Saudi Arabia has long relied on foreign workers to fill millions of low-paying construction, clerical and service jobs, in many cases illicitly. But as the government cracks down on illegal workers, tens of thousands of Filipino and Indonesian migrants are being forced to leave the country by November 3, or face up to two years in jail.
In response, senior Philippine officials flew to Saudi this week to negotiate the repatriation of 5,000 Filipino laborers who still have not been issued exit permits five days before the deadline, while Vice President Jejomar Binay wrote to Saudi King Abdullah pleading for more time. Indonesia, meanwhile, expects to repatriate 18,000 migrant workers, only 4,000 of whom have obtained exit permits. The repatriation process is costly for both governments and workers: The Philippine Department of Foreign Affairs has offered to shoulder penalties and fines imposed upon their citizens in Saudi, and opened a temporary shelter in Jeddah for undocumented mothers and children; the Indonesian government is trying to facilitate low-cost flights for its citizens.
The Saudis' crackdown on foreign workers is part of a broader push to create more jobs for its own citizens. The government began prioritizing job creation in 2011, in an effort to stave off popular unrest (At the time, 25 percent of Saudi youths were unemployed), and instituted a "Saudization" policy. Now, fewer firms are allowed to employ foreign workers and, because migrant laborers require employer sponsorship to obtain work permits, many lost their legal right to remain in the country. (Some were already in the country illegally, having entered with the help of recruiters who operate outside the regulatory system). Since then, more than 800,000 migrant laborers have been deported.
FAYEZ NURELDINE/AFP/Getty Images
After his appearance on a BBC radio program Monday, British Work and Pensions Secretary Iain Duncan Smith probably wishes he could eat his words -- because now he may not be eating much of anything for a year. Smith said in the interview that he could survive on £53 ($80) a week -- the amount one welfare recipient complained he was forced to survive on after his housing stipend was cut -- and now Britons are asking him to prove it. As of Wednesday morning, roughly 350,000 people had signed a petition on Change.org urging the secretary to make good on his pledge.
The petition calls on Smith to stick to the budget for "at least one year," thereby helping to "realise the conservative party's current mantra that 'We are all in this together.'" Doing so would require him to take a 97-percent salary cut while living in London, one of the world's most expensive cities.
Smith has been less than enthusiastic about the petition, which he called a "complete stunt" in an interview with the Wanstead & Woodford Guardian. The demand "distracts attention from the welfare reforms which are much more important and which I have been working hard to get done," he said.
If he warms to the idea, however, Smith won't be the first politician to take a trial run on the dole. In 2012, Jagrup Brar, a member of British Columbia's Legislative Assembly, spent a month living on $610, the province's welfare rate for a single, unemployed adult. After the last night of the month, which he spent "couch surfing," Brar was 26 pounds lighter and $7 in debt -- even after selling his backpack to buy a train ticket home.
Cory Booker, mayor of Newark, N.J. pulled a similar stunt several months later, living on the equivalent of food stamps for a week. The mayor was forced to cut caffeine out of his diet, eat "singed" yams for lunch, and consider "making a meal out of mayonnaise and salsa."
As appealing as it sounds, Smith may not be interested in the politics of empathy, having already gone through two real periods of unemployment in the 1980s. As he said in an interview Tuesday, "I know what it is like to live on the breadline."
Chinese media agency Xinhua reports that Foxconn, China's largest private-sector employer, is angling to replace more than 80 percent of its workforce over the next three years with robots.
The announcement comes a year after a string of employee suicides drew attention to poor working conditions at the company, which produces gadgets for Apple, Nokia, and Motorola, among others. At the time, management responded with a hodgepodge of measures, some to actually appease its workers (granting them pay raises and access to counselors), and some to just get them to, you know, stop killing themselves (forcing them to sign a pledge not to commit suicide and installing suicide nets on buildings to catch those who jump). But a report released this May by a Hong Kong-based labor watchdog suggests that working conditions remain worrisome.
Employee discontent aside, Foxconn's announcement appears more a response to the changing environment for Chinese manufacturers who look to produce cheap goods for export. Rising wages have made this model increasingly less sustainable. Foxconn reported a net loss of $218.3 million last year and has seen revenues decline 8 percent since 2009.
