Great Britain is leaving the European Union on January 31. However, the future relationship between the EU and the UK has yet to be negotiated. While many EU politicians consider the current schedule to be unrealistic, including EU Commission chief Ursula von der Leyen and chief negotiator Michel Barnier, the UK leadership continues to advance its plans diligently – particularly in terms of post-Brexit immigration.

Here, Boris Johnson has long-planned new restrictions on low-skilled immigrants, which ought to come into force just one day after the end of the Brexit transition phase at the end of December 2020. Home Secretary Priti Patel is expected to present corresponding proposals in the next few days as part of the new immigration regulations in the cabinet.

This plan would overturn Johnson’s commitment that his predecessor Theresa May had made to corporate groups and that after Brexit, there should have been a two-year deferral for new immigration regulations until 2023, however.

Johnson unveiled long-awaited details of his plans for an Australian-style points system a few days before his election victory. His three-tier system aims to accelerate the immigration of “highly skilled” workers and also allows a second tier of “skilled workers” to immigrate to the UK for employment.

The third tier of low-skilled workers could only obtain employment if either there were a shortage of staff or under an exception for sectors such as construction due to notorious high demands.

Already in December, Johnson had written on Twitter that the UK sought to encourage and welcome highly qualified immigrants in the UK while maintaining control in order to plan to pay for our public services accordingly.

Meanwhile, Labour described the Tories’ plan as ignorant and reactionary and warned that changes would affect the NHS and civil service staffing and key private-sector industries in particular.

Business associations, agriculture industry, the hospitality industry, construction and the care sector, in particular, have also criticized the government’s plans. All rely on workers from the EU.

No 10’s announcement was made after Chancellor of the Exchequer Javid had already indicated the Tories’ plan by advising companies to recant their call for continued close cooperation between the EU and England. Javid justified this by saying that the companies had already had three years to prepare for any Brexit labor consequences.

Javid said that “there will not be alignment, we will not be a rule-taker, we will not be in the single market and we will not be in the customs union – and we will do this by the end of the year.”

In order to stimulate the UK’s economy post Brexit, Javid has pledged the government’s commitment to making substantial investments, especially in the infrastructure of the economically dependent regions in the Midlands and the north of the country. In the future, significantly more money should also be invested in the qualification of specialists. For this, Javid seeks to increase taxes in the medium term, he indicated. Javid hopes that this will kickstart the recently weak economic growth, and the continued low productivity rate in the country – through employment remains at a record level.

The UK government has long been trying to reduce the immigration surplus. The previous year the figure was estimated at 226,000 people by the British Statistics Service ONS. However, the numbers have declined since the referendum of 2015, even though not as significantly as anticipated.

EU citizens have so far been allowed to live and work in Great Britain without any issues. With the Brexit deadline looming, this may change, particularly for individuals who have not lived in the country for at least five years and are thus not eligible for settled status.

Skilled workers from all over the world are still attracted to the UK, which in turn forces the UK to restrict the movement of unskilled and unemployed individuals. Due to the urgency, this will very now likely happen before December 2020.

L'articolo Tories to Implement New Immigration Regulations by the End of 2020 proviene da InsideOver.

Women now outnumber men in the American workforce for the first time since the Great Recession ended a decade ago. According to a new IMF study, male labour has declined globally as female participation in the labour force has increased.

The “Employment Situation Summary”, data released from the US Labor Department, reveals that there were “notable job gains” in growing industries that hire more women, such as retail trade and healthcare, while industries that hire more men, such as mining and manufacturing, are shrinking.

The ESS shows that, last month, women in the US held 50.04% jobs. They also gained 139,000 jobs while men only gained 6,000 jobs within the same period. This can be attributed to advances in technology which has increased the need for labour in service jobs, but decreased the need for jobs that require manpower. Technological advancements, for example, have ushered the rise of automation in manufacturing, construction and other male-dominated industries.

Julia Pollack, labour economist at American labour firm, ZipRecruiter, argues that technological advancements have given a “boost” to women, opening up jobs that were previously male-dominated.

“The sectors that are growing, like education and health care, are predominantly women’s employment,” Ariane Hegewisch, the program director of employment and earnings at the Institute for Women’s Policy Research, told The Wall Street Journal.

“Looking at the 21st century, it is really amazing how profound some of the [sex] segregation is in the labor market.”

“It’s a milestone because it’s really heralding the future and not just telling us where we are today,” said Betsey Stevenson, a professor of public policy and economics at the University of Michigan and an Obama administration economic adviser.

“As women get into more senior positions, it creates more space to hire more women and brings more equality into management decisions,” Stevenson continued. “It’s one of those things that’s self-reinforcing and keeps on going.”

