One more cut from S&P Global Ratings will see SA join the ranks of its junk-rated peers.

S&P, whose decision on the country’s sovereign credit rating is due late on Friday, has made no secret of the fact that, to hold off, the agency needs to be convinced that the steps taken by the government to rein in debt and reform the structure of the economy would pave the way for SA’s growth rate to recover.

Although the week ahead will feature plenty of data releases, these will be overshadowed by S&P’s decision.

S&P has ranked SA’s foreign-denominated debt at BBB-, the bottom rung of the investment-grade ladder, with a negative outlook. Konrad Reuss, S&P’s MD for sub-Saharan Africa, told the Financial Mail recently that a downgrade was “a real possibility”, although it was difficult to say whether this would happen in June or December.

S&P is concerned about the country’s “very lacklustre” reform agenda and the danger that political events will slow progress.

A downgrade to speculative grade or junk status (BB+) would be a vote of no confidence.

In December 2015, S&P changed its outlook on SA to negative. Since then, the country’s gross domestic product (GDP) outlook had deteriorated, says Citi Bank economist Gina Schoeman.

There had also been little hard evidence of policy reform.

As a result, S&P would be “easily justified” in downgrading SA this week, Schoeman says.

However, in the past six months, the prospect of a downgrade had become far closer to call because of SA’s recent display of institutional strength. She singled out the judiciary, the Reserve Bank and the Treasury.

S&P might also wait until the mini-budget in October to allow more time for fiscal and GDP data to emerge, she says.

These are some of the reasons Moody’s did not downgrade SA earlier in May.

“Methodologies differ, however, and S&P may well have lost patience with the wait-and-see approach,” Schoeman says.

“This keeps the risk of a 3 June sub-investment grade foreign currency rating alive.”

In the run-up to the decision, the markets will have private sector credit extension data, as well as the country’s trade and budget balances to digest on Tuesday.

BNP Paribas Securities economist Jeff Schultz expects headline credit extension to have slowed to 8,7% year-on-year in April, from 8,9% in March.

The bigger releases of the week include the manufacturing purchasing managers’ index (PMI) on Wednesday and whole-economy PMI on Friday.

The manufacturing PMI will be the most interesting after its surprise spike up to a healthy 54.9 index points in April. Many economists do not expect the rise to be sustained, however.

By Claire Bisseker for www.bdlive.co.za

An internationally co-ordinated fraud attack involving forged bank cards used at ATMs in Japan has stripped Standard Bank of about R300-million.

Standard Bank and authorities remained mum on the progress of investigations and the whereabouts of the syndicate, as investors appeared largely unconcerned by the bank’s loss.

Spokesman Ross Linstrom of Standard Bank, which made just more than R22-billion in headline earnings across the group in 2015, said on Monday a sophisticated and co-ordinated syndicate had created a “small number of fictitious cards” and proceeded to draw a total amount of R300-million from ATMs in Japan.

He said investigations were at a sensitive stage, but that bank customers would suffer no adverse effects if their details had been stolen and used in the Japanese fraud.

Japanese media have reported that about 100 individuals hit 1 400 ATMs in just three hours on a day when banks are closed for business, with one withdrawal transaction at each ATM up to the daily limit amount set in Japan.

According to Japanese media, no arrests have been made and the individuals who made the withdrawals may no longer be in the country.

The fraud fits an international trend involving hit-and-run withdrawal schemes in which fraudsters may be jetting into countries in different time zones to buy themselves time to collect the cash and run.

The South African Banking Risk Information Centre confirmed the Standard Bank matter was under investigation, and CEO Kalyani Pillay said the local industry would provide full support to both the bank and law enforcement, where possible.

“The industry’s card losses for 2015 were in the region of R778-million across all card types for South African-issued cards.

“This was a 4% decrease compared to 2014. Banks have robust systems in place to monitor and detect fraud, but some risks lie with bank clients themselves,” Pillay says

Southern African Fraud Prevention Services executive director Manie van Schalkwyk said his organisation stops about R3-billion in fraud every year.

“Identity fraud is declining, and the main reason is the use of biometrics,” he says.