The company's location exacerbates its financial predicament. Half of its workforce operates out of its factories in the affluent region surrounding the southeastern Chinese city of Shenzhen, whose liberal business environment made it a major hub for Chinese manufacturing during the 1980s and 1990s. But the same success that first brought companies like Foxconn to Shenzhen has driven up wages and forced many manufacturers to relocate inland, closer to the homes of the migrant workers who make up the bulk of China's low-wage workforce.
Even moves inland can only work for so long. Chinese finance magazine Caixin says that, in the wake of the Foxconn suicides, almost every provincial government has legislated minimum wage increases over the last year. In the first quarter of 2011 alone, says Caixin, hikes in 13 provinces averaged more than 20 percent. Meanwhile, a May 5 report from Boston Consulting Group predicts that net labor costs in China and the United States will converge sometime around 2015.
If this is the end of the line for one million humans at Foxconn, the company probably could have done a better job breaking the news to its employees. The Xinhua report says that company chairman Terry Gou announced the measure last night at a workers' dance party. I'll bet the party petered out pretty soon after that.
Tough times call for tough sacrifices. Economies everywhere, desperate to continue their uphill climb out of the global recession, have imbibed this sound logic, however grudgingly. The French, however, don't seem agree with the conventional wisdom: strikes erupted this morning across the country in response to President Nicolas Sarkozy's proposal to bump the retirement age from 60 to-gasp!-61 or 62.
Sarkozy has defended the new measure as a reasonable adjustment given increasing life expectancy. Indeed, he might be excused for merely following in the footsteps of his European colleagues-Germany recently raised the retirement age from 65 to 67. (Then again, these days any comparison to Angela Merkel may do more harm than help.)
So far, the French aren't buying the President's explanations, bringing the country to a near stand-still. 14 percent of teachers and 8 percent of hospital workers left work today to participate in protests, airport travel was disrupted, and even news agencies took a hit. NPR reported that "because there aren't enough journalists available to deliver news bulletins, the main public radio news channel in Paris is playing pop music intermittently."
JOEL SAGET/AFP/Getty Images
If you can’t beat ‘em, regulate ‘em -- that’s the Indian Supreme Court’s take on the country’s illegal sex trade.
The court’s advice came in response to an NGO’s public litigation regarding child trafficking in the country. As of 2007, UNICEF estimates 2.4 million Indians were HIV-positive (with the high estimate ranging up to 3.2 million). The sex trade is at the center of the epidemic: reportedly, a young prostitute can charge a customer just over $2, while an older woman will only receive about 65 cents – and that figure usually drops if the prostitute demands the use of a condom. And the youngest girls in the trade, forced into prostitution before 15, are at the greatest risk of contracting the virus – they work longer hours, serve more clients, and are more likely to work in multiple brothels.
A UNAIDS report issued a couple of weeks ago reports that efforts to control the spread of HIV has been effective, with HIV prevalence among female sex workers declining by more than half, from 10.3 percent to 4.9 percent, between 2003 and 2006. Still, as the court points out, there are an estimated 2 million female sex workers, and legalization would allow monitoring of the trade and further provision of medical aid.
As the judges asked, "When you say it is the world's oldest profession and you are not able to curb it by laws, why don't you legalise it?"
Photo: PRAKASH SINGH/AFP/Getty Images
If you only think of genocide when you hear the name "Rwanda," it's time to think again.
Today, Rwanda is moving forward, fervently set on rebranding itself into one of Africa's most investment-friendly havens. And it appears to have some of America's most recognizable names in business in its corner. A just-published article in Fast Company counts the CEOs of Starbucks and Costco as two of the Rwanda's most influential supporters, along with the likes of Google CEO Eric Schmidt, former British PM Tony Blair, and Pastor Rick Warren of "Purpose-Driven" fame. All seem to praise the Rwandan government -- and especially President Paul Kagame -- for being serious about making the country's business climate as streamlined and free of bureaucratic hassles as possible, which is certainly an anomaly in much of the developing world. (Registering a business in Rwanda apparently takes less than 48 hours.)
An article in Fortune called "Why CEOs love Rwanda" offers this money quote from Chicago financier Dan Cooper (who is credited with introducing Kagame to Costco CEO Jim Sinegal):
We came away saying, this is the most undervalued ‘stock' on the continent and maybe in the world. Here's an African nation that's reaching out, not to governments so much, but to corporate America. They want to work. They want U.S. business to bring innovation to their country."
