Moody’s blues and other morbid stats

2012-10-20 11:49

Understandably, there has been much hand-wringing over the recent downgrade by ratings agency Standard & Poor’s, and Moody’s downgrade of parastatals Eskom and Telkom, 12 of our ­municipalities and our banks.

These downgrades affect lending rates and the more ­“unstable” we are rated, the higher the interest rate. In simple terms, it means that yet again these added costs will eventually be passed on to the consumer.

However, the ­ripple effect will only be felt when we’re well into 2013. Its real impact will be like a silent and deadly virus eating away at our already diminished disposable incomes.

While the focus has been on the downgrades, another ranking system seems to have slipped quietly beneath the radar, which explains not only the worrying wildcat strikes spreading across the country, but more importantly a depressing trajectory of South Africa’s future.

Last month, the World Economic Forum released its Global Competitiveness Report. A few in the media cherry-picked a few good and bad points, but I believe it is worth revisiting and unpacking the report in light of these downgrades.

First, the good news. Overall, South Africa was ranked 52nd this year, remaining the highest-ranked country in sub-Saharan Africa and third-placed among the Brazil, Russian, Indian, Chinese and South African (Brics) economies. What was not revealed – and what many people are completely surprised and shocked at – is we rank number one in two pillars: our institutions and our financial market development.

In fact, within each of these pillars we are also ranked number one in two subcategories.

The graphic above shows the two top ­rankings in the category of institutions.

However, before we pat ourselves on the back, take a look at the seventh pillar rankings: that of labour market efficiency, where we rank second to last in hiring and firing practices, and come in rock bottom on cooperation in labour-employer relations, while our flexibility of wage determination is also nothing to be proud of.

So, while we are brilliant at auditing (ironically, we can identify which municipalities are dysfunctional, but sadly we have no systems in place for ­recourse) and have exemplary corporate board governance, we fail in the most important labour relations categories.

In a nutshell, this is the fuse that ignited the Marikana tragedy and what is fuelling the ongoing strikes that are tarnishing South ­Africa’s global reputation. These rankings ­also illustrate clearly not only the inequality that exists in our country, but perhaps more importantly how the seeds of dissatisfaction are sown between the blue-collar workforce and the C-Suite (senior executives). They ­explain how we got to where we are now, which is why I consider it the “good” news.

Now for the bad news: our future development trajectory.

South Africa’s education rankings are not only depressing but deeply concerning when you look at other factors that the report does not consider. As with labour relations, we languish at the bottom of the pile when it comes to our overall education system, our primary education, and our quality of maths and science education.

(Zimbabwe ranks 30th compared with our 140th – go figure.)

So while this may cause further hand-wringing, it becomes even more worrying when you layer in the fact that the country has an extremely youthful population, with one of the youngest populations in the world.

The average age of the South African population is under 25 and 31% of South Africans are 15 or younger. Youthful populations work positively for a country if there are two things in place: a good education system and plenty of employment opportunities.

We have ­neither. Add to this the fact that a large portion of our youth (people under 30) are either illiterate or have simply fallen through the cracks by not managing to finish school (half a million alone in 2011), plus the fact that we are currently dealing with approximately 3 million Aids orphans, then South Africa’s future looks decidedly bleak.

The time for chirping from the sidelines has passed. We all need to roll up our sleeves and fix things, collectively. Global rankings mean nothing to failed states.

» Chang is the founder of Flux Trends. Visit ­ 

Join the conversation! encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions. publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Inside News24

Traffic Alerts
There are new stories on the homepage. Click here to see them.


Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire network.


Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.