Van Schalkwyk said banks were making use of various databases and methods to try keep up with and combat such fraud, as criminals continued to evolve their modus operandi.

By Brendan Peacock for www.bdlive.co.za

If you want to attract and retain talented employees, having an office in the right location, with the features that today’s workers want, is more important than you may think.

The world of work is ever-changing, and employers who don’t adapt risk getting left behind. In an era when the boundaries between work and social life are becoming ever more fluid, reward packages and career progression are far from the only things that make for happy employees, as we discovered when we asked more than 1,000 workers across the UK about the features that make up their ideal office. The results point to a clear link between these ideal features and talent recruitment and retention – and some of them may come as a surprise.

The good news is that the workers we surveyed believe they would be 36% more productive at work if they were working in the ideal office. Moreover, 86% say they’d stay longer with an employer that had the ideal office location and features.

The other side of the coin is that 80% believe that companies that don’t offer their employees a convenient location and attractive features are more likely to lose them. And that’s not an empty threat, as younger workers in particular – the people who will be staffing the country’s offices for the next few decades – are markedly more likely to move jobs to find a working environment that suits them.

That can be costly for employers; consultants Deloitte estimate that, when an employee departs, a company loses two to three times their annual salary in terms of lost intellectual capital, client relationships, productivity and experience, plus the cost of recruiting a new hire.

Prime location

So what does this mean for employers? How they can they ensure that their office environment and facilities help to keep their current workforce happy – and attract the top talent they need to thrive in the future?

One thing’s for sure: employees are looking for – and expect – more than just smart decor. Our research reveals a wish list that includes a great office location and easily accessible transport links – but also, less predictably, communal meeting areas and social events in and around the office.

It’s no great surprise that the overall location of an office was rated firmly as the most important feature, with 70% of those surveyed saying this was very important – but only 42% claiming to be very satisfied with their current office location. An easy commute was also high up the list, with 62% rating public transport links as very important and 44% wanting car parking facilities.

Generation gaps

What really jumped out from the survey results, though, was the diversity in responses from the different generations that make up the working population in 2016.

Millennials (those aged 18-29) and Generation X (30-49) demand the most from their employers and – tellingly – are prepared to move to find what they want. Among Millennials, 53% claim they have previously changed jobs to improve the location and the features on offer, and 39% say they will definitely change jobs in 2016. This is a generation of workers with strong ideas about what they want from an office.

And what exactly is that? As working styles change, open and connected environments, with Wi-Fi and communal meeting areas, are very important to these two groups. Being in a location that has a ‘buzz’ about it is also high on the wish list for 90% of Millennials and 82% of Generation X.

Given that 68% of all respondents agreed that the line between work and social time is becoming increasingly blurred, activities and events at the office – or near it, on a campus for example – are also popular. Three quarters of Millennials said they valued such activities, compared with only 45% of Baby Boomers (those aged 50 or over).

Future workspaces

With Millennials predicted to account for 75% of the UK workforce by 2025, employers are already thinking hard about how to bring in the most talented of these workers – and how to keep them. Our survey suggests that planning workplace moves or improvements should be playing a significant part in businesses’ overall recruitment strategies, given the impact of the working environment on recruits’ decision-making.

When planning your next move, it’s worth considering the features listed above alongside the obvious things such as geographical location. Employees’ needs are changing: they are prepared to move to find the right working environment, and providing an office with the features they want could make a significant difference in being able to attract and retain the talent your business needs to succeed.

Source: www.officeagenda.britishland.com

Five fresh measures to deal with the economy were announced on Monday night by the government and business leaders. They will include R180-billion investment in energy in the next three years.

A joint public and private sector small-business fund on a 50-50 basis was another of the main measures. Already, the private sector has pledged about R1,6-billion to the fund.

Initiatives include scaling up investment by using lessons learnt from independent power producers programme for renewable energy. This model would be extended to gas and coal.

Co-investment by the private sector in investment in infrastructure and the strengthening of crisis-ridden state entities were other measures agreed to by business-government working groups set up in February to tackle the slowdown in the economy.

A credit rating working stream will meet to identify potential areas of reform and other interventions to avert a credit downgrade next month.