But is this too good to be true? The country's new model of economic development is an interesting one; it's almost as if Kagame has torn a page out of Beijing's handbook. While Kagame can be credited with cracking down hard on government corruption and creating a competent administration in the country's capital of Kigali, there's always the problem of restricted political rights and civil liberties, which critics of the regime never fail to point out. The issue is certainly important, especially given Rwanda's long history of political violence.
But that said, the country's clearly moving forward. And apparently, the business world isn't the only one taking notice. Last year, the United States signed a bilateral investment treaty with Rwanda -- the first such treaty signed between the U.S. and any Sub-Saharan African country in almost a decade.
Fifteen years after genocide, this is Rwanda rising.
Hat tip: Africamusings
GIANLUIGI GUERCIA/AFP/Getty Images
The Private Sector Development blog at the World Bank has a cool post on the effect of labor laws on computer use. Social scientists have theorized that the stricter the regulations on hiring and firing workers, the more companies turn to computers and technology.
Turns out that conventional wisdom is correct, a World Bank study shows:
Amin (2009) tests this hypothesis on 1,948 retail stores in India using data from Enterprise Surveys, a regular World Bank survey on firm performance, firm characteristics and the business climate....The study finds that the percentage of retail stores that use computers rises by 6.2 percentage points as we move from the state with the least to the median level of rigid labor laws. This is a large effect given than only 19% of the stores in the sample use computers.
The PSD blog cautions against reading too much into the results, though:
That is, to properly understand the computers/productivity relationship one needs to distinguish between the motive of saving labor because of labor regulations and the motive of enhancing efficiency through computer usage. To what extent these effects hold remains to be empirically ascertained - an important task given that the use of computers and other modern devices is fast spreading across the globe.
But there's a nice synergy there. And I wonder whether the same scientists have studied the corollary between India as an outsourcing hub and an IT giant.
Today, the U.S. Bureau of Labor Statistics released a frankly horrific set of numbers. The unemployment rate hit 8.5%, the highest in more than 25 years; 663,000 workers lost their jobs in March alone; 25 million are underemployed; and over the course of the recession, the U.S. has bled more than 5 million jobs.
Certainly, the U.S. has fewer social safeguards against the disruptions of unemployment than many other high-income economies, meaning fewer protections against lay-offs and less-generous unemployment benefits. (FP looked at the best places to lose your job last month.) This generally means more volatility in the unemployment rate.
But is the U.S. really doing worse than, say, France and the United Kingdom, countries with historically high unemployment?
The short answer is yes; the U.S. recession has gone on for longer and is deeper than in Europe, and therefore has sapped three times as many jobs. The unemployment rate in the U.S. is higher than in the U.K., and close to France's. (The U.K. and French numbers above are estimates.) And the job-losses are accelerating faster in the U.S. than in other countries.
Here's hoping for it to bottom-out soon.
There are more slaves on the planet today than at any time in human history. But a landmark case in West Africa this week should give thousands of them a rare dose of hope. A court in Niger found the country's government guilty of failing to protect the rights of Hadijatou Mani, a 24-year-old woman sold into slavery at the age of 12.
Mani says she was sold as a young girl to a man for $500 and forced into domestic and agricultural work for a decade. Her master raped her repeatedly, and she bore him three children. She was freed in 2005 and, with the help of Anti-Slavery International, brought the case against the government for failing to protect her. In the judge's decision, he ordered the government to pay Mani about $20,000.
Niger officially abolished slavery in 1960, but the practice persists throughout the country, with an estimated 43,000 people enslaved. There are believed to be tens of thousands more in bondage across West Africa. Niger's government repeatedly contends that it does all it can to eradicate the practice, but this is the first time a court has held it responsible for looking the other way. There's little chance of thousands more slaves being so lucky as to be freed and rewarded, but if this compels the government to enact (or enforce) more stringent laws, all the better.
Photo: Boureima HAMA/AFP/Getty Images
Think it's tough finding employment in the United States?
Try a Chinese job fair:
Job seekers visit the first large-scale job fair held at the China International Exhibition Center after the Olympics Games on September 21, 2008, in Beijing.
