunications Transport Year-on-year growth in Revenue 5.28% Year-on-year growth in Profit 11% Year-on-year growth in ED Remuneration 12% -10.68% -1.11% 3.13% -254% 60% -76% -27% -35% -50% 1.50% 7.84% 16.91% 3.27% -2.53% 22.17% 4.31% 6.02% -3.87% -4% -24% 82% 5% 125% 876% 1% 5% 23% -20% -15% 6% 20% 26% 3% -18% -27% 15% 1.00%-27% Source: 2017 SA MNC Database 22% Executive director remuneration does not seem to be directly linked to revenue or profit growth. Although the analyses above are done on a sectoral level, it clearly illustrates a lack of coherence. Banking and financial services seem to be relatively on par – ED growth grew by approximately the same as profit growth from 2016 to 2017. The construction sectors show a massive loss in revenue as well as profit, and ED remuneration reflects this by decreasing by 27%(though still not directly correlated to the numbers). The Food and Beverage sectors showed a small loss in revenue, which was accompanied by a big pay cut for Executive Directors(20%). The hospitality sector saw a profit increase of 82%, and an ED remuneration increase of only 3%. The retail industry saw an increase in revenue and PBT, but a decrease in ED remuneration of 27%. This is mainly due to Shoprite’s change in CEO, which accounts for a large percentage of EC remuneration in this sector. In the Technology and Telecommunications sector, ED remuneration increased by 22%. PBT, however, decreased by 27%. It is often claimed that CEO remuneration is linked to company performance. From the above it can be inferred that there is at best a vague connotation between the two in any given year. There is little observable logic when it comes to ED remuneration. 78

Liberty Holdings Anglo American plc BHP Billiton Shoprite Assore limited Investec Barloworld Limited MTN Group Anglo-Vaal Industries Mondi Group Highest Remuneration(excluding LTI) Banking and Financial Services Mining Mining Retail Mining Banking and Financial Services Diversified Holdings Technology and Telecommunications Food and Beverage Paper and Packaging Amount 65626000 65183333.33 51712500 50114000 49752000 43986933.33 42987000 40456000 38994000 35156242.86 Highest LTI Naspers Bidvest Mr Price Anglo American plc BHP Billiton Sibanye Gold Pick n Pay Stores Ltd FirstRand Bank Liberty Holdings Pioneer Foods Media Diversified Holdings Retail Mining Mining Mining Retail Banking and Financial Services Banking and Financial Services Food and Beverage Amount 140581081.1 89606000 85336000 46383333.33 36937500 25956000 23754300 20250000 19096000 17757000 79

Highest Total Remuneration Naspers Anglo American plc Bidvest Mr Price BHP Billiton Liberty Holdings Sibanye Gold Shoprite FirstRand Bank Assore limited Media Mining Diversified Holdings Retail Mining Banking and Financial Services Mining Retail Banking and Financial Services Mining Amount 170337837.8 111566666.7 107734000 93366000 88650000 65626000 52656000 50114000 50044000 49752000 Trans Hex City Lodge Hotels Assore limited Crookes Brothers Cargo Carriers Grindrod Mr Price Grindrod Anglo-Vaal Industries Seardel Investments Highest Total Rem as a% of MNC Revenue Mining Hospitality Mining Food and Beverage Transport Transport Retail Transport Food and Beverage Diversified Holdings 1.22% 0.69% 0.69% 0.69% 0.51% 0.49% 0.47% 0.32% 0.30% 0.29% Companies often cite decreasing revenue or profits as the reason for not increasing wages of workers. From the above, we can see that when it comes to CEO paychecks this is not always the case. CEOs are often still rewarded when companies are losing significant profit/revenue. While Shoprite scores high when it comes to highest remuneration(excluding LTI), as a percentage of revenue this is only 0.0355%. Diamond mining company Trans Hex, who lost over 19% in revenue in 2017, paid their CEO 1.22% of total revenue. From the numbers above, it is hard to determine any logic when it comes to CEO pay. 80

