Johannesburg - A recent international survey commissioned by the International Trade Union Confederation (ITUC) found that South Africans were far more pessimistic about their economic prospects than the citizens of any other major economy, including those of fellow Brics members Brazil, Russia, India and China.
The results of the survey, which may help to explain the unrest that has hit so many sectors of the local economy, revealed that a comparatively high proportion of South Africans believed their current financial situation was grim and that employment prospects were poor.
The economic and social outlook survey covered the adult populations of Belgium, Brazil, Canada, China, France, Germany, India, Russia, South Africa, Spain, the UK and the US.
The results of the survey reveal the extent of the damage inflicted by collapse in the global economy caused by the financial crisis in 2008, with 50 percent of respondents directly affected by the loss of jobs or reduced working hours and more than half saying their incomes had fallen behind the rising cost of living.
Some 73 percent of South African respondents said they had directly experienced unemployment or reduced working hours. And 70 percent said their incomes had fallen behind their cost of living.
While respondents from the other Brics countries were generally optimistic about their economies, only 24 percent of South Africans expressed optimism.
Sharan Burrow, the general secretary of the ITUC, told Business Report last week that there was a feeling of “deep despair” across the globe. It was evident that the global economy was no more stable today than five years ago and that unemployment and inequality were driving economic instability. “There is an extraordinary sense of insecurity and a lack of trust in democracy.”
Burrow was a key speaker at the Principles for Responsible Investing conference in Cape Town last week, which was attended by international investors representing some $34 trillion (R340 trillion) of funds. She told the conference that workers and their unions accounted for a large portion of the pension funds that were being invested in equities across the globe.
“There has been too great a focus on share prices and speculation and not on building the sort of demand that will support economic growth.” It was difficult to see evidence of environmental, social and governance (ESG) issues being at the core of business plans. “There is a short-termism that denies the sort of society we should be creating… The current use of workers’ capital is in a highly questionable space.”
Burrow said a new investment model had to be developed that would better suit the retirement needs of workers. She called for more democratic debate involving the asset owners (workers) and for improved disclosure about what was being done to ensure ESG issues were being implemented and monitored. “The crucial challenge is to restore accountability… and to rebalance the power relationship between asset owner and asset managers, together with strong reporting requirements.”
John Oliphant, the principal executive officer of the Government Employees’ Pension Fund (GEPF) with funds of over R1 trilllion, who was responsible for bringing the annual conference to South Africa, told Business Report that it presented an excellent opportunity for Africans to tell international investors about the “African growth story”.
The African story had not been oversold, he said. He was excited about the continent’s growth prospects. He referred to the need to attract capital to realise the opportunities available in Africa.
With regard to incorporating ESG issues into pension fund investment strategies, Oliphant said there had to be a far greater alignment between the interests of pension fund members and investment managers.
There needed to be a focus on developing capacity among fund trustees so they could engage more vigorously with service providers on behalf of members.
He said the Code for Responsible Investing in South Africa had been developed to give fund members some insight into how service providers exercised their obligations when engaging with companies in which they invested pension fund monies.
More recently, the GEPF had supported the development of Responsible Investment and Ownership, a guide for pension fund trustees designed to enhance their capacity to undertake responsible investment. - Business Report