The globetrotting documentarians over at Current Vanguard have just posted an interesting new short film from the Philippines, where the primary export is the country's own citizens.
"Destination Anywhere" looks at the 20 million Filipinos who work abroad in fields ranging from housekeeping to medical care. The billions of dollars in remittances they send home every year account for about 10 percent of the Philippines' GDP. While this is generally viewed as positive for economic growth (President Gloria Arroyo has described the overseas workers as "heroes of the republic".) it doesn't do much for the kind of longterm development and savings that could stimulate job creation at home. Plus, as the film's director, Tracey Chang, finds, there are enormous social costs when you consider the Philippines' millions of separated families.
For more on the relationship between remittances, corruption, and poor economic planning, check out "The Remittance Curse" in the current issue of Foreign Policy.
It's no secret that Japan has traditionally been averse to immigration. Many long-term immigrants wait eternally for Japanese citizenship. The Japanese parliament also recently approved a plan to fingerprint and photograph all adult foreigners entering Japan.
But is the tide against foreigners turning in Japan? Possibly. According to a recent Mainichi newspaper telephone survey, 63 percent of respondents favored allowing the immigration of unskilled foreign laborers, even though the Japanese government generally opposes such measures—opting instead for a "cautious" approach toward unskilled workers. Out of the 63 percent, 58 percent supported accepting unskilled foreign workers in fields facing worker shortages, and 5 percent believed that entry-level foreign workers should be accepted without conditions.
Hidenori Sakanaka, head of the Japan Immigration Policy Institute, believes the shift in favor of foreigners may be due to Japan's enormous demographic challenge associated with its rapidly aging society. He also suggests the Japanese may gradually be appreciating the work already done in Japan by entry-level foreign workers in fields from nursing to agriculture, forestry and fisheries. Necessity may be the mother of invention—or in this case, acceptance—but it remains to be seen whether this is really a cultural shift toward embracing immigration. If legislation follows, I may be convinced.
Many of Passport's readers are college students who are looking to launch careers in foreign policy. As it's job-huntin' season on campus, here's a timely guest post from Peter W. Singer, a military expert at the Brookings Institution and the author of Corporate Warriors: The Rise of the Privatized Military Industry, on how to become a foreign-policy wonk.
We hope you find it helpful.
Frequently, I get e-mails from young students who want to know how to crack into the world of foreign policy. Below are the most frequent questions and my answers, which FP thought actually might be of use or at least amusement. Please judge their worth by the amount of money that you paid for them.
How did you decide to get into the foreign-policy world?
I've been interested in these issues since as long as I can remember. I was the weird kid in elementary school, who for book reports would choose Soviet Military Power (the Pentagon's somewhat overhyped annual report on the Red menace) rather than Sweet Valley High or The Boxcar Kids. Yes, it was totally nerdy. Guilty as charged. By the time I got to college, I applied to the Woodrow Wilson School of Public and International Affairs as my major. If I didn't get in, my backup plan was to go into the history field. Fortunately, I did, and thoroughly enjoyed it. When it came time to figure out a job afterwards, I flirted a bit with the idea of becoming a management consultant. My thinking was that I could feed the beast by getting subscriptions to various political magazines to read in my off time, while I made scads of money merely for using words like "synergy," "leverage," or "optimize." But I soon realized that I didn't know what those words actually meant and I would shoot myself after a few months. So, I went into the foreign-policy business instead.
[If you're reading this from the main page, read on after the break]
I see that Democratic presidential candidate John Edwards is now taking potshots at the U.S.-Peru trade agreement that is now going through Congress and due to hit the Senate in November. Speaking on Saturday in Newton, Iowa, Edwards summed up his reasons for opposing the deal:
In short, this agreement does not meet my standard of putting American workers and communities first, ahead of the interests of the big multinational corporations, which for too long have rigged our trade policies for themselves."
This is his big strategy for victory in Iowa? As FP documented in June, bilateral trade between Peru and the United States is small potatoes: barely $2.5 billion in 2005. And most of that trade, $2 billion, was exports from the United States to Peru.