The Wage Gap The previous section pointed out the lack of transparency when it comes to directors’ remuneration. However, in some cases companies do unpack remuneration practices, and KING IV compels companies to be more transparent in this regard. Unfortunately the same cannot be said for workers’ remuneration. There is a complete lack of reporting when it comes to workers’ remuneration. As with the 2017 MNC Trend Report, this section advocates for mo re transparent and detailed reporting on workers’ remuneration. The below graph illustrates some information obtained from the retail networks on entrylevel wages in the retail sector, again showing the value of these networks and the information obtained from sharing within these networks. The lowest paid entry level position is of an entry-level worker in Shoprite, Malawi, at R972.41 per month. When compared to the CEO’s remuneration(Basson of Shoprite), who received total remuneration package of ZAR 50,114,000, the massive gap is evident. Basson was paid 4195 times more than the lowest paid worker in this company. Entry level minimum wages(Rand) per month(2017): PNP, Zimbabwe PNP, Zimbabwe Shoprite, South Africa PNP, Zimbabwe Massmart, Zambia Shoprite, Zambia Shoprite, Lesotho Massmart, Tanzania Massmart, Lesotho Massmart, Botswana PNP, Lesotho Shoprite, Swaziland PNP, Zambia Shoprite, Botswana PNP, Botswana Shoprite, Mozambique Shoprite, Uganda Massmart, Malawi PNP, Zambia Shoprite, Malawi 0 4305.38 4305.38 3700 2870.25 2508.55 2347.1 2268.3 2240.64 2056.15 2042.18 2021.3 1970.74 1969.47 1610.26 1421.92 1311 1138.79 1107.48 1004.69 972.41 500 1000 1500 2000 2500 3000 3500 4000 4500 5000 81

The Future of Work Introduction Industry 4.0, the Fourth Industrial Revolution, the gig-economy and the internet-of-things are all terms becoming more generally used when discussing the future of work. These terms share the fact that technology is playing an increasing role in our daily lives and that it will alter the way we perform tasks. As early as 1930, Maynard Keynes warned that:"We are being afflicted with a new disease of which some readers may not have heard the name, but of which they will hear a great deal in the years to come— namely, technological unemployment"(Keynes, 1930: unpaginated). Central to the technological advances of our time is an intersection of hardware, software and humans in a context of artificial intelligence(AI)(Baldassari and Roux, 2017). One of the main advantages of AI is described as“its ability to help turn large and diverse data sets into enriched information that can help impr ove speed, cost and flexibility across the value chain”(Chitrakorn, 2018). While the cost associated with technology like AI is currently high, it is set to decrease and increasingly create workplaces less reliant on employees. The gig-economy, associated with innovations such as Uber and Airbnb, creates situations where jobs are secured through online platforms and employees have often not even met their employer (Smith, 2016). The previous quote from Keynes illustrates that there has, throughout history, been fears that new technology would replace workers. While this may be true, some argue that the 19 th and 20 th century has shown that the new jobs created through technology, in fact, outnumber the job losses(Arntz, Gregory and Zierahn, 2016). Past president of the The Institute for the Future, Roy Amara, is quoted as saying:"We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run"(The Age, 31 October 2006). The Fourth Industrial Revolution will see humans increasingly involved in the design of jobs but less in the actual performance thereof. App developers, cloud computing specialists, data scientists, social media managers and sustainability managers are but to name a few of the occupations seen as synonym to the new wave of technology(Baldassari and Roux, 2017). Researchers predict that the new world of technology will bring a demand for more skilled labour in these fields( ibid). However, Osborne& Frey(2013) posit that not only are blue collar jobs at risk of automation, but also white collar jobs like bookkeeping, accounting and auditing clerks. Jobs that have elements that are predictable and repetitive are likely to have these elements of the job automated. Jobs at risk include cashiers, clerks, and mining and maintenance workers, as many elements of these jobs are both predictable and repetitive. Based on a literature review, desktop research and engagements with unions in various retail network alliances, this paper provides an analysis of what the future of work could entail in a developing context, and more specifically, Africa. The first section of the paper focuses on the retail sector as a case study relating to technological innovations. This sector is chosen in particular as it is a sector in which technology could have a direct bearing on employment based on the number of low skilled workers. The LRS is further well located to utilise the primary research it conducts through its supporting role in the UNIGlobal Shoprite, Massmart and Pick n Pay Network Alliances. How relevant are some of the predictions regarding technological innovations in the developing world? The second section of this paper aims to answer this question by locating the impact of new technologies 82

