Monday, September 30, 2013

An uphill climb for millennials; Driving the next era of sustainable business; Toshiba axes 3,000 jobs; Apple is most valuable brand; Disarray in India government

1 An uphill climb for millennials (Caroline Porter in The Wall Street Journal) The on-ramp to adulthood is delayed and harder to reach for young people today, a reality that is changing the country's society and economy, according to a new report. More demanding job requirements, coupled with the pressures of the recession, have delayed the transition to adulthood for young people in the past decade and earned them the title of "the new lost generation," according to the report from the Georgetown University Center on Education and the Workforce.

Through analyzing about three decades of census data—from 1980 to 2012—the study found that on average, young workers are now 30 years old when they first earn a median-wage income of about $42,000, a marker of financial independence, up from 26 years old in 1980. The labor-force participation rate for young people last year declined to its lowest point in about 40 years, according to the report.

For young people, the delayed entry into the world of work is partly a reflection of the recent recession, but it is also driven by long-term trends, including more jobs that require advanced skills and fewer high-paying factory jobs that required little more than a high-school diploma, the report found. The "new knowledge economy" has spawned more internships and bite-size credentials as a result.

2 Driving the next era of sustainable business (John Brock in The Guardian) When the global financial crisis hit, there was significant speculation that organisations would move away from investment in sustainability. In fact, companies have maintained – or even grown – their commitments. However, the success and sophistication with which companies are adopting sustainability strategies vary widely.

In a research that explores the role that innovation, collaboration and technology play in implementing sustainability strategies, more than 330 senior executives across Europe were asked about their experiences when setting and pursuing sustainability objectives. It's clear from the survey that while some make strong links between innovation, competitiveness and sustainability – by offering more sustainable products (48%) or investing in renewable energy (33%) – others are still trying to gain endorsement from the top and a clear view of how to embed sustainability in their business.

We're facing dwindling natural resources and potentially 3 billion new middle-class consumers by 2030. Tried and tested solutions won't work anymore, so we need to accelerate the pace of change and embrace disruptive new business models to drive breakthroughs in the next era of sustainable business. Ten years ago, who would have thought we'd be renting our cars by the hour? 

Alongside innovation and collaboration, technology will continue to be important in driving sustainability plans forward. According to the survey, 58% of businesses are using technology to develop more sustainable business models, and 54% are using social or mobile technologies to engage with their customers.

Companies' approaches to sustainability have clearly matured, and greater opportunities now exist to harness the transformative power of external partnerships, innovation, technology and senior leadership. We can't get there on our own. It will be the companies that recognise this and use it to their competitive advantage that will be leading the way over the next 20 years.

3 Toshiba axes 3,000 jobs (BBC) Japanese electronics firm Toshiba has said it will halve the number of staff in its TV division to 3,000 as it looks to revamp the unit's operations. The changes will also see the firm close two of its three overseas TV manufacturing facilities. Toshiba said it would focus on emerging markets including Asia and Africa, and end sales in "unprofitable regions".

Toshiba, like other Japanese TV makers, has been hit by slowing demand, falling prices and increased competition. The company's digital products division, which includes TV manufacturing, saw its losses widen to 16.3bn yen ($166m), in the financial year to 31 March, compared with a loss of 3.3bn yen a year earlier.

4 Apple is most valuable brand (Stuart Elliott in The New York Times) Apple is the new most valuable brand in the world, according to an annual report from Interbrand, a corporate identity and brand consulting company owned by the Omnicom Group that has been compiling what it calls the Best Global Brands report since 2000. The previous No. 1 brand, Coca-Cola, fell to No. 3. 

Not only has Apple replaced Coca-Cola as first among the 100 most valuable brands based on criteria that include financial performance, this is the first time that the soft drink known for slogans like “It’s the real thing” has not been No. 1. The 2013 report begins: “Every so often, a company changes our lives, not just with its products, but with its ethos. This is why, following Coca-Cola’s 13-year run at the top of Best Global Brands, Interbrand has a new No. 1 — Apple.” 