In fact, the dirty secret about the new agreement is that it would benefit U.S. exporters the most, as this summary of the deal (pdf) from the U.S. Trade Representative's office makes clear:
Eighty percent of U.S. exports of consumer and industrial products to Peru will become duty-free immediately, with remaining tariffs phased out over 10 years. Key U.S. exports will gain immediate duty-free access to Peru. Peru has agreed to allow trade in remanufactured goods, and will join the WTO Information Technology Agreement.
Peru already enjoys good access to the U.S. market thanks to previous trade agreements, so it's not as if the United States is suddenly going to be flooded with cheap chicha, alpaca wool, and mahogany. Edwards may think that spreading this silliness is going to help him win the Democratic nomination, or at least earn him points in protectionist Iowa. My guess is that Edwards knows better. That's probably why he chose Peru rather than, say, the South Korea deal, which is on a different scale altogether.
It was only a matter of time: The European Commission today unveiled its new "Blue Card," modeled on the United States Green Card, in a bid to attract more skilled workers to the European Union. For several years now, the EU has been facing an increasingly serious labor shortage, which has spread to "new" EU member countries in Eastern Europe. The EU believes it will face a shortfall of 20 million workers in the next two decades, a problem exacerbated by declining birth rates and an aging population. "The EU as a whole ... seems not to be considered attractive by highly qualified professionals in a context of very high international competition," according to the European Commission. But with easier access to jobs, and with the United States' H1B visa quota restrictions, this is likely to change.
So what benefits can prospective recipients of a Blue Card expect? Aside from being covered by a common set of standards across the EU, Blue Card holders would be able to live, work, and travel in the EU without additional restrictions; they could have their families join them within six months; and they would be treated in the same way as EU nationals in terms of tax benefits and many social-security benefits. After five years, card holders would automatically become eligible for permanent residency where they are working. In order to qualify for the card, applicants will need to have an EU job contract lasting at least a year that guarantees a salary of at least three times the minimum wage (or twice for applications under 30), plus health insurance—quite typical demands for working visas around the world.
It seems like a win-win situation for prospective skilled migrants and their European host countries. Nonetheless, I'll bet the Blue Card scheme won't have an easy passage once trade unions and immigration opponents in Europe inevitably start to voice their complaints.
Forget "Deadliest Catch," the Discovery Channel show about the peril of being an Alaskan king crab fisherman. The most dangerous job in the world has to be mining coal in China. Last year alone, 4,746 miners were killed in China, according to state figures.
Stop and think about that for a second. That's about 1,100 more deaths than the U.S. military has incurred in five years of fighting in Iraq.
Which is why China is ecstatic over yesterday's rescue of 69 miners from a flooded coal shaft in Henan Province. The shaft, part of a 50 year-old state-owned mine, collapsed Tuesday afternoon when a torrent of more than 1 million gallons of water rushed into the mine after a rainstorm. The government said 102 miners were working at the time of the flood. Thirty-three escaped. The remaining trapped miners were kept alive thanks to hundreds of rescuers, who poured 145 gallons of milk down a 2,600-foot ventilation shaft over the course of three days while crews pumped out the mine and cleared tons of mud.
It was a death-defying escape from the jaws of "development at any cost"—and a fate denied to far too many.
UPDATE: A reader writes in, "What on earth are you doing comparing gross number of deaths of Chinese miners to the number of Americans killed in Iraq? At least give us the denominator on the Chinese miners, otherwise the comparison is meaningless."
Just so there's no misunderstanding: I wasn't dissing American servicemen and women. Nor was I comparing apples to apples or trying to make a point that a coal shaft in Shanxian is more dangerous than a pillbox in Baghdad. Neither sounds like much fun to me.
So let's set the record straight. There are about 7 million miners in China. Our in house statistician tells me that, based on back-of-the-napkin calculations, you're about 8 times more likely to die as a U.S. soldier in Iraq than as a coal miner in China. I still don't want to sign up.
I'd heard of online services through which it's possible to rent protesters for a couple of hours. But never had I heard of a union outsourcing its picket line until I read today's Washington Post:
Although their placards identify the picketers as being with the Mid-Atlantic Regional Council of Carpenters, they are not union members.
They're hired feet, or, as the union calls them, temporary workers, paid $8 an hour to picket. Many were recruited from homeless shelters or transitional houses. Several have recently been released from prison. Others are between jobs. [...]
Carpenters locals across the country are outsourcing their picket lines, hiring the homeless, students, retirees and day laborers to get their message across.
