1 Silver linings of Cyprus bailout (Sony Kapoor in The Guardian) Most recent commentary on the Cyprus bailout has been remarkably negative. Not without reason: the excruciating process of reaching this deal was deeply flawed and will impose large additional and unnecessary costs on Cyprus and other eurozone economies. However, the deal does have some redeeming features which should not be underestimated.
First, the deal provides a template for Europe's unforgivably delayed bank resolution regime. The shotgun approach used in Cyprus, which was forced to adopt and apply such legislation in less than a week, now means that the long-overdue EU-wide approach to bank resolution is imminent.
Second, the deal would enhance the confidence of depositors in the EU-mandated scheme wherein those with less than €100,000 in bank deposits were guaranteed. The original Eurogroup deal, which violated the spirit of this guarantee, was replaced by one that upheld its sanctity. This is hugely important as most deposit guarantee schemes are unfunded – so ultimately rely on the trust that depositors can place in governments that they will honour the guarantee.
Third, events in Cyprus convincingly demonstrated the perils of having an oversized banking system. While the origins of problems in Ireland, Iceland and Cyprus were all very different, it was the disproportionate size of their banking systems in relation to the underlying economy that brought the three countries to their knees.
Fourth, events in Cyprus would have rudely woken up those who had become complacent about the eurozone crisis. The reality is that the political, social, economic and financial aspects of the crisis all continue spiralling downwards and only a grand political bargain can stem the descent. The farcical decision-making surrounding Cyprus has shown how unlikely such a bargain is.
Importantly, Cyprus has once and for all demonstrated that those hoping that a "banking union" will be the panacea that gets us out of this mess are deluding themselves. The dream that the European Stability Mechanism will come to the aid of banks in troubled economies without invoking guarantees from the sovereign is dead. Better to face harsh reality than live in cloud cuckoo land.
2 End of India IT staffing as we knew it (Dawn) India’s IT outsourcers are promoting “mini CEOs” capable of running businesses on their own, while trimming down on the hordes of entry-level computer coders they normally hire as they try to squeeze more profits out of their staff. The shift by Infosys Ltd and others is symptomatic of a maturing industry that wants more revenue from its own intellectual property instead of providing only labor-intensive, lower-margin information technology and back-office services.
For young graduates who see the $108 billion IT industry as a sure pathway to modern India’s growing middle class, the transformation is unsettling. Just 20% of the 5,000-6,000 campus recruits offered HCL jobs in 2011 have been taken on board since graduation last summer, and HCL said it made no offers in 2012 to students who would graduate in June 2013. Slower growth, fewer people leaving, greater demand by customers for experienced staff, and increased productivity through automation and software have put pressure on all recruits, according to HCL, which said it expects to accelerate bringing entry-level staff on board from August.
India’s IT services industry grew in large part because of the availability of cheap skilled labor, an advantage that is eroding as wages and other costs in India rise. In years past, it was cost-effective for IT companies to hire new graduates by the thousands and keep a portion on the “bench” awaiting deployment on a client project.
But budget-constrained clients now demand shorter lead times. IT vendors that might have hired people six months in advance of an expected contract are now working with a one- or two-month window, said Surabhi Mathur Gandhi, senior vice president at TeamLease, a staffing consultancy. Traditionally, about 30% of Indian IT services industry staff are on the bench at any given time, often in training, as they await deployment to client work.
3 Wearable computing is nearer (Straits Times) Google has picked 8,000 people in the US who will have a chance to wear the company's new Internet-connected glasses, which are being described as the next breakthrough in mobile computing. Google began notifying contest winners on Tuesday.
The winners will have to pay $1,500 apiece if they want a test version of the product, called "Google Glass". They also will have to travel to New York, Los Angeles or the San Francisco Bay area to pick up the device, which isn't expected to be available on the mass market until late this year or early next year.
The excitement stems from the belief that Google Glass is at the forefront of a new wave of technology known as "wearable computing". Google, Apple Inc and several other companies also are working on Internet-connected wristwatches, according to published reports that have cited anonymous people familiar with the projects.
4 Fixing India’s broken education system (Rakesh Mani in The New York Times) India’s school enrollment rates have risen but there are many other flaws. First, it has not even dented the issue of child malnourishment. Also, it not been accompanied by an increase in the number of trained teachers, resulting in unwieldy class sizes and low-quality instruction.
Although the government raised salaries to attract talented teachers, they have often lacked adequate training and have remained largely unaccountable. Finally, the enrollment rates distract from the fact that dropout rates are alarmingly high. In Mumbai, for example, enrollment rates surpass 95%, but only a small fraction of students will graduate.
The situation across the rest of the country is not much different – according to recent figures, 4% of Indian children never start school, 57% don’t complete primary school and almost 90% — around 172 million — will not complete secondary school. These numbers should deeply anger Indians and force them to question society’s priorities and values.
For several years, important voices have waxed eloquent on the sheer economic potential of India’s young population. Around 30% of the country – close to 350 million children – is under the age of 15. Given this, statisticians predict that India’s labor force will grow by a staggering 100 million over the next decades, over 10 times the corresponding figure in China. By some estimates, over 25% of the global workforce will be Indian by 2030.
These numbers make one thing clear: the entire world has a social and economic stake in ensuring that India provides top-quality education to its children. But the harshness of the inequity suggests that the debate ought to be more about what is morally right. Despite India’s dazzling economic growth, the bigger growth story over the last two decades has been that of inequity, which is growing faster today than at any time since independence. Underinvestment and ineffective governance in health and education services have played a key role. In just a few more decades, the implications of India’s apathy will have profound implications – not just within the country, but around the world as well.
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