“We will work to reduce policy uncertainty and shore up the confidence in government’s ability to deliver on its promises of boosting growth,” said President Jacob Zuma after the meeting in Pretoria on Monday night.

The possibility of private sector involvement in state-owned entities was agreed to even after Zuma on Friday said South African Airlines was not for sale. The cash-strapped airline is seen as natural for private investment.

Part of the package announced last night was the appointment of “service providers” to help “consolidate airline businesses”.

In response to questions about Mr Zuma’s comments, Deputy president Cyril Ramaphosa said the government was looking at various models to look at how the private sector could “participate in some way” as they had a “great deal to offer”.

A framework for state-owned companies is set to be developed and “principles of disposal of nonstrategic assets” were “under development”, he said.

The government would also develop “economic regulators” to improve certainty, increase efficiency and healthy competition, such as a single transport economic regulator. “Appropriate mechanisms to strengthen state-owned entities will be developed so that we reduce the risk they pose for the fiscus and can play a stronger role in driving development,” Mr Zuma said.

The meeting came after ratings agency Moody’s, gave SA a reprieve late on Friday night.

Standard & Poor’s (S&P) will be in the country from next Monday, when government and its business and labour partners will again have to show that the country is up to the task of reviving a moribund economy.

Fitch is set to conduct its probe in the coming weeks. Both S&P and Fitch, which rate SA just one notch above subinvestment grade, will release their reviews of SA’s credit ratings early next month.

It is understood that the plans by the business-government working groups contributed to the positive outcome last week in the Moody’s review.

Closer co-operation between the government and business was made necessary after the fallout from the unexpected firing of former finance minister Nhlanhla Nene in December.

Earlier on Monday, Finance Minister Pravin Gordhan told a public finance management conference in Johannesburg that he was “optimistic” the team effort by the government, business and labour had helped SA avoid a ratings downgrade by Moody’s.

Although he acknowledged that SA was among countries that had not yet recovered adequately from the 2008 global financial crisis and that its structural challenges including education, were also weighing on economic growth, he expressed optimism.

“I’m very optimistic that the Team SA approach is one that we can extend to the next two ratings agencies that are going to come and have a look at our economy and our management of the economy — and in particular, the interaction between labour, government, and business,” he said.

By Natasha Marrian for www.bdlive.co.za

South Africa continues to experience slow growth in disposable salaries, according to the latest BankservAfrica Disposable Salaries Index (BDSI) released last week.

The nominal trend indicates further increases could be even smaller than currently seen, but remain above the inflation rate.

The trend in total payments of disposable salaries and pensions shows consumers will not be in a strong position this year, according to Mike Schüssler, chief economist at Economists dotcoza.

At the same time, he pointed out, pensioners are still not well off by any stretch of the imagination.

“Last month the increase in disposable salaries of 6,5% on a year ago barely beat inflation, which sits at 6,3%,” explains Dr Caroline Belrose, head of knowledge and risk services at BankservAfrica.

The average monthly take-home pay for March 2016 was R12 501. This still outpaced banked pensions, even though the BankservAfrica Private Pensions Index increased at a faster rate than salaries and was up by 7,4% for the year.

The average pension as paid via the payments system of BankservAfrica for March 2016 came in at R6 075.
Schüssler explained that the slowdown in disposable salary growth is also impacted by personal income taxes that were effectively raised again by not being compensated for inflation. This is called bracket creep and means that as people’s salaries or pensions go up to compensate for inflation, they enter a higher tax bracket. Therefore, in real terms they are taking home the same amount.

The salary of employees in the middle of the salary spectrum outpaced those at the higher end due to more people slowly moving up the employment ladder. The median salary shows a growth of 7.2%, which is again better than the average salary.

The typical pension increased by 13.4% on a year ago, and shows that many pensioners have kept up well with inflation. But pension payments are still less than half of salaries.

The typical salary came in at R9 282 for the month of March, while the typical pension was R4 259. The increases for both medians outpaced inflation in March 2016.

The total combined payments of salaries and pensions grew by a total of 7.2% over the year to March 2016. It is the seventh month that the total payments have been within 50 basis points of 7%.