With bone-headed tactics like these, it's no wonder American unions are in decline. So what's next? Are the "temporary workers" going to somehow offshore their jobs to India so they can pocket the lion's share of the eight bucks?
I'm a regular reader of the Wall Street Journal and the Financial Times. They're great newspapers, but I've noticed that both are in the habit of reporting "labor shortages" exclusively from the perspective of employers. That's understandable, given that the WSJ and the FT are aimed at the wealthy business crowd.
But a "labor shortage," as in the case of the Bollywood actors, is often just a case of businesses complaining that they have to pay better wages to attract talent. So when you read these horror stories about a shortage of IT workers or what have you, remember that salaries are responsive to market forces as well. When people aren't willing to supply labor at a given wage, you get a shortage, just as when the price of oil is too low, oil companies aren't willing to invest in new refineries.
I have nothing against the wealthy; I'd love to join them someday. But given how middle class income growth has stagnated in the United States in recent years as wealthy investors have prospered, I don't think we should cry in sympathy when companies complain about labor shortages. Rising wages are what economic growth is ultimately supposed to be about.
European newspaper columnists often lament that Europe's best and brightest are leaving for greener pastures. But brain drain is only part of the problem with European labor. Europe is also undervaluing the brain power of half of those who stay behind.
A recent report by the European Commission (pdf) finds that women are still earning an average of 15 percent less than their male counterparts. The gender pay gap has shrunk by only 2 percent over the last decade or so, and there's no evidence that it's narrowing.
And here's the most baffling detail: It's better-educated women who are being underpaid the most. Statistics show that women with higher degrees earn 30 percent less than their male counterparts, whereas for jobs with fewer qualifications the gap is only 13 percent. Maybe they should start teaching Bargaining 101 in European universities.
India faces a skills crunch in its IT and engineering sectors, Passport noted earlier this year, and it's hurting India's global competitiveness. But now India must confront an even more ominous shortage: a lack of quality Bollywood actors.
Anyone who has seen some of the dreck Bollywood churns out will probably laugh and say, "Tell me something I don't know." But there's a new phenomenon going on here. As money pours into the film industry, Bollywood is suffering from a "talent crunch," the Financial Times reports, and it's particularly hard to find good male actors. Because production companies are finding it easier to secure financing from abroad, it's getting tougher for them to tap quality local talent for a reasonable price. As a result, Bollywood's A-list celebrities are cashing in, demanding double or triple the fees they would have earned just a few years ago. It doesn't help that Hollywood—with its extravagant fees by Indian standards—is starting to take an interest in Bollywood stars, beginning with former Miss World Aishwarya Rai.
So why is it so difficult for Bollywood to find new talent? Audiences are heavily biased towards existing stars, so it's risky for filmmakers to opt for an unknown face. As Sameer Nair, the head of a new entertainment channel being developed by India's leading broadcaster, puts it,
If your definition of a blockbuster requires these superstars to be present and that's in your business plan then you have a general scarcity problem."
Perhaps, then, Bollywood should look outside India for emerging talent. Consider Kashif (Pakistani by background), who made it into the top 20 of America's Got Talent by dancing his, um, distinctive Bollywood moves... .
Every summer, we're treated to the same news story: It seems Europeans get weeks and weeks of vacation and Americans don't get any at all. Shocker of the century, right? My guess is the thinking goes: Slow news day, so let's send that "Americans are overworked" story over the wires.
But does all that time off make Europeans any less productive? The answer is a surprising no. Several European countries—Norway, Ireland, and even France—post higher productivity levels than does the United States. Check out FP's recent article, The Influential Tourist, for more on that.
And in our latest issue, Clive Crook explains in Think Again: Europe that even when America does beat European countries in the productivity rankings, "[t]he United States’ much higher output per person is due mostly to more hours on the job, not to superior productivity while working." Is it worth it?
A popular saying within the EU depicts politicians as having "the punctuality of the Italians, the flexibility of the Germans, and the humility of the French"—to which they now might want to add the marketing talents of, say, the Bulgarians.
Exhibit A: The European Commission is pushing something called "flexicurity" (pdf) as a way to sell its labor market reform plan to the EU Council and Parliament. As the Commission explains:
Flexicurity can be defined as an integrated strategy to enhance, at the same time, flexibility and security in the labor market.
