Impact of the economic crisis on employment in OECD countries

The OECD area economy has entered recession and labour market conditions are rapidly deteriorating in many countries, according to the latest issue of the OECD Economic Outlook (No. 84, November 2008).

OECD projections indicate that the average unemployment rate in the OECD area may reach 6.3% in the last quarter of 2008, from 5.5% a year earlier. The unemployment rate is projected to increase further in the next 18 months and peak at 7.3% in the second quarter of 2010.

Overall, these projections suggest an increase in the number of unemployed persons in the OECD area from 34 million in 2008 to 42.1 million in 2010 – the most rapid rise in OECD unemployment since the early 1990s.

(click on the images to enlarge)

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Finance & Construction - biggest contributor to growth in SA

Image: LotusHead

The finance and construction industries have been identified as the most significant contributors to growth in South Africa's services sector - this according to BuaNews, the Government news portal.



Deputy Minister of Trade and Industry, Rob Davies, on Wednesday said in South Africa, service sectors contributed 74 percent of the Gross Domestic Product (GDP), and 72 percent of employment."




Service sectors such as finance and construction have been particularly significant contributors to growth during the upswing which we experienced between 2001 and 2007," said Mr Davies, speaking at the Service Exporter Network Annual Meeting and Conference. He highlighted the importance of sectors such as the services sector to the growth of South Africa's economy.

Services and trade within the services sector is becoming increasing important to both developed and developing countries, Mr Davies said, adding that the sector had become inclusive of telecommunications, transportation, finance, insurance, distribution, information services and entertainment services.

The services sectors currently account for two thirds of global output, one third of global employment and nearly 20 percent of global trade, the deputy minister said.Between 2000 and 2007, global services sectors grew at an annual rate of 10.1 percent which was 1 percent more than the growth in trading goods.

The Accelerated and Shared Growth Initiative of South Africa (AsgiSA) identified two important services sectors, namely Business Process Outsourcing and off-shoring (BPO&) and tourism.

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The financial crises and the BRICs

Image: sundstrom

As the financial crisis continues to roil credit and stock markets around the globe, it seems that no country or continent is being spared the consequences.
Brazil, Russia, India and China--the BRIC countries--are no exception.

In a recent Knowledge@Wharton podcast on the Forbes website, Shiv Khemka, vice chairman of Sun Group, based in London, New Delhi and Moscow; Silas K.F. Chou, president and CEO of Novel Holdings, based in Hong Kong; and Odemiro Fonseca, founder of Viena Rio Restaurantes in Rio de Janeiro, discuss their countries' response to the crisis, its impact on specific sectors, the decoupling hypothesis and the dangers of protectionism, among other topics.

The edited transcript of the conversation is available here.

Credit crunch impacting retailers

Copyright: svilen001

The credit squeeze that culminated in a major financial meltdown last week has been impacting U.S. consumers, as well as retail businesses, throughout 2008.

According to a telephone survey of 100 CFOs at leading chains nationwidstudy by BDO Seidman, LLP, one of the USA’s leading accounting and consulting organizations:

• Nearly half (41%) of CFOs at U.S. retailers have experienced a tightening of credit by their lenders
• More than a third (37%) of the CFOs report a reduction of planned inventory purchases for 2008, further illustrating a difficult lending and economic environment
• One-in-four (24%) of the retail CFOs cite that they have had, or plan to have, significant staff reductions in 2008. When looking at the top 100 retailers specifically, 32 percent of those CFOs are experiencing layoffs this year
• 36 percent of the retail CFOs say that they have, or will, close stores in 2008, with 27 percent citing that they will close more stores this year than they did in 2007.
• three quarters (77%) of CFOs have not or do not plan to delay store opening plans in 2008.
• nearly a third (28%) of the retail CFOs stated that they are evaluating, or considering changing from U.S. accounting standards to IFRS
• The majority (91%) of retail CFOs reported that the weak U.S. dollar has not increased their concern of being acquired by an international entity

The Structure of Financial Supervision: Approaches and Challenges in a Global Marketplace

In July 2007, the Group of Thirty decided to launch a review of various national supervisory
and regulatory approaches and place them within the context of the changing global
financial system.

The study set out to look at the changes evident in the financial markets and the evolution of the national supervisory architecture at a time when central banks and supervisory agencies have been seeking to improve their supervisory processes in light of the blurring of lines between different financial sectors and businesses.

The review of 17 major national supervisory systems has confirmed that while dealing with similar problems and challenges, such systems are fashioned through a process that includes a myriad of political, cultural, economic, and financial influences.

Despite the many differences from country to country and market to market, the central bankers, supervisors, and government ministries are charged with overseeing financial institutions and dealing with threats to the stability of the financial system.