and different debates within the retail sector. Through the LRS's involvement with unions in the retail sector, it is possible to develop insights into the challenges unions are facing as a direct result of attempts at more“streamlined” supply chains. While it is difficult to predict to what extent job losses could be experienced in the sector, it becomes apparent that the future of work within the context of the Fourth Industrial Revolution will take on a more flexible format which could have serious implications for the social protection of workers. These dynamics are deliberated in the third section of the report. Source: The Guardian, 2017 Based on foregoing findings, the following two sections reflect on what responses the future of work will require from labour movements. Where section four considers national responses, section five focuses on the workplace and what those engaged in collective bargaining will have to look out for. The report concludes with broad recommendations for collective bargaining and broader campaign development. Although the report focuses on retail, the recommendations are formulated for all sectors and in support of cross-sectoral and cross-border alliances. Technological Changes in the Retail Sector Retailers are increasingly shaping their models based on convenience and the experience of shopping. Ecommerce, which entails ordering shopping online, is becoming more and more prevalent. PrimeNow, for example, is a division within Amazon through which a delivery is made within one hour of ordering online (Smith, 2016). Services such as these allow customers to free up more space to dedicate to, among others, leisure or family. What is central to creating such systems of convenience is what is referred to as Big Data and the Internet of Things. The collection of data based on preferences and shopping trends makes it possible to develop software that can filter through thousands of items to match an item with a suitable buyer. Amazon has gone as far as to develop“anticipatory shopping software”( ibid.). Based on a buyer's previous browsing preferences, the software will assess whether the shopper is likely to buy a product and if so, start the shipping process even before the customer has pressed the"buy" button. Based on the idea that the act of paying is associated with negative, retailers are moving towards automated stores in which customers do not have to make use of any till facility or encounter any employee. High-tech automated convenience stores are becoming more frequent across Chinese cities such as Beijing and Shangai(Chitrakorn, 2018). These stores have no checkout, cash or salespersons. Each shopper has a unique ID through a mobile app and pays for the purchases through the app. To prevent theft, a sensor on the shelves can detect if an item has been lifted by a customer. Such an item will be directly linked to the shopper’s ID. Amazon has launched a similar store concept through“Amazon Go” that is also run through a mobile app. When a customer leaves a store their credit card is charged directly 83

which means there is no line for checkout(Kestenbaum, 2017). An Irish company, Everseen, has gone a step further where no mobile phone is required once a shopper is registered. The store will recognize your face and run the purchase accordingly( ibid.). In addition to the advantages customers could experience through automated stores and e-commerce, retailers have much to gain. Retailers would require less floor space in future as shopping goes online (Singh, 2008 and Omarjee, 2017). Retailers might only keep smaller stores in set locations as showrooms, but the remaining trade would take place through online platforms from central distribution centres. There will also be less reliance on actual employees. Automated tills; digital price displays through which thousands of prices can be changed within minutes; robotic shopping carts as well as robots that restock shelves and direct customers are but to name a few innovations set to decrease the reliance on human labour(Bhattarai, 2016). Figure 1: Robotic shopping cart and robots that restock shelves and direct customers Source: Bhattarai(2016) Such a decreased reliance on human labour will not only have cost-saving effects, but also avoid the demands of organized labour such as providing workers with adequate social protection. What Is The Reality In The Developing World? The debates arguing that jobs are at risk of being replaced or computerized is to a large extent based on studies conducted in Europe and Northern America(Arntz, Gregory and Zierahn, 2016). While this may be true, there are some who argue that this is not the norm. Arntz et al.(2016) conducted a study in which they compare different countries in the Organisation for Economic Co-operation and Development (OECD). Although most OECD members are high-income economies with a very high Human Development Index(HDI) and are regarded as developed countries the findings could have potential relevance to developing parts of the world: “We further find heterogeneities across OECD countries. For instance, while the share of automatable jobs is 6% in Korea, the corresponding share is 12% in Austria. Differences between countries may reflect general differences in workplace organisation, differences in previous 84