The report estimates the value of the Apple brand at $98.3 billion, up 28 percent from the 2012 report. The value of the Coca-Cola brand also rose, by 2 percent to $79.2 billion, but that was not sufficient to give Coca-Cola a 14th year as Interbrand’s most valuable brand. A spokesman said, “Coca-Cola is an efficient, outstanding brand marketer, no doubt about it,” but Apple and other leading technology brands have become “very much the poster child of the marketing community.”

5 Disarray in India government (M J Akbar in Khaleej Times) What is doing fatal damage to India's Congress party is the total disarray within the establishment. Prime Minister Manmohan Singh is being humiliated time and again, not by Opposition but by his own party. The confusion and somersault over the convicted politicians’ ordinance, is only one, albeit startling, instance. This was a Cabinet decision, not a throwaway order. All the heavy lifters, including Chidambaram, Sushil Shinde and Kamal Nath, put their support on record much before Rahul Gandhi dismissed the ordinance as complete nonsense. Such warfare between a ruling party and its Prime Minister is unprecedented.

It is embarrassing to watch the last shards of credibility crumble around a prime minister who has been in office for nearly a decade. His visit to the White House this week has all the warmth of a desultory retirement dinner financed by a quick whip-around. Is Dr Manmohan Singh a stoic? To take punishment from the Opposition is part of the give and take of democratic politics, but to accept such dismissive barbs from one’s own colleagues requires a temperament that is not easy to decipher.

There is no government left. What we have instead is a desultory squabble in which no minister can be sure of where he stands, or where he should stand, on any issue. A technical structure will hold office, while Congress continues to hope that some miracle between now and next March will prevent an electoral meltdown. Miracles need saints, and there are no saints in politics.

Sunday, September 29, 2013

US faces federal shutdown; Siemens to axe 15,000; Austerity was never the answer; Google at 15 eyes the future

1 US faces federal shutdown (Janet Hook & Kristina Peterson in The Wall Street Journal) The nation braced for a partial shutdown of the federal government, as time for Congress to pass a budget before a Monday midnight deadline grew perilously short and lawmakers gave no signs Sunday they were moving toward a resolution. Leaders of both parties said they wanted to avoid the first federal closure since 1996, but their public appearances seemed aimed more at affixing blame for the impasse.

The prospect of legislation was remote, as the House legislation included a one-year delay of the new federal health law that Democrats have vowed to reject, as well as a repeal of the new law's tax on medical devices. The tense maneuvering has surrounded a bill that otherwise might be uncontroversial: an extension of current funding for the government for the early months of the new fiscal year, which begins Tuesday. But a determined faction of conservative Republicans has argued that the deadline gives the party its best opportunity for derailing the new health law before one of its central elements, health-insurance marketplaces for individuals, are launched Tuesday.

Some Republicans held out hope that the prospect of a government shutdown would pressure Senate Democrats to make even a symbolic concession to their demand for changes in the Affordable Care Act, perhaps by agreeing to the repeal of the medical-device tax intended to help fund the law. A shutdown would prompt federal agencies to suspend a large range of activities and furlough at least 825,000 of the US government's more than two million workers, according to plans filed with the White House. However, much of the public would be unaffected, as services deemed essential would continue, among them those related to national security, mail delivery, air traffic and law enforcement.

The stalemate was a monument to problems that have increasingly gripped US politics, especially over the last three years of divided government. The growing polarization of the parties, a diminished willingness to compromise on spending and an epidemic of brinkmanship have made it more difficult for Congress to address even the most routine budgeting questions.

2 Siemens to axe 15,000 jobs (BBC) German industrial giant Siemens is to cut up to 15,000 jobs as part of a cost-cutting programme. It will cut about 4% of its 370,000-strong workforce but aims to avoid compulsory redundancies, according to a company spokesman. The firm will shed 5,000 jobs in Germany and another 10,000 jobs abroad.

