Pay inequality, fairness and employee retention in South African fast-moving consumer goods

Abstract

Orientation: Pay inequality remains a persistent challenge in South African organisations, particularly in competitive sectors such as fast-moving consumer goods (FMCG). Unequal and opaque pay practices shape perceptions of fairness, trust and legitimacy, influencing employee engagement and retention decisions.
Research purpose: This study explores employees’ experiences of pay inequality and how fairness perceptions influence engagement and retention in a South African FMCG context.
Motivation for the study: Despite frameworks promoting equal pay for work of equal value, pay disparities and opaque remuneration practices persist. Understanding how employees experience pay inequality is essential for organisations seeking to strengthen trust, commitment and retention amid intensifying competition.
Research design, approach and method: A qualitative, interpretivist design was employed, using semi-structured interviews with 11 FMCG employees. The study integrates Equity Theory and Social Exchange Theory to explain how pay inequality is interpreted as both a fairness judgement and a relational signal, shaping retention over time.
Main findings: Pay inequality is interpreted as a fairness and legitimacy issue. Inconsistent pay structures, opaque decision-making and limited transparency intensified social comparison, undermined trust and contributed to psychological withdrawal, disengagement and increased openness to external opportunities.
Practical/managerial implications: Organisations should address pay equity and governance by implementing consistent, transparent remuneration systems, strengthening communication and aligning transparency initiatives with corrective action to reduce disengagement and retention risk.
Contribution/value-add: This study offers context-sensitive insights into pay inequality in South African FMCG organisations, extending equity and exchange perspectives and informs fair pay governance and retention strategies.