investments into automation technologies as well as differences in the education of workers across countries”(Arntz et al., 2016: 4). Although a similar study could not be found for developing countries it starts to illustrate that the future of work is a context-dependent phenomenon. Services such as automated stores and online shopping are associated with middle to high-level income groups. When we are considering Africa, it is well known that affordability and literacy levels differ to that of the global North. The Living Standards Measure(LSM) is a tool used in South Africa to group people according to their living standards. It divides the population into 10 LSM groups, 10(highest) to 1(lowest). A successful retailer such as Shoprite's majority of buyers is located in the mid-range LMS as illustrated in Figure 1. Figure 2: The target LSM divisions of some of the Shoprite divisions Source: Shoprite Annual Report(2017: 6) There is a case to be made that a large percentage of the buying power in developing countries is located in an LSM bracket that does not necessarily support automation processes. The development of automated stores and Big Data represents complex systems operated at very high costs. In 2017, Amazon admitted that“scaling this technology[automated stores] for uncontrolled numbers of people is too taxing, it takes the sy stem beyond its capacity”(Kestenbaum, 2017). As the cost of automation decreases this could change, but it is difficult to foresee when as automation is further 85

reliant on infrastructure- like good internet connections. Automation can, therefore, be regarded as a slow process that has to overcome economic, societal and legal hurdles which are often more pronounced in a developing context. It further has to be acknowledged that the experience a retailer is trying to create in the developing world could differ fundamentally from that in the global North. Retailers in sub-Saharan Africa could have already started the automation process, but it becomes a branding decision. It relates back to the experience they want to craft in a context where price is valued more than convenience. Another potential consequence of automation is increased economic disparity, which makes for bad social capital on the side of MNCs in developing countries. Daniel le Roux(2018) makes an argument for automation being a‘driver of economic inequality’: Businesses around the world are cottoning on to the value of transferring labour from human workers to machines. Automation can increase efficiency and decrease labour costs. It helps employers to avoid complex challenges like wage increase demands, labour protests and strikes. Consumers also benefit from automation when products and services become cheaper because of reduced input costs. But while there are numerous benefits to automation, recent economic trends in the developed world suggest that it may also be a key driver of economic inequality. Some are also more cautious regarding the role of technology in retail and the extent that automation would actually lead to job losses. Kestenbaum(2017) reasons that technology is important but will remain as only a tool in which the connection between a consumer and a product is made. It is not the answer to all the challenges existing in the sector. Arntz et al.(2016) bring forward the idea that predictions of a jobless future are based on an occupation rather than job-task approach. When considering that certain tasks within one occupation rather than a whole occupation could be automated, it becomes apparent that the job automatability has been overestimated. Where previous studies estimated the percentage of job losses based on automation through an occupation-based approach to be 47% in the US, a task-based evaluation brings such estimations down to 9%. It is yet to be discovered what similar percentages in developing countries will represent. While this section, on the one hand, proves that the future of work is content driven and that some argue that the extent of automation is often exaggerated, it is anticipated that routine or predictable tasks are more susceptible to displacement than non-routine tasks. Such predictions place a sector such as retail at a higher risk than an industry such as Information Technology(IT). It is predicted that while the jobs themselves may not entire ly vanish, the jobs will be‘redefined’. If a job radically changes, a worker may indeed not have the new skillset. Flexibility in the Retail Sector Automation comes at a cost and to compensate for these additional costs, retailers will continue to reduce costs such as labour: "All on-demand mobile services keep sales costs low by using an app for ordering, payment, and feedback. But the biggest part of this rebalancing is labour costs. As an aggregation and distribution channel for people providing personal services, a company with an Uber-All business model creates 86