It comes after Siemens axed its former chief executive, Peter Loescher, earlier this year over falling profitability. Siemens and its unions have reached an agreement over about half of the job cuts and a deal on the other half will follow, the spokesman told news agencies. The firm has issued two warnings about profit margins during the last fiscal year. Mr Loescher, led the company from 2007 and the Austrian was the first person recruited from outside the company to run the business.

3 Austerity was never an answer (Michael Burke in The Guardian) George Osborne claims that the recovery has begun and that this was due to his austerity policy. This is factually incorrect on both counts. Britain has entered its sixth year of slump and remains more than 3% below its previous peak level. Apart from Italy, this is the worst performance in the G7.

But it is also incorrect to state that the recovery owes anything to austerity policies. The final data for the second quarter shows government consumption has been rising since the end of 2011 and largely accounts for the very modest rise in GDP over that period. Government consumption has risen by £7.7bn in real terms while GDP has increased by £11.7bn at the same time.

British government finances are notoriously opaque so it is very difficult to see where this money has gone. It is possible that the sharp rise in temporary, part-time and low-paid jobs has had the effect of pushing up the cost of benefits to those in work. This is in effect a subsidy to weak or extremely exploitative employers. Despite cuts to basic services there is too a vast increase in waste in the education and health budgets, arising from their creeping privatisation.

No economy can sustainably grow without increasing production and productive capacity through investment. But thanks to government policy, the British economy has entered one of its frequent bouts of consumption-led upturns, which are destined to bust. Yet now that government day-to-day spending has increased, there is no going back.

4 Google at 15 eyes the future (Dawn) Google celebrated its 15th birthday Thursday with a trip down memory lane, and an update to the search engine formula which helped spawn the tech giant. Google, which has grown into one of the world's biggest companies, is not content to just look at the past. It announced an upgrade to its main search engine, referred to as 'Hummingbird' with new ways to integrate its use across different devices. Since 1998, the tech world has changed dramatically and Google said its search engine has been constantly improved.

Google has quietly retooled the closely guarded formula running its Internet search engine to give better answers to the increasingly complex questions posed by Web surfers. The changes could have a major impact on traffic to websites. Hummingbird represents the most dramatic alteration to its search engine since it revised the way it indexes websites three years ago as part of a redesign called ''Caffeine,'' according to Amit Singhal, a company vice president. He estimated that the redesign would affect about 90 percent of the search requests Google gets. Any reshuffling of Google's search rankings can have sweeping ramifications because they steer so much of the Internet's traffic.

Thursday, September 26, 2013

Growth crisis undercuts India influence; Fed tapering and the Fragile Five; Onion turns kingmaker in India; Jesus as first tweeter

1 Growth crisis undercuts India influence (Sadanand Dhume in The Wall Street Journal) As Manmohan Singh meets Barack Obama on what is likely his last visit to America as India's prime minister, US-India relations stand at a proverbial crossroads. Not so long ago, many in Washington viewed the 2008 civil nuclear deal as marking the advent of a dynamic partnership with the potential to transform Asia and the world. Today, ties between the world's oldest and largest democracies are just as often characterized as listless or oversold.

Some of the hiccups in bilateral relations can be traced to poor economic decisions by both countries. In America, overzealous advocates of immigration reform in the Senate have targeted India's flagship information technology industry by proposing restrictions on firms that employ a high proportion of foreigners on skilled worker visas.

New Delhi's self-inflicted economic wounds—caused by a combination of policy paralysis, populist spending and stifling red tape—have only made things worse. HSBC expects India's gross domestic product to grow only 4% this year, compared to 10% six years ago. Needless to say, India's lagging growth makes the logic of a big US bet on it look a lot less compelling.

