SABMiller chief casts doubt on positive indicators
November 24, 2009
It could be that it's just one of those "leads and lags" situations. It could be that the most appropriate stuff is not being measured, or it could be that the global powers that be just don't want us to become so depressed that there's a chance we never consume again.
Whatever the explanation is, there does seem to be something of a disconnect between what the professional economic forecasters are telling us and what we are all actually experiencing.
The chances are that you are experiencing tough times. That is unless you are in a plum job in the public sector and your employer wants to be shot of you, or you have access to an executive remuneration package in the private sector.
And if you look around - in South Africa and across the globe - you'll see a similar situation with very little justification for optimism.
Indeed, because we are hosting the World Cup next year, South Africa probably has more reason for optimism than most countries - other than China perhaps.
So for all of the rest of us who aren't economists working for large organisations such as the Organisation for Economic Co-operation and Development or are well-placed to milk the floundering system, last week's comments from SABMiller chief executive Graham Mackay will have struck a chord.
Beer volume growth is an indicator of current consumer performance. However, Mackay acknowledged his group, which is stretched across the globe, doesn't see any indicators that would give rise to serious optimism. Mackay described the current economic conditions as the toughest that have been experienced for decades.
He speculated that all the official reports indicating a pick-up in the pace of recovery might just be an attempt to "talk us out of recession".
Tourism
When the world's leading economies went into recession almost two years ago, there were fears that there might be less interest from abroad in the World Cup and that some of the overseas visitors might just skip a trip to come to Africa as part of being prudent spenders.
But certainly, judging from the ticket sales and hotel bookings, there will be a lot of visitors coming to Africa next year and though the World Cup will not turn every South African into a successful business owner, it has had some positive spin-offs even for the man on the street.
Take for example Signature Life Hotel Group, which is spending just more than R1 billion building 17 hotels in southern Africa. The group has 1 249 hotel rooms and by the time the hotels under construction are done, there will be 4 100 rooms under the management of the company by the end of September next year.
A third of the rooms have been booked out for the World Cup to Match, which is handling ticketing and accommodation for Fifa, and the rest will be contracted to tour operators. The tournament was a motivation for the company but it has plans to sustain its growth beyond the World Cup.
Ten of the hotels under construction are in Durban and they are creating 2 000 construction jobs at the moment and there will be another 2 000 permanent jobs once the hotels are up and running.
Yes, there are a lot of things that many would prefer were done differently by Fifa, which has literally taken over the country with some of its ridiculous restrictions, but the truth is hosting the World Cup has resulted in investments which otherwise would probably not have happened.
Employment
The government's efforts to curb job losses, by offering some respite to companies troubled by the downturn that would otherwise be sustainable, has floundered a bit.
In a nutshell, the training lay-off scheme launched in August is aimed at using this period of industrial slack to train workers so companies have better skilled staff when the economy picks up.
It is for workers earning less than R' 000 a year that are due to be retrenched or put on short time. The scheme is for up to three months, during which time the government will cover a portion of the worker's salary while the company will continue to pay benefits.
A company will be accepted if it is in financial distress and has the potential to turn around after the training lay-off scheme. Those wanting to participate must do so via the Commission for Conciliation, Mediation and Arbitration.
The problem seems to be that not only is there confusion at some companies as to what the scheme is all about, there is also misunderstanding about how to access it. At least one company that had recently carried out retrenchments did not know about it at all.
Complicating the lack of understanding among businesses are the apparent difficulties in getting workers on board, as they are suspicious that they might lose out on a retrenchment package if the company still folds after government intervention.
The government has set aside R2.4 billion for this scheme, but a comprehensive information campaign has been lacking.
The Department of Labour, which is overseeing the scheme, has now recognised that a document buried on its website has been an insufficient means to communicate this programme.
In the next few weeks it will launch a print and radio advertising campaign to increase the profile and understanding of the lay-off scheme.
Its unfortunate that the scheme was only launched three months ago and that an awareness campaign is only getting off the ground now, given that so many jobs have already been lost. It is akin to closing the barn door after the horse has bolted.
Edited by Peter DeIonno. With contributions from Ann Crotty, Slindile Khanyile and Samantha Enslin-Payne
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