scale that has been difficult to realize heretofore. In addition, by engaging people to provide personal services on demand, companies can lower the overhead costs associated with full-time employees by taking advantage of broader shifts in labour markets"(Smith, 2016: 387). The reality is that work is starting to take on a more flexible form in which workers are not protected and jobs are not secured(Omomowo, 2011). Outsourcing of work is fundamental to a value chain in which cost dominates all decisions. Outsourcing becomes a way for organisations to rid themselves of less-skilled workers and to have that work done at a lower cost. Within the Shoprite, Massmart and Pick n Pay Alliances, to which the LRS provides strategic research support, it has become evident that these companies are moving towards a more flexible workforce. A company such as Massmart is also bringing in the position of“general assistant” in which employees need to be able to multi-task and conduct various jobs at the same time. Employees are not adequately compensated for performing multiple tasks which in turns drain productivity(Massmart Alliance Meeting, 2017). Throughout these network meetings complaints relating to temporary workers and the conditions under which they are employed are heard: “Key-time employees who are employed in Shoprite are not treated like employees nor according to our labour laws.” “The company survives through key- time employees.” “We need to be assisted with international campaigns against the employment status of key-time employees and/or to eliminate precarious work.” In an article written on how employers should structure work contracts towards the implementation of technological innovations the following is stated: "…if your labour contract does not contain strong job security provisions or minimum-hours guarantees, count your blessings— and do not let the union negotiate those in during the next round of bargaining. However, employers that are signatory to a labour contract containing job guarantees over the life of the CBA, work-hour guarantees, and/or restrictions on the right to lay-off workers will want to jettison these provisions when the parties bargain for a renewal agreement. … picture the retail establishment that wants to phase-out its cashiers and move to an automated check-out system, and, thus, reduce the workweek of its 10 full-time cashiers to part-time, only to find its hands tied with a guaranteed 40-hour workweek"(Korval, 2017:). The above quote clearly states how employers are seeking more flexible workforces in the advent of the fourth industrial revolution. The steps employers are willing to take to free themselves from a permanent guaranteed workforce is in line with what retail workers are experiencing on the ground. Unions are constantly faced with employers whose main objective is to terminate all permanent contracts that provide employees with any form of social security. While the outsourcing of work may become more prevalent, Tavis(2017: 8) speaks to one of the risks posed by a“loosely connected network of part- time workers”. It is said that workers subcontracted into any company will be disengaged from the actual organization, its vision and objective. Many businesses rely on elements of teamwork to advance and promote the company. This desire would not exist within 87

