Posts tagged ‘economy’

How will the BREXIT impact AFRICA?

(BROOKINGS)

 

The potential departure of the U.K. from the EU—commonly referred to as the Brexit—will likely negatively affect the global economy.

 

Perhaps the biggest impact of the Brexit on Africa would be the end of British “outwardness”—the country’s concern with and responsiveness to global development issues—which, from an African development perspective, reached its peak in 2005 with the U.K. presidency of the G-8. Indeed, at the G-8 Summit in Gleneagles, Scotland that year, leaders agreed to double aid to Africa and eliminate outstanding debts of the poorest countries.

 

Indeed, one of the major successes of the G-8 U.K. presidency was the agreement to provide debt relief to the poorest African countries. The G-8 countries agreed to increase aid to developing countries by $50 billion a year by 2010 with at least half of this commitment going to Africa. Other commitments included increased support for African peacekeeping forces and additional investment in education and the fight against HIV/AIDS, malaria, tuberculosis, and other diseases.

 

Africa played an important role for Britain when it joined the EU. When Britain’s colonial empire ended, the economy faltered as well. Africa was a strong motivation for the European integration process. Also, in the context of Britain, its withdrawal from the empire and declining economic strength due to this made the move towards the European experiment somewhat inevitable

 

The Brexit could lead to a retrenchment from outwardness with possible negative implications on the U.K.’s development initiatives in Africa and have negative effects on:

 

Bilateral development assistance

 

An exit from the European Union would also have dire consequences for development assistance. The U.K. is one of the biggest contributors to the European Development Fund, the EU’s development assistance arm, which provides funds to developing countries and regions.

 

While a Brexit would deprive the EDF of British resources for development assistance, Watkins argues that the direct disbursement of aid—set to replace the U.K.’s contribution to the fund—from the U.K. to recipient countries will have a more narrow geographical reach than aid funnelled through the EDF.

 

Stronger bilateral relations but weaker bilateral trade?

 

Analysts have stated that the Brexit would weaken trade ties between the U.K. and African nations. The renegotiation of trade agreements can be a lengthy process, which could cause a decrease in trade volumes between the U.K. and Africa Indeed, a Brexit would prompt the United Kingdom to renegotiate over 100 trade agreements.  Bilateral trade agreements signed between the EU, on one hand, and other countries and regional communities, on the other, would also have to be renegotiated.

 

In sum, there are a number of ways through which the Brexit could have an impact on African countries, starting with its impact on the global economy, reduced British outwardness when it comes to global development issues, as well as decreased bilateral development assistance and trade. They are all difficult to quantify but broadly point to a negative impact on African countries. The Brexit referendum is rather inopportune as African countries are facing serious external shocks such as the fall in commodity prices, an economic slowdown in China, and higher external borrowing costs

 

“Gig’ economy to phase out lifetime careers?

(Financial Times)  The typical cog in a machine job in a typical work place are not the only jobs available. The new world of work has jobs which are both more exciting and less secure. There is greater variety, in both pay and conditions. A job is more likely to be part-time, temporary, freelance or self-employed. It may not be a job at all, in the way it used to be defined.

 

Job sites such as Monster.com and platforms such as Uber, could add 2 per cent to global gross domestic product by 2025, increasing employment by 72m full-time equivalents. As the number of micro-firms, Freelancers and independent contractors grown many young people believe that the best days for freelancers lie ahead.

 

Gone is the era of the lifetime career, let alone the life-long job and the economic security that came with it, having been replaced by a new economy intent on recasting full-time employees into contractors, vendors and temporary workers.

 

The gig economy is only part of a shift in employment over the past three decades, unleashed by technology and global trade. It has created many winners and losers, both by outsourcing jobs from the west to Asia and Africa, and by changing the terms on which most people work. Financial and contractual risk that used to be borne by companies has been transferred to employees.

 

Yet this world of insecurity and risk is also one that many people seem to appreciate. More self-employed people in Europe and the US report enjoying their jobs than those who are employed. Many entrepreneurs, even those who run a tiny business that amounts to self-employment, like their freedom and self-reliance and the possibility that they could become wealthy and see lot of lot of potential in the new world of work .

 

The ideal working life for many millennials is not finding a safe job that will last them a lifetime but creating a technology start-up, a glamorous form of small business that is backed by angel investors.

 

The challenge for policymakers is to find a new form of employment contract that suits the changing workforce. Benefits such as pensions and sick leave are often attached to permanent jobs and increase with longevity. As jobs fracture, individuals who switch jobs, work as consultants or run “micro-businesses” with one or two employees need similar support.

 

The task is to limit the downside of the new economy without curtailing job growth or preventing people from working in the way they prefer. There is a danger of romanticising the past benefits of permanent full-time employment and fixed-job contracts when many now want alternatives.

 

While most people prefer freedom from typical jobs; the new world of work must chart a course between the twin dangers of corporate conformism and worker exploitation.

CXOs get up to 10% pay cut due to dull market

NEW DELHI: The Economic Times reports that, Job market is all about economic sentiment. Companies now want and surprisingly get top executives at a lower price.

There are two developments. One, the quantum increase in compensation packages has come down at least 10%. Two, new salary offers are way below the previous incumbent’s pay packages.

Recent examples include an industrial group that recently hired a managing director for its steel business and another organisation that hired a new legal counsel at a much lower price than the previous incumbent. This is rare as observed by top executives and business heads.

Due to the dull economic market Companies now think of the necessity and utility before hiring an expensive CEO. Hike in compensation a CEO would get in a new job has dropped at least 10%. The hikes are now in the region of 15%, compared with 25% and above earlier in the year.

Sectors most affected are manufacturing, especially in consumer product and engineering. Telecom sector is contributing to CXO salary packages dipping. In the telecom sector, a lot of top talent is looking for new options. A lot of them came from FMCG and retail and are looking for opportunities in these two sectors.

This makes us wonder if top management should look for alternative openings and move to well paying job locations such as Africa.