This is slower than the period of July 2014 to March 2015, where only one month had a growth rate in single digits. While BankservAfrica still excludes payments to bank accounts that are over R100 000, the total averaged over R47,8-billion.

“The slowing trend in the total payments for salaries and pensions is probably the best indicator that the current growth in retail sales is coming from the falling sales of big ticket items such as cars,” explains Schüssler.

“There is likely to be a bit of extra consumer credit growth driving retail sales too. The faster increase of median and average pensions was unexpected. But as we do not have a long history of data, it is difficult to have foreseen this.”

He believes retail sales will no longer be growing at a real rate of 4% or even 3% within the next few months.

“Interest rate hikes and slower salary increases based on last year’s low inflation numbers will limit the employee’s ability to spend. This is bad news for large item sales like cars and furniture. It is likely that retailers will struggle for real growth in the next few months,” says Schüssler.

By Carin Smith for www.fin24.co.za

In light of rising food prices following the nationwide drought and weakened value of the rand, employers can expect additional pressure from employees for annual salary increases. Many employees are desperate for an increase in order to make ends meet; however, the challenging economic climate makes it difficult for employers to provide an annual raise to their entire staff. Employers must therefore approach the situation very strategically.

This is according to Francois Wilbers, MD of Work Dynamics – a leading organisational psychologist consultancy in the country, who says that often the workforce doesn’t realise that employers are exposed to exactly the same circumstances and are also battling to keep a steady revenue stream. “Granted, in larger corporations, the extent to which they are exposed is less than in smaller organisations, as smaller establishments experience the economic changes with far more severe financial consequences.”

Wilbers says that it is important to note that salary increases are not regulated by labour legislation, except in as far as may be provided for in any agreement or collective agreement, where provision is usually made for annual wage or salary negotiations. “Essentially, in the absence of any such agreement, salary increases remain a matter of mutual interest between employer and employee, therefore, there is no obligation on the employer to grant annual increases. With that said, if any party in a relationship finds it necessary to refer to the ‘terms of a contract’ as a point of departure in engaging with each other, it says something about the nature of trust between the parties.”

Wilbers adds that in cases where employers cannot afford to pay an increase equal to the consumer price index (CPI), they need to be honest with their staff members and accept the premise of them seeking alternative employment. “It is absolutely essential to maintain an open dialogue rooted in transparency and honesty in order to handle the situation effectively. For example, don’t use the detrimental state of the economy as an excuse to not grant your employees annual increases if you are still increasing profitability.”

When trying to asses the best option for your organisation, the retrenchment of staff members is a pressing threat that must be avoided at all costs, he explains. “For organisations in financial distress one of the most common ways to solve the problem is to retrench staff. From a socio-economic point of view, employers should try to avoid retrenchments and rather think of more creative alternatives. This option is especially less desirable in our country, as our unemployment rate of 25% is of the highest in the world.

“In addition to the socio-economic impact of retrenching staff, the effects on employee morale can be devastating, especially if the process is not handled in a professional and transparent manner. First prize is to avoid retrenching staff altogether.”

Wilbers explains that there are a number of alternatives that can be implemented to avoid the process of retrenchment and that these could end up being a mutually beneficial solution. “One of the most common steps organisations take is to forfeit guaranteed year-end bonuses and to rather assign bonuses according to targets that are achieved.

This incentive system is a great tool for maintaining committed and hardworking employees, while weeding out those that are not target driven, says Wilbers “In extreme cases, organisations can also implement salary cuts rather than retrenchment. “Again the key here is mutual honesty between employer and employee. The employer could for example allow the employee to take on freelance opportunities in order to supplement his or her decreased salary.”

Wilbers continues that other tried and trusted alternatives to retain staff is to implement annual increases subject to affordability, on a ‘pay-as-you-go’ basis. “Here you would have to decide whether you can actually afford the increase. You would have to look at the company’s performance over the first quarter and then see whether you can afford to pay an increase for that quarter. Increase will be paid in the form of a cash amount for the first quarter or spread equally over the second quarter.”

