(OPE-L) Outsourcing and pension funds

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,
 management of national pension funds is itself being outsourced to foreign

 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

 WM Company indicates at its site that the highest profit rates for Dutch
 pension money are now obtained in Japan, in emerging markets, in
 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
 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
 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


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