A strategic partnership built on weak economic foundations will likely flounder. With $92.3 billion in two-way trade last year, India is only America's 13th largest trading partner, falling between the Netherlands and Venezuela. Meanwhile India's sharp slowdown—at a level of per capita income that still lags both China and Indonesia—raises questions about whether it will live up to forecasts that have underpinned its rise to prominence in Washington.

Time is not on India's side. After nearly a decade of stuttering reforms, both foreign and domestic investors are looking at the country with greater skepticism than at any time since the onset of liberalization in 1991. India already lags most of East Asia in terms of both income and human development; it can scarcely afford to slip behind further. If growth continues to stall, it will jeopardize both the US-India strategic partnership and India's rise as a global power. If Mr. Obama is frank, this is the message he'll deliver to his visitor on Friday.

2 US tapering and the Fragile Five (Linda Yueh on BBC) Whilst tapering the cheap cash injections and an end to the Fed's economic stimulus could begin to spell a return to normality for the US economy, it could have serious ramifications for five large emerging economies in particular. Dubbed "The Fragile Five" by Morgan Stanley, these are the countries judged to be most at risk when tapering finally begins. The group includes Indonesia, South Africa, Brazil, Turkey and India.

What do they all have in common? Well, they all have large current account deficits - the broadest measure of the trade gap - which means that they rely on external financing.  So, these countries have relied on money flowing into their borders, and now that investment may leave when the end of the era of cheap cash looms.

Plus, foreign investors are worried about political risk because all five have elections set for next year. That raises uncertainty. Perhaps one reassuring thought is that there has been some time for these economies to prepare for the inevitable end of cheap cash. As for the end of this era of cheap cash, it may be next month, December or perhaps January when Fed chairman Ben Bernanke leaves office. The key question is whether there has been enough time for the rest of the world to prepare their economies for the inevitable.

3 Onion turns kingmaker in India (Neeta Lal in Khaleej Times) The specter of relentlessly rising onion prices is haunting Indian politics yet again. As the market rate of the odoriferous veggie quadrupled over the last month, touching Rs 90 a kg in some parts of the country, it has become a hot button issue not only for the haus frau, but for economists and policymakers as well.

The liliaceous plant, whose bulb is a staple in Indian curries, has pushed incensed women and men onto the streets, giving the ruling UPA government sleepless nights. After all, the party knows only too well that the potent commodity can be a political game changer. Its rival — Opposition party (BJP) — had to suffer an ignominious defeat in the 1998 Delhi and Rajasthan Assembly elections, all because of its government’s failure to curb the northbound prices of onions. Having been stung by the onion once, the BJP is trying to cash in on the current crisis.

Ironically, this is despite India being the world’s second largest producer of onions after China. Yet, it has the third-lowest yield per hectare among the 20 biggest producers. Voters have a way of settling scores — something the political class knows too well. Be it the late Pramod Mahajan on whom agitated Nashik farmers had hurled onions in 2000 or the BJP that met its nemesis in Delhi and Rajasthan in 1998, onions do have the power to deep-fry politicians. And this time round, onions will likely give the BJP a chance to take sweet revenge on a lachrymose Congress. The latter’s tears of grief just might turn out to be Modi’s tears of joy!

4 Jesus as first tweeter (Johannesburg Times) Jesus Christ was the world's first tweeter because his pronouncements were "brief and full of meaning", Vatican cardinal Gianfranco Ravasi has said.

Christ "used tweets before everyone else, with elementary phrases made up of fewer than 45 characters, such as 'Love one another'," said Ravasi, the Vatican' equivalent of a culture minister. The cardinal emphasised the importance of clergy making full use of modern-day computer technology.

"If a cleric, a pastor, is not interested in communication, he is defying his duty," he said. Pope Francis has more than 3million followers on Twitter in English alone.

Tuesday, September 24, 2013

Asia at risk as economies delay the inevitable; Unripe old age in UAE; A balance on work-life balance; Telstra axes 1,100

1 Asia at risk as economies delay the inevitable (Bettina Wassener in The New York Times) Economists say the Federal Reserve’s decision to keep pumping money into the American economy is only a temporary reprieve for Asia — one that could tempt policy makers in the region to put off the structural changes they believe are essential to improve long-term growth prospects across the region.

