An analysis of the impact of COVID-19 on the remuneration structures of South African JSE-listed transportation companies

Abstract

The Black Swan event, COVID-19, had a profound and detrimental impact on the already challenged South African economy, its people and the way they live their daily lives. The regulations associated with the nationwide lockdowns crippled most of the sectors and industries, with emphasis on the transportation sector. Travel restrictions, social distancing requirements and bans on the sale of certain items had a severe impact on the performance and operations of companies in this sector. The repercussions of declining financial performance among these companies were transferred to employees through measures such as salary reductions, retrenchments and reduced work for reduced pay. The COVID-19 pandemic has significantly altered how business is conducted, how the economy operates and how work and the remuneration of employees are approached. The question then follows as to what degree and in which manner remuneration was impacted. The research focused on changes to the way in which executive remuneration was structured, as well as changes to other areas of work and remuneration brought about by the pandemic. The aim of the study was to determine what the impact was, if any, of the COVID-19 pandemic on the remuneration structures of South African JSE-listed transportation companies. To achieve this aim, the researcher identified and conceptualised the components that can form part of total remuneration, including the taxation impact, cash flow implications and timing of the components. In this comparative study, the researcher followed an inductive, quantitative approach. The ontological stance was that of realism, while the relationship between the researcher and the data (epistemological stance) was seen as objective. These stances led to the adoption of the positivist research paradigm. The findings indicated that employers increased their focus on health and safety by ensuring that their staff had access to personal protective equipment to safeguard against the COVID-19 virus in the workplace. This was accompanied by an increase in flexibility for employees regarding work hours and working conditions.

Numerous companies implemented strategies enabling employees to work remotely or from home. While the pandemic disrupted training and development initiatives, adjustments were made to the method of training delivery and the focus of training offered, ensuring its continuity and relevance. Employers introduced various programmes to offer support to employees and their families. These initiatives included assistance in the form of food parcels, hampers and medical supplies, as well as programmes targeting employee mental well-being and psychological assistance. Furthermore, there was a notable enhancement in open and timely communication between employers and staff. Employers also made arrangements to ensure staff accessibility to COVID-19 vaccinations. Retrenchments during the pandemic were widespread and, in most cases, inevitable. In response, certain companies extended aid to employees to facilitate their re-skilling for alternative employment opportunities. Overall, the pandemic had the most significant impact on the percentage of total remuneration attributable to cash/base salaries, as well as bonuses and other short-term incentives. The prevalence of share-based payments in remuneration structures underwent changes as well. In addition, the pandemic influenced the composition of remuneration in terms of fixed and variable components. The findings specifically showed that a greater portion of total remuneration was attributable to cash/base salaries, while there was a noticeable decrease in bonuses and other short-term incentives. A comparison of the during-COVID and post-COVID remuneration structures revealed a significant increase in the proportion of total remuneration derived from bonuses and other short-term incentives, while a corresponding reduction in the cash/base salary proportion was observed. Also, share-based payment arrangements constituted twice the proportion of total remuneration in the post-COVID structure when compared to the during-COVID remuneration structure. Lastly, a comparison between the pre-COVID and the post-COVID remuneration structures indicated that the changes described above are still evident, however less drastic. There was a decline in the cash/base salary segment, but an increase in the bonuses and other short-term incentives. The study concluded with a description of the limitations of the study, as well as proposed areas for further research.