Some orgnisations opt for a performance-based pay on top of current salaries. “In exchange for sacrificing annual increases, staff will be offered the opportunity to earn incentives if targets are achieved. These targets must be set in such a way that there will actually be enough money available to fund the incentives.”

Another effective way would be to pay certain allowances to key staff – despite the difficult economic times – is for companies to keep in mind that they still have to compete for talent, explains Wilbers. “If you are afraid you may lose some of your key staff, consider paying them an allowance to retain their services, without giving an annual increase to other staff.”

“Ultimately, organisations differ in their ability to sustain staff and afford salary increases. Retrenchments in harsh economic conditions should always be avoided. The key is to seek solutions that will be of mutual interest to the employer and employee and engage in a proactive and honest way to find creative solutions,” concluded Wilbers.

A petrol price hike of between 17 cents and 18 cents a litre is likely in May‚ according to the Automobile Association (AA).

Diesel and illuminating paraffin‚ however‚ are set for decreases of 11c to 12c a litre.

Commenting on unaudited mid-month data released by the Central Energy Fund (CEF)‚ the AA said on Monday that rising international oil prices were continuing to do battle with gains in the rand/dollar exchange rate.

“We are seeing a gradual‚ but sustained return of strength to petroleum prices‚” the AA says.

“On the international market‚ diesel and petrol prices have risen since late February‚” the Association explains.

“The appreciation of the rand against the US dollar has gone some way to offset this‚ meaning that diesel and illuminating paraffin are heading for reduced prices‚ while petrol is set to climb‚” it adds.

“Both the exchange rate and international oil prices continue to be volatile‚ and the month-end picture could be quite different from the current one‚” the AA says.

Source: www.bdlive.co.za

South Africa has the highest number of highly-skilled women professionals of any African country who are emigrating to other countries because of limited career opportunities at home.

This is according to an analysis of data by the Organisation for Economic Co-operation and Development (OECD), which shows the migration patterns between all African countries and OECD countries.

The OECD is made up of 35 countries, including the United States, Australia, New Zealand, the United Kingdom and several European countries.

This, combined with the analysis of data from the Institute for Futures Research at the University of Stellenbosch and the Commission for Gender Equality, shows that the number of women leaving South Africa for the world’s most popular immigrant destinations is growing faster than the men who are moving to the same countries.

Out of 86 countries that South Africans emigrated to, those that experienced the highest migrant influx were the United Kingdom, Australia and the United States.

These three countries received 967,619 migrants from South Africa from 2010 to 2013. Of these, almost half — 486,134 — were women. In the 2010-2011 period the number of women migrants to these countries outnumbered men.

Commission for Gender Equality commissioner Janine Hicks said women professionals were likely to seek career opportunities in other countries because their representation in managerial positions and directorships were still disproportionately low.

“If you ask about a push factor, it’s that we are out there but we are not getting access to senior positions. Gender transformation groups have put out figures that point to poor gender transformation,” Ms Hicks said.

While women made up 46.8% of the employed population in 2013/2014, their representation was at 29.3% among executive managers, 9.2% among private sector chairpersons of boards and as low as 2.4% among CEOs of JSE-listed companies, she says.

Also at issue were rigid attitudes in the professional environment regarding the inclusion of women in key decision-making. And there was a failure on the part of the private sector to recognise the needs of women when fulfilling their corporate social responsibility obligations, especially in rural areas where access to services was limited.

“Mining companies in Mpumalanga claim they struggle to retain women professionals. Mining companies in South Africa are based in rural areas, so some would joke that there is no Woolworths in Secunda so it would be hard to retain a woman there,” Hicks says.

“But they don’t seem to want to talk about investing in services that women working in these rural areas need, such as schools to send their children to, and gynaecologists. In fact I challenge you to find one gynaecologist in Secunda,” she says.

Mienke Steytler of the South African Institute of Race Relations said women were most affected by the lacklustre performance of the South African economy, which hampered their employment prospects.

“Young women tend to take advantage of the opportunities offered to them and if these opportunities are in other countries, they will take them, especially if they face such a high chance of not finding work,” Ms Steytler said.