The Commission's awkward marketing strategy reflects past failed attempts to shake-up Europe's labor markets. As the turmoil that torpedoed the career of Dominique De Villepin demonstrates, Europeans simply don't like reforms that cut into their cherished safety net in the name of greater labor market flexibility, no matter how clever the portmanteau used to describe them.
And yet, with unemployment rates hovering around 8 to 9 percent, Europe badly needs a shakeup, and the Commission's reform would do just that. And from the standpoint of textbook economics—where the U.S. labor market is the ideal type of flexibility and Europe a paradise of security—"flexicurity" isn't a bad name at all. It envisions more flexibility than in the current European labor markets, and more security than in the current U.S. system. But in the eyes of a European citizen, it just means increasing flexibility and cutting on security. And so, "flexicurity" is likely to be ridiculed as a blatant attempt to sweeten a bitter pill for Europeans to swallow.
Here's why I think former British PM Tony Blair is making a big mistake in taking the job of Middle East envoy—a job that is apparently limited in scope to "shoring up Palestinian institutions" and not actually negotiating any deals.
Alvaro de Soto, who was the United Nations' representative to the Middle East until he stepped down in May of this year, penned a damning report on the Quartet's failure in the peace process between the Israelis and Palestinians. It leaked to the Guardian, which promptly published the entire report on its website. De Soto is a professional diplomat who did a lot of good in advancing the Cyprus peace process, so we should take him seriously.
The report is filled with juicy details on why Blair's predecessor, James Wolfensohn, couldn't get anywhere. It does credit Wolfensohn with getting across "the notion first put forward by the World Bank that the Israeli closure system was the determining factor in the decline of the Palestinian economy." But as de Soto notes, "Israel has completely shut off Palestinian workers from going to Israel at all - Palestinians who used to work in numbers over 100,000 in Israel have been reduced to zero."
And so it's clear that Blair will have to address this key factor in the Palestinians' economic catastrophe if he is going to get anywhere ... which will entail negotiating with the Israelis. Unless Condi Rice can deliver on this, Blair's efforts will be useless—and that's why he'll eventually quit in frustration. I'd love to be proven wrong.
Earlier this month, Passport noted that Eastern European countries are facing a labor crunch that threatens to impede their rapid economic expansion. Companies in Poland, for instance, have been forced to look outside the country for skilled workers—even though Poland's unemployment rate is 13 percent. And so, hosting the 2012 European football championships, a multi-billion dollar soccer event, is proving to be more of a burden than a blessing as the country struggles to find enough construction workers.
Well, Poland may just have found a solution: importing labor from India. Poland already hosts around 3,000 Indian workers, but could welcome hundreds of thousands more as a result of a recent agreement between the two countries to make Poland the "next hot destination for Indians."
It's a supply that's much needed. Between 800,000 and 2 million Poles have left the country since it joined the European Union three years ago. India, for its part, will no doubt benefit as well through remittances sent back from workers in Poland, especially as demand for workers from countries in the Middle East starts to dry up. And as India's IT competitiveness declines slightly, it can still take advantage of its main competitive advantage: abundant labor.
As it gears up for the 2008 Olympics, China is quickly falling into last place in one category that won't be on the schedule in Beijing: labor rights.
Just in time for World Day Against Child Labor, PlayFair 2008, a campaign sponsored by trade unions and labor rights organizations, issued a scathing report (pdf) Monday on China's rampant child labor violations and sweatshop conditions.
Through a series of interviews and undercover investigations of four factories licensed to make official Olympic merchandise, PlayFair discovered working children as young as twelve, adult workers earning half the Chinese minimum wage, and workers being instructed to lie about wages and conditions to outside inspectors.
The report's release coincides nicely with International Olympics Committee meetings in London regarding the 2012 games. As Maggie Burns, chair of one of the labor groups backing PlayFair, told the Financial Times:
The London Olympics has just spent £400,000 [€590,000/$788,000] on a logo. There is no reason why organisers cannot ensure a “sweat-free” games if they act now.
One can only hope that these efforts to fight worker exploitation will be a bit more successful than the design of the 2012 logo.