a group of neglected contract workers and could result in negative long-term consequences such as losing institutional knowledge and damaging their reputation as an employer. Unfortunately, these negative consequences are yet to be seen, especially in a sector such as retail in which employees are regarded as replaceable. As a result, unions and workers will have to be cautious of the tactics employers will use to ensure flexibility within their workforce. A Response: The Broader Framework The future of work is not only a concern within the workplace but also on a national level. As automation increases those with inadequate skills may be left behind and unemployment rates could soar. Within national debates the potential loss of jobs brings forward arguments for compensatory measures (guaranteed basic income and wealth redistribution), legislation protecting the rights of workers(realistic mini mum levels of pay and benefits, restoring a decent work-life balance, and removing the impediments to union organizing) and ensuring sufficient(re-)training especially for low qualified workers(Arntz et al., 2016; Hodgson, 2016; Wright, 2018). New ownership models are also being discussed; if workers are replaced by robots, they could still be assured an income if ownership was to be shared among workers. As a result, worker cooperatives become more prevalent(Hodgson, 2016). Labour, civil society, the private sector as well as government become key stakeholders towards developing a skills transition or relevant compensation measures. The International Labour Organisation (ILO) framework and the G20 Policy Priorities on the Future of Work identify the following key areas towards stimulating debate:  “Preventive labour market policy: What role can labour market policy play in preventing technological unemployment and support the creation of quality jobs in times of structural change? Which instruments are necessary, in particular regarding skills in the digital world?  Social security in the digital age: Which mechanisms of social security can be provided for workers in the digital world? How to reform existing social security systems to include new forms of work(e.g. crowd working, free-lancers, self-employed)?  Future proofing labour law: How can the legal frameworks evolve in response to a growing diversification of new and/or non-standard forms of employment without putting standard forms of employment at risk?  Agile industrial relations: How to make co-determination work for all workers, including in new types of employment(e.g. platform workers)? What are appropriate collective bargaining solutions? How to foster innovation to harness technological change for better work? Is there a place for“innovation spaces” within companies to try out different arrangements of work organization, work design and working time?”(Ramutloa, 2017). An analysis of relevant policy frameworks addressing these issues is beyond the scope of this report. It is, however, crucial that labour acknowledge these issues and work towards national campaigns to ensure pro-active debates and change. Altenburg, Kulke, Hampel-Milagrosa, Peterskovsky, and Reeg(2016) who conducted a study on retail modernization in developing countries explained how“despite the far reaching impact of the supermarket revolution, this challenge has so far hardly been debated in development policy circles(Altenburg et al., 2016: 1). There is much to be done on the part of all stakeholders involved. In the absence of such pro-active action and policies, the tendency of capitalism to exacerbate income inequality will increase. 88

A Response: Bargaining at the Workplace With regards to the future of work and bargaining in the workplace, this report highlights four areas that deserve attention. The first is the need for trade unions to revisit the way in which they organize through an acknowledgement of the broader value chains in which they operate. Although the focus of a union is in the workplace, broader value chains and the dissemination of power are starting to play a more prominent role. Value chains describe where a company or operation is situated in the bigger picture of production and how it is situated there, or rather what power it has in the bigger picture of how things are produced. This has implications for organising and bargaining. Knowing where and how a company is situated in a value chain can help the trade union understand how to best negotiate for better pay or conditions of work. Revisiting strategies will have to be done on a step-by-step basis but will start, for example, through a retail worker looking beyond their own workplace at something such as distribution centres that influence the functioning of the company as a whole. Having a presence in such areas of operation will increase the power of a union in relation to the employer. The second concerns the way in which union, themselves will utilize technology: “The advent of the Inter net has seen a variety of contrary claims about their adoption by trade unions. Some have argued that the increasing use of the ICTs will further undermine the role of the traditional representative organisations, including trade unions, in favour of more issue-oriented groups, protest networks and/or individualised forms of participation. Alternatively, there has been interest in the notion of e-unions, virtual unions or cyber unions, where the ICTs are harnessed to reinvigorate and modernise union practic es… In fact, it is only the labour that will decide where they want to stand. In this digital economy, only the powerful can survive. Therefore, the workers continuously need to develop IT skills and to be on the alert so as to market them at every opportunity. Internet and e-commerce technologies are just tools, what the labour market is going to do with these tools will decide the future of the labour market”(Singh, 2008: 639-640). Utilising technology within unions will become increasingly necessary if they were to target the broader value chains along which companies operate. As explained in the quote above, the organisations who have mobilized against big retailers or companies have been big NGOs and consumer movements in the Global North. This poses a challenge for unions. How do they respond to these big NGOs? NGOs operate differently as they do not have members- they report to a board. Should unions start thinking of alliances with quite different organisations or should they start utilising technology to expand their own campaigns? These are but a few questions that stand to be answered. The third relates to the expansion of the traditional role of unions. Traditionally trade unions would have focused on issues such as wage increases, benefits and working conditions during negotiations. Going forward, automation in the workplace will require an increased focus on issues relating to“education, training, and legal support in an increasingly complex environment”(Hodgson, 2016: 213). If the fourth industrial revolution is to result in a positive effect on employment, the reskilling of the workforce is pivotal. Tavis(2017) place employers on a continuum of options. The first option is where companies decide to invest in their workers through training to include them in the technological transition. A 89

