From: Gerald_A_Levy@MSN.COM
Date: Thu Nov 18 2004 - 19:10:41 EST
----- Original Message ----- From: "Jurriaan Bendien" <andromeda246@hetnet.nl> Sent: Thursday, November 18, 2004 3:56 PM Subject: Outsourcing and pension funds Just a few snippets: In connection with the issue of "outsourcing" computer work to India, Vijay Joshi, a fellow of Merton College, Oxford, writes in the Financial Times (Nov 16, 2004, p. 17) that information technology related output is currently less than 1 percent of India's GDP, employing less than 1 million people. This could increase to 2 million people by 2010, but by that time, Joshi says, India's labour force will rise to about 450 million people. The author claims about 5 percent of India's relevant age group receives a college education. Concerning pension funds, the Dutch Financieel Dagblad (Nov. 17, 2004, p. 9-10) reports that out of the grand total Dutch pension fund capital of 480 billion euro, two-thirds (316 billion euro) is managed by twenty Dutch fund-managers (including ING, F&C Netherlands, Philips, and ABN Amro), the other third is managed by overseas organisations (including Aegon, Barclays Global, State Streat Global, Merrill Lynch, Northern Trust, Vanguard Investments, Theodor Gilissen, HypoVereinsbank and Goldman Sachs). Thus, the management of national pension funds is itself being outsourced to foreign companies. The average general rate of profit on invested Dutch pension capital was 10.7% in 2003 (WM Company Universum at www.wmcompany.com). The strongest growth in the 1990s was investment of pension capital in real estate, which yielded an average return of 10.5% over the last ten years and 7.1% in 2003. WM Company indicates at its site that the highest profit rates for Dutch pension money are now obtained in Japan, in emerging markets, in information technology, and in commodities-trade. About 40% of Dutch pension capital is invested in stocks, yielding an average return of 12.8% in 2003 and averaged 6.5% over the last ten years (outperformed by real estate). Property yields averaged a return of 7.1%. International bonds yielded a negative return of -3.3% in 2003, principally through the decline of the exchange-rate of the US dollar. All of this appears to confirm my view of "surplus capital" in contemporary capitalism, i.e. that in the reproduction of total capital, an increasing portion of capital has exited the productive sector over the last ten or fifteen years, with its obvious consequences for employment levels. That is, overall, the rise in S/V in most industries was not able to offset the decline in S/(C+V), as indicated by the trend in real wages, real output growth, and the differentials in sectoral average rates of return on equity. Jurriaan
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