The Group of Thirty that assessed the strengths and weaknesses of a number of international regulatory systems. The conclusions of the study can serve as a framework for the coming debate over how best to reform our regulatory framework to mitigate and withstand future shocks.

As the discussion over financial services regulatory reform deepens, financial industry experts need to stay informed about the direction and future shape of their industry’s changing regulatory structure.

Ripples felt across the world

Copyright: ilco

The financial crises in the US has made waves across the globe. Barry Sargeant from Moneyweb made a brief synopsis of the global ripples:

• The Dow Jones Industrials fell as much as 700 points in midday trading after it was announced that the government would not bail out the industry for an estimated $700 billion
• in the UK, Bradford and Bingley, Britain's ninth-biggest mortgage provider, was nationalised
• In Iceland the government seized control of Glitnir bank – the third largest in the country
• Fortis, a large Benelux banking group, has been saved by the governments of Belgium, Luxembourg and the Netherlands when they announced that they were to invest €11.2bn (£8.9bn) to support the group
• In Europe, Dexia's stock price was down 29%, while in the US, Wachovia fell 27%, and Sovereign Bancorp lost 52% of its value.
• "The Nikkei Stock Average of 225 companies was down 3.3% midday, while benchmark indexes in Australia and New Zealand were down 2.9% and 3.1% respectively. Taiwan's stock market, open for the first time since Friday due to a typhoon, was down 4.3%, while indexes in Singapore and Hong Kong were both down 2.4%. China's markets remained closed for a week-long holiday." more
• In Germany, the government provided €35bn in credit guarantees to Hypo Real Estate Bank,
• And in France president Nicolas Sarkozy has assured citizens that the government would protect depositors from any potential losses brought on by the credit crunch
• Among individual country indices, China was down 55%, the UK by 28%, Germany by 29%, Japan by 32%, and France by 29%.
• The world banks index has fallen 38%, while world materials, which includes resources such as mining and oil, is off by 35%.

For more news articles on the effect of the crises, click here.

Biggest Bankruptcies in the USA

The Lehman Brothers bankruptcy protection filling is the largest in US history, CNBC compiled a list of other costly bankruptcies:

1. Lehman Brothers
Pre-Bankruptcy Assets: $639 billion
Date Filed: Sept. 15, 2008

2. Worldcom
Assets: $103.9 billion
Date Filed: July 21, 2002

3. Enron
Assets: $63.4 billion
Date Filed: Dec. 2, 2001

4. Conseco
Assets: $61.4 billion
Date Filed: Dec. 18, 2002

5. Texaco
Assets: $35.9 billion
Date Filed: April 12, 1987

6. Financial Corp. of America
Assets: $33.9 billion
Date Filed: Sept. 9, 1988

7. Refco
Assets: $33.3 billion
Date Filed: Oct. 17, 2005

8. Global Crossing
Assets: $30.2 billion
Date Filed: Jan. 28, 2002

9. Pacific Gas and Electric
Assets: $29.8 billion
Date Filed: April 6, 2001

10. United Airlines
Assets: $25.2 billion
Date Filed: Dec. 9, 2002

Interestingly enough 8 of the 10 were occurred in the 2000's.

Lehman to file for bankruptcy

Copyright www.daylife.com

Here are some news results regarding the bankruptcy of the Lehman Brothers, a global investment bank:

Lehman Brothers sunk, Merrill Lynch sold National Post, Canada

Fuld's Subprime Bets Fueled Lehman Profits, Undermined Survival Bloomberg

Lehman Goes To The Wall Forbes, NY

Lehman Brothers files for bankruptcy as credit crisis bites Telegraph.co.uk,

Lehman to declare bankruptcy Moneyweb

Research leading to (financial) rewards

Copyright laurenced

Which universities get the most bang for their research buck? Forbes Entrepreneurship assembled a list of the top 15, based on a 2006 survey (the most recent data) of 189 schools by the Association of University Technology Managers, which tracks university-born patents and licensing revenues. (Stevens came in at number three; Stanford, number nine.)

Total research-related income generated by all 189 schools: $1.5 billion.

New reference book with historical economic/financial statistics

Copyright kikashi

International Historical Statistics; Africa, Asia and Oceania 1750-2005 is the latest edition of the most authoritative collection of statistics available.

It is available in our Reference collection at HG2 MITC (this means that you won't be able to take the book out, however, you can make photocopies)

Updated to 2005 wherever possible, it provides key economic and social indicators for the last 255 years, serving as an essential reference source.

