Tuesday, December 27, 2016
Modi own goal dents India outlook; Toshiba in line for big losses on US nuclear unit; Why gender pay equality won't happen in 2017
1 Modi own goal dents India outlook (Gulf News) India started 2016 as the world’s fastest-growing major economy, but at the year’s end the nation faces a significant slowdown and the delay of what’s been hailed as Prime Minister Narendra Modi’s greatest reform — the creation of an integrated marketplace.
Much of the pain is self-inflicted as Modi’s decision last month to drain 86 per cent of currency in circulation stalled spending and caused a political stalemate on a landmark sales-tax reform. It’s an apt end to a busy year that’s included a change of guard at the central bank, the overhaul of a century-old bankruptcy law and the biggest battle to rock corporate India in decades. And it’s sown the seeds for a tumultuous 2017.
“Reforms will have long-term structural benefits but carry short-term execution and adjustment risks,” said Abhishek Dangra, a credit analyst at S&P Global Ratings. Early data back economists’ fears that consumption will be hit, particularly in rural areas, with the dominant services sector absorbing the bulk of the pain. Industrial production and investment are likely to be pressured with subsequent job losses adding to the disruption, according to economists.
Gross domestic product will grow 6.5 per cent this quarter, slowing from 7.3 per cent in the July-to-September period, according to the median estimate in a Bloomberg survey. Demonitisation has sucked momentum from the movement to roll out India’s goods and services tax from April 1.
On the corporate front, a public battle for control of India’s largest conglomerate has played out after family patriarch Ratan Tata replaced Cyrus Mistry as chairman of the Tata Group in October. Both men have traded accusations over missteps at the salt-to-software empire, bringing its governance structure into question.
India introduced a new bankruptcy code this year that’s likely to allow the quick closure of businesses gone bad and prevent the build-up of non-performing loans. Nevertheless, the Organisation for Economic Co-operation and Development says implementation will require an improvement in the nation’s severely back-logged judicial system.
2 Toshiba in line for big losses on US nuclear unit (Straits Times) Toshiba Corp has said it may have to book several billion dollars in losses related to a US nuclear power acquisition, a shock warning that sent its stock tumbling 12 per cent and rekindled concerns about its accounting acumen.
The Japanese group said cost overruns at US power projects handled by a nuclear construction business newly acquired from Chicago Bridge & Iron (CB&I) would be much greater than initially expected, potentially requiring a huge writedown.
Big losses would be another slap in the face for a sprawling conglomerate hoping to recover from a $1.3 billion accounting scandal as well as a writedown of more than $2 billion for its nuclear business in the last financial year.
Toshiba, led by new chief executive Satoshi Tsunakawa, has positioned its nuclear and semiconductor businesses as key pillars of growth while seeking to scale down less profitable consumer electronics units such as PCs and TV sets.
It has forecast a full-year net profit of about 145 billion yen this financial year, a turnaround from a 460 billion yen loss, on demand for flash memory chips from Chinese smartphone makers. But any big losses are likely to force Toshiba to boost a capital base that has been weakened by a range of restructuring steps taken in the wake of the accounting scandal.
3 Why gender equality in pay won’t happen in 2017 (Harriet Minter in The Guardian) A great deal is made of the need to encourage women to negotiate more effectively. However, even if we take that into 2017, research suggests it’s not going to help.
While women ask for pay rises as often as men do, they’re much less likely to get them. The reality is we expect men to be pushy about salary, to ask for more money and to vocalise their worth, so when they do it we’re not surprised.
However, society has taught that it’s not polite for women to do the same, so when they do, we tend to see them as pushy and arrogant, and that instantly makes us less likely to reward them. So while it’s useful to encourage women to negotiate their salary more firmly, it’s also not the only way to solve this problem and certainly won’t help women in the coming year.
This doesn’t mean equal pay in 2017 is impossible. We might not be able to achieve it on a worldwide level, but within the UK, the US and Australia it should certainly be achievable. In 2015, Salesforce did an audit of its pay gap. CEO Marc Benioff was so sure the company wouldn’t have a gender pay gap that he made a deal with his senior female employees. If they could prove there was in fact a pay gap he would instantly fix it.
They proved it and Benioff instantly paid out $3m to fix it. He found every woman who was being paid less than a male colleague doing the same job and adjusted her salary accordingly. In the grand scheme of things $3m is not much to a big corporation like Salesforce, but the amount of goodwill it bought was priceless. There’s absolutely nothing stopping other businesses following suit.
And this is the one bright light that has come out of 2016. While it hasn’t been a good year for women’s rights, it has been a great year for women speaking up and making their voices heard. From politics to Hollywood, women around the world have been calling time on the sexist attitudes and experiences they’ve encountered and pushed back against them.