Australia, Canada, New Zealand and the United Kingdom favoured highly skilled female migrants, and there were also fewer concerns for women over crime, healthcare, and education among other things, she said.

By Khulekani Magubane for www.bdlive.co.za

Fears of a further slowdown in the economy and political risks pushed the rand over the R15/$ level again yesterday, and a key index showed that private companies are battling to survive, write Ntsakisi Maswanganyi and Maarten Mittner.

The Standard Bank whole economy purchasing managers’ index (PMI) fell to 47 from 49.1 in February — the most marked deterioration in operating conditions in more than a year and a half. Readings below 50 signal declines.

This means less investment, further job losses and limited support for economic growth — one of the reasons SA is at risk of a credit rating downgrade.

The average PMI for the first quarter was the worst since the inception of the survey almost five years ago.

The rand tanked more than 2% to R15.13/$ after President Jacob Zuma survived a motion to impeach him in Parliament.

Global risk aversion also dragged down the rand and the JSE which closed in the red.

Rating agencies would take the political situation in SA into account when reviewing its credit rating, Finance Minister Pravin Gordhan said after Parliament voted against impeaching Mr Zuma.

“Politics, economics and the fiscal situation are all things rating agencies watch out for. South Africans should be aware of that,” Gordhan says.

Source: www.bdlive.co.za

In just a few days’ time, South Africans will feel the real impact of the struggling economy as inflation records a seven-year high, the drought deepens and several everyday items go up in price.

Already, non-governmental organisations are seeing increases in the number of poor South Africans experiencing malnutrition.

Next month, Eskom hikes the price of electricity by 9,4%, petrol and the new fuel levy will cost 80c more a litre and DStv subscription goes up by 8%.

Moreover, the prices of many foodstuffs have over the past few months been climbing, driven by inflation and the drought. The Reserve Bank said last week that inflation had reached 7% in February.

The poor are the worst hit. Already, one in four children go to bed hungry, according to data from the Human Sciences Research Council’s National Health and Nutrition Examination Survey.

“We expect life to get much worse for the poor,” said Mervyn Abrahams, CEO of the Pietermaritzburg Agency for Community Social Action. “People struggle to get by day to day.”

He said there was a pensioner who no longer bought vegetables because they had become too expensive as a result of the drought.

Abrahams said he also knew of a boy receiving food through his school’s feeding scheme. He said the boy brought his plastic container to school so he could take his lunch home to feed his three-year-old and five-year-old siblings.

Abrahams said his organisation had calculated that a basket of food containing enough protein and vegetables would cost a family of seven R4239 a month. An average household in Pietermaritzburg survives on R3200 a month .

On the West Rand, activist Cora Bailey said she had seen an increase in the number of hungry people approaching NGOs for food. In one instance, a grandmother approached an NGO with a baby.

“The mom has abandoned the child. The grandmother is [an illegal immigrant] from Lesotho and can’t apply for the child support grant. She didn’t have money for baby formula. The child looked [unhealthy] and she didn’t look too good herself,” said Bailey. “I had to split a food parcel for two with four people on Thursday.”

“I think we’re going to have a food revolution,” she added.

“When winter comes and people are both cold and hungry, we’re going to see huge problems. Honestly, I don’t know how people are coping.”

Economist Dawie Roodt said the situation looked bleak as more interest rate hikes were likely.

Already, a middle-class family with a R1-million bond faced a R300 increase in monthly mortgage repayment following the recent interest rate hike.

Interest rate hikes, he explained, meant people paid more for their debt and there was less money in the economy.

Less spending caused factories to produce less, which led to retrenchments Roodt added.

Middle-class families face further squeezes, with the petrol price increase at 41c a litre next month. But with increased taxes on fuel, it is likely to cost about 80c more, according to the SA Institute of Race Relations. The institute’s Ian Cruickshanks said with the rising food and fuel prices, the government had to realise it had to start spending what it had.

Roodt also said the weakening rand meant imported goods were more expensive. “High unemployment and the high cost of imported goods could be an opportunity for entrepreneurs to create jobs and factories to make things.

”But the government must stop harassing business owners and taxing them to death.”

By Katharine Child for www.timeslive.co.za

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