Contents provides:

• statistical data in easy to use tables
• for the last 255 years (where available)
• of every country in the African, Asian and Australiasian continents

Covering:

• Population & Vital Statistics

Includes population of countries at enumerations, by sex and age groups, of major cities, vital statistics, international migrants

• Labour Force

Includes economically active population, unemployment, industrial disputes, indices of wages/earnings

• Agriculture

Main arable food crops; various foodstuff outputs; livestock, exports of various agricultural commodities

• Industry

Includes coal , crude petroleum, natural gas and iron ore production; assembly of motor vehicles, imports & exports

• External Trade

Includes aggregate current values, main trading partners and major commodity exports

• Transport & Communication

Includes length of railway open lines, freight/passenger traffic on railways, merchant ships registered, motor vehicles in use, civil aviation traffic, postal/telegraph traffic, radio/tv sets in use

• Finance

Includes currency/banknotes in circulation, demand deposits in commercial banks, savings, money supply, total central government expenditure,central government revenue (tax yields)

• Prices

Includes wholesale and consumer price indices

• Education

Includes number of children schools and higher education

• National Accounts

Includes national accounts totals , proportions of GDP by sector of origin, balance of payments

Credit cards usage on the up in emerging markets

Copyright LotusHead

According to a new Forbes article, credit card usage is on the rise in the emerging economies of the world:

" The growth of credit card use in Latin America, Asia and Eastern Europe signals continuing financial development in these markets. However, the experience of South Korea in 2003 demonstrates that excessive growth in this type of consumer credit has the potential to threaten economic stability. In recent years, the credit card industry in emerging-market economies has expanded rapidly: --Between 2004-07, the number of credit cards in Brazil and Mexico more than doubled, while the number of cards in circulation in Poland tripled. --Russia has also seen major growth. --Outstanding credit card debt in India tripled over the same period. --In China, growth in the number of outstanding credit cards averaged just over 23% from 2004-07. It surged to nearly 93% in the first half of 2008. " For more on the article, click here.

For scholarly articles discussing credit cards and emerging markets click:

• here for articles from EbscoHost
• here for articles from ProQuest
• here for articles from ScienceDirect

Top 50 CEO's in Asia

Forbes Business just released a list of CEO's of the Top 50 companies operating in Asia:

Auditor General briefing to Parliament

Copyright by miamiamia

The Auditor General and his Deputy briefed the Parliamentary Monitoring Committee on Finance extensively on the 2007/08 Annual Report. Here is the presentation they made. Highlights include:

• The Office of the Auditor General (OAG) was engaging more positively and proactively with stakeholders.
• Interventions with the provincial MECs of Finance had shown good results.
• Engagement with local municipalities was also proving useful, showing improvements in motivation and commitment and planning.
• The OAG did, and would continue to, contract out work to private audit firms, many of them newly emerging black firms, and was in this way improving capacity, training and transformation in the profession.
• Its international participation was described, and it was reported that OAG would assume the Chair of the international body of Auditor Generals from October.
• The financial statements showed a deficit of R8.3 million instead of the anticipated surplus. This was largely as a result of more work being contracted out than anticipated. OAG did not earn a profit margin on such work, and although it recovered its fee output, it did not in fact recover the administrative costs. Full details of the income were tabled and explained.
• There had been high provision for debt – much owed by municipalities – and further cleaning up of the balance sheet had revealed several further small non-recurring amounts to be written off or corrected, totalling R3.9 million.
• A comparison of performance against budget was tabled, as well as a comparison of projected and actual targets. OAG had achieved an unqualified audit, and was working hard to maintain this and to ensure that governance remained strong in every business unit.
• Debt collection for national departments had improved, although it was still problematic at municipal level. Funding bottlenecks had been addressed.
• There would be ongoing challenges in capacity, because of the shortage of skills in the whole profession, but the OAG would both safeguard its own position and continue to involve private audit firms.

Audit Outcomes of Municipalities: Auditor-General & Accountant-General reports 2006-2007

copyright bylusi

Here is a summary:
The Accountant-General and the Auditor-General briefed the Parliamentary Monitoring Group for Finance on the 2006/2007 audit outcomes of municipalities.

It was noted that of the nine provinces, only four provinces (Western Cape, Gauteng, Northern Cape and Mpumalanga) had submitted their financial reports on time. Limpopo (53%) recorded the lowest percentage of submissions.

The Accountant-General said that many municipalities did not have the internal capacity to adequately manage their financial reports, but did note that there had been a slight improvement by provinces in terms of adverse opinions and disclaimers.

He said that the interventions made in Western Cape and Gauteng had been important as delegated municipalities were no longer in existence, regular workshops were held, strong leadership and support was forthcoming from the provincial government and National Treasury, and in Gauteng retired experienced officials were deployed to municipalities to provide assistance.

The Auditor General had identified six best practices indicators, which he outlined. Many municipalities had problems with compliance as they did not have the relevant capacity to address their challenges. Lack of proper oversight and supervision was also identified as problematic. He urged municipalities to cease their suspicion of deployed officials, and said that political officials should enforce proper management of public funds entrusted to them.

They also mentioned the fact that the local municipalities were not seen as attractive job prospects and political infighting as constraints.