national policy framework with strong labour movement and civil society would assist in moving employers towards the positive end of the continuum. The fourth issue speaks to the tactics employers will implement to start reshaping their workforce towards automation and a more flexible workforce. As stated earlier, employers will try to bring in clauses like the following to ease their transition to automated functions: "Management, in its sole and absolute judgment and discretion, shall have the unlimited right to lay-off, eliminate the jobs of, and/or reduce the workweek of bargaining unit employees during the term of this agreement. The Employer shall have the right to open or close departments as it deems appropriate and to use new and improved methods(including automation) which it deems to be in the best interests of its business"(Korval, 2017) Such a clause will ensure that a company has no restriction on their right to sub-contract. Some employers might even bargain for a right to sub-contract such as the following: “The Employer shall have the absolute and unlimited right to sub-contract out bargaining unit work at any time, including the right to subcontract out the work of the entire bargaining unit, or any part thereof. The Employer shall further have the absolute right to select subcontractor(s) of its own choosing, in its sole judgment and discretion. This agreement shall satisfy any obligation that the Employer may have to bargain about the deci sion to subcontract”(Korval, 2017) Language like this will allow employers to sub-out the warehousing and delivery services to a drone operation that can do it more cost-effectively because their associates' labour costs are negligible. Based on the issues identified, the following section concludes with some key recommendations for unions faced with the challenges of the future of work. Conclusion There is no doubt that the world of work will be altered from how we know it to be today. While this report acknowledges these changes, it also emphasizes that fourth industrial revolution is context dependent and that the effect could be different in a developing country compared to a developed country. The question becomes less to what extent employers will try to replace humans with machines but rather to what extent they will want to employ a more flexible workforce without commitments towards social protection and decent wages. Going forward, employers will increasingly try to structure their employment contracts to accommodate the transition to a more flexible workforce. Within bargaining processes unions’ negotiators should thus focus on ensuring clauses such as the following:  Guaranteed minimum working hours  Job guarantees for the length of the CBA  Restrictions on staff dismissals  Restrictions on sub-contracting  Protection of non-permanent workers  Education and training(including re-skilling to meet new skills demands) 90

If the fourth industrial revolution is to result in a positive effect on employment, the reskilling of the workforce is pivotal. Unions will need to form part of a process in which there is a crafting of approaches to ensure the re-skill of workers. There is further a need for labour movements to start looking at the broader value chains in which they operate. Such a broadening could result in more power in the hands of a union compared to employers. The way technology will be utilized by unions themselves is important in this regard. As technology is influencing all sectors it will also influence unions going forward. E-unions, virtual unions or cyber unions are becoming a reality. In this way, technology becomes a tool that can be utilised by unions to enhance their own influence. In addition to bargaining within the workplace, there is also the need for national debates to ensure the required skills transition or relevant compensation measures. Such broader campaigns targeted to influence policy formulation include the following:  Compensatory measures(guaranteed basic income and wealth redistribution)  Legislation protecting the rights of workers(realistic minimum levels of pay and benefits, restoring a decent work-life balance, and removing the impediments to union organizing)  Training demands/programmes: ensuring sufficient(re-)training especially for low qualified workers Change has been inevitable throughout history. There is, however, no reason why change cannot be accommodated for adequate social protection, compensation measures and/or training and(re)skilling opportunities for workers. Bargaining is a pivotal tool in ensuring workers receive protection and would gain immensely from being supported by broader support and awareness campaigns. Capacity building to equip negotiators to bargain in complex environments is crucial. Employers will increasingly try to by-pass any responsibilities in the changing nature of work. Should this become the norm, the tendency of capitalism to exacerbate income inequality will increase. Although the report focuses on retail, in particular, the recommendations are formulated for all sectors and in support of cross-sectorial and cross-border alliances. 91

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