For much of the past five years, Asia has been feasting on the money that flowed in as investors, leery of low yields in the West, poured into the region. Deprived of urgency in attracting inflows, many countries spent much of that time doing very little to lower hurdles to investment, cut back on red tape or reduce the dominance of state-owned businesses, analysts have long complained. 

Many now fear that the continued flow of cheap cash and signs of renewed vigor in China could prompt still more delays. Asia’s emerging economies are, on the whole, better positioned than they were during the financial crisis that shook the region in 1997 and 1998. More debt is now in local currencies, rather than dollars, meaning that weakening local currencies do not bring a painful increase in debt servicing costs, analysts say. The region’s banks are more robust than they were in the 1990s. And foreign exchange reserves are higher than they were then. 

Still, some analysts say, many of the region’s developing economies need more overhauls to ensure that the capital inflows that have become increasingly important for growth in recent years keep coming. The issues vary from country to country. Infrastructure shortfalls, for example, are most pronounced in Indonesia and India. India’s investment in the power sector, for example, has failed to keep up with the nation’s growing need for electricity — its generating capacity is only about one-quarter that of China’s. 

2 Unripe old age in UAE (Khaleej Times) A new report circulated by wire agencies indicates that the Swiss have the longest life expectancy now with the average resident living up to 82.7 years. The list of the top 10 countries where people live longest also includes Japan, Iceland, Spain, Italy and Australia.  While genetics and the bracing climate of a country helps in achieving the enviable distinction, diet and exercise, the cornerstones of a healthy lifestyle, also contribute substantially to the phenomenon.

Though the UAE has the handicap of an adverse climate, yet there is room for residents to improve their lifestyles. According to another study of 15 countries with similar geography, GDP and per capita income, conducted by University of Washington’s Institute for Health Metrics and Evaluation and released in 2012, the UAE was at the bottom with a life expectancy of 76.3 years.

However, irrespective of which survey reflects the UAE situation most accurately, the unanimous verdict would be that people generally live up to their 70s. This despite the improved healthcare available in the country, not to mention residents’ capability to get even more superior medical treatment abroad. There is an important lesson to be learned from countries like Switzerland and Japan. Though among the world’s most developed economies, their citizens tend to exercise self-restraint in their diets. Also, both tend to use public transport, the bicycle and walk, which ensures exercise. 

Japan has another record as the country with the lowest adult obesity while obesity is a ballooning phenomenon in the UAE. The UAE would be better off emulating these compatriots than the US where the average life span is 77.85 years.

3 A balance on work-life balance (Goh Chin Lian in Straits Times) Prime Minister Lee Hsien Loong has sought to inject some balance in the national preoccupation with work-life balance, warning Singaporeans that competitors are out to steal their lunch. At a televised forum, he said the idea of work-life balance has become so popular it is now a tag phrase.

"They call it a meme on the Internet," he said, adding that people who used the phrase did not seem quite sure what they meant by it except that they would like more free time and less stress. It was also not clear if people knew the trade-offs, he said.

4 Telstra axes 1,100 (Georgina Wilkins in The Age) Telstra has announced it will shed 1100 jobs as part of a restructure of its Australian operations. The bulk of the job losses are expected to come from Telstra Operations, the business unit that handles the design, construction, and operation of Telstra's networks, plus the delivery of some customer services.

The jobs will be cut from the business by June 2014 and are part of a sweeping restructure announced by the telco in May. The reduction equates to approximately 6 per cent of the Telstra Operations workforce. Telstra's restructure will see its operational activities reorganised into five groups, three of which - networks, IT solutions and customer service delivery - would be new. In July the telco announced it would also be cutting 170 jobs as it shifts part of its back office operations to India.