It's widely known that Japan is facing a significant demographic transition as its population continues to age while its birth rate remains well below population replacement levels. In fact, a United Nations population model predicts (pdf) that in 2050, Japan's population will have declined to 104.9 million (currently 127.4 million) and that people aged between 15 and 64 will constitute only around half the population. The same model also projects that if Japan allows more immigrants into the country, it will be able to both address its impending labor shortage and stabilize its population. Singapore, which faces similar demographic pressures, has announced plans to do just that. But not Japan—it's opting for another "solution": Putting the elderly to work.
In a white paper released on Friday, the Japanese government urges Japan's elderly people to remain in the workforce, arguing that old people need not be a "burden" on society. The idea does have merit: The life expectancy in Japan 78 and 85 for men and women respectively, and many post-60s enjoy their jobs and would prefer to keep working. Plus, within fifty years, it's likely that there will be just one younger worker to support each pensioner, a ratio that would be become more favorable if people worked longer. But it still seems like a shallow, incomplete solution to a deeper problem that could effectively be addressed by allowing more immigration—a way of avoiding Japan's deeply entrenched xenophobia toward foreigners.
For instance, in 2005, then Prime Minister Junichiro Koizumi hinted at this inherent prejudice, stating,
If [the foreign labor] exceeds a certain level, it is bound to cause a clash. It is necessary to consider measures to prevent it and then admit foreign workers as necessary."
Even further back, during the economic boom of the 1990s, Japan addressed its labor shortages by pushing for automation instead of immigration. This may have provided a short-term band aid at the time, but clearly it's failed to address Japan's larger demographic and labor problems. Barring a major breakthrough in robotics, it's likely that the elderly work initiatives will suffer the same shortfalls. With less than 2 percent of its population composed of immigrants, Japan can surely afford to open its borders just a little. After all, if it doesn't, the people most likely to suffer the consequences are the Japanese themselves.
Angela Merkel showed some serious diplomatic acumen at this week's G8 summit, riding herd on world leaders and wringing concessions from the United States on climate change—thus avoiding an embarrassing setback for Germany's first female chancellor.
But Merkel and here European colleagues will need more than just political skills if they are to address Europe's latest crisis ... of skills. The continent has a massive shortage of skilled workers across a range of sectors. The Financial Times reports that Merkel's Germany is considering opening up its labor market to foreigners, primarily due to an "exodus" of qualified workers that includes academics, medical professionals, engineers and corporate staff. Coupled with demographic pressures, including a seriously below-replacement population rate, Germany—which has traditionally favored protecting its labor market—has little choice but to consider welcoming immigrants into its workforce.
At the same time, eastern European countries are also beginning to face a chronic labor shortage. Wages in some sectors have risen by as much as 50 percent in the past year, and emigration from eastern Europe to western Europe has exacerbated the shortage. Even though Poland, for instance, has a high unemployment rate of 13 percent, companies are still unable to find sufficiently skilled workers to recruit, and many people who remain in eastern Europe are unwilling to move even within their country's borders to fill open positions. Indeed, companies are now forced to look to places like China for workers. That may not be good enough, and the region's growth may suffer as investors look elsewhere to avoid these labor crunches.
The perks of being a worker in France are well known: thirty-five hour work weeks, months of vacation, virtual immunity from being fired. The benefits were enough to draw students out into the streets en masse last year to protest even the slightest erosion of the carefree employment conditions that are their birthright. Throw in cultural acceptance of drinking wine at lunch, and it becomes clear that the French really do have nothing to complain about, right?
Well, don't tell that to the French. According to a new study, the French are the world's whiniest workers, edging out Britain and Sweden (another socialist labor paradise) for the top spot. Charlotte Cornish, who heads the company that ran the study, thinks the results bode ill for new French president Nicolas Sarkozy's reform plans:
The French come out on top -- it seems unlikely that Nicolas Sarkozy's election and the likely shift to more Anglo-Saxon economic practices will make the workers in France any more happy with their lot."
Another interpretation is more plausible, though. If some of the best working conditions in the world haven't been enough to make French workers happy, then maybe the paternalistic coddling and stifling embrace of its system are at fault. The Swedes' foul moods lend credence to that interpretation. If so, then Sarkozy's "rupture" might be just what the doctor ordered to cure the French maladie. With some more dynamism in the their economy, maybe the French would only be as unhappy as Americans—who ranked number five.
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