The last decade has seen major shifts in labour force participation in ‘advanced’ economies. These changes will affect the global economy in the next century.

“Participation has increased among prime-age women and, more recently, older workers, but it has fallen among the young and among prime-age men,” the IMF study recounts.

The study accredits these shifts in part to an increasingly ageing population, and the after-effects of the global financial crisis. The global financial crisis, for example, increased the share of two-income households as families now struggle to survive on a single-income salary.

The report also accredits these labour changes to: “labour market policies and institutions [working] together with structural changes and gains in educational attainment”.

The United Nations has predicted that the rising ageing population in ‘advanced’ economies, combined with slowing population growth will shrink total population growth in half by the middle of this century.

“The burden will fall on those currently considered to be of working age, who in a few decades will support close to double the number of elderly people they do now. Unless more people participate in labour markets, ageing could slow advanced economies’ growth and, in many cases, undermine the sustainability of their social security systems,” the IMF study states.

Furthermore, technological advancements have the potential for economic division in the future.

“Technological progress that enabled routine jobs to be automated may have reduced the demand for less-skilled labour in advanced economies and made certain jobs obsolete,” the study continues.

“While these global developments benefit the economy as a whole, and create new opportunities in other sectors, workers may be unable to take advantage of these opportunities due to lack of relevant skills and training, preferences, hardship involved in relocating geographically, or an inadequate return compared with their previous earnings.”

Labour changes are a challenge for global geopolitics and economics. Increased sex equality in labour markets are a celebratory milestone, but rising nationalism and xenophobic border closures in ‘advanced’ economies are not sustainable under this new labour system. The input of immigrants in increasing population growth, boosting the economy, and taking care of the older generations out of the workforce is indispensable.

Economists and policymakers must keep abreast of a rapidly changing labour market to ensure equality in all spheres of society.

L'articolo Women Now Outnumber Men in the American Workforce proviene da InsideOver.

Nothing characterised Donald Trump’s presidential campaign more than his penchant for making new deals, after tearing apart or renegotiating existing ones. Be it the nuclear agreement with Iran or brokering better terms of trade with China, no one was safe from verbal wrath. 

Not even the North American Free Trade Agreement, an almost 30-year old pact that ensured free movement of goods between the US, Canada and Mexico. The agreement had led to thousands of job losses, Trump said, as many US companies shifted their production to Mexico where the costs are lower. The same goods were then imported from there, leading to a trade deficit – something the US president hates with all his heart. 

But earlier this week, the three North American countries finally reached another agreement in place of NAFTA, which the US says “will create more balanced, reciprocal trade that high-paying jobs for Americans” when finalised and implemented.

Trump had time and again complained about US companies moving their manufacturing to Mexico due to cheaper cost of production, resulting in American workers losing their jobs, especially in the auto sector where giants like Ford had relocated much of their factories across the border. The new pact addresses this issue by requiring that 40-45% of auto content be made by workers earning at least $16 an hour. 

This would push up the labour costs in Mexico and discourage US firms to shift manufacturing, or at the very least, ensure a higher wage for American workers involved in the sector. According to a report from the Trump administration, the new deal is expected to create over 76,000 auto jobs over the next five years, while the International Trade Commission puts that figure at 28,000 in a period of six years. 

It further requires Mexico to overhaul its labour justice system, by adding legislative actions that the country must take to provide for the effective recognition of collective bargaining rights. Another key feature is the proposed dispute settlement mechanism, which will ensure the enforcement of core labour standards in Mexico.  

The three countries have also committed to reducing trade distortions, for example by not using export subsidies or WTO special agricultural safeguards for products sold to each other’s markets. 

Another bone of contention for the Trump administration was regarding the tech sector, and the new deal explicitly prohibits Canada and Mexico from requiring US companies to host data of their citizens inside their borders. The agreement further lays a roadmap for digital trade, ruling out the application of customs duties on digital products distributed electronically such as music, software etc. 

However, overall the differences are not that many and might not justify the hype afforded to the entire politics leading up to this agreement. The new deal surely does a good job at addressing key points regarding data and digital trade in an ever-advancing technological world, but in the traditional sectors, the changes have been rather marginal. 

As for the benefits it will reap, there are differing views but even the most generous projections do not add too much to the US economy in terms of investments and jobs. However, now that the matter is hopefully settled once and for all, with backing from House Democrats as well, it will go a long way in boosting investor confidence and tackle the uncertainty that had plagued North American trade. 

Similar results to expect with China?

Now that a breakthrough has been made, with core US demands accepted, many might naturally be wondering if the Trump can score a similar “win” against China or other partners as well. But the underlying fundamentals suggest a different picture. 

Unlike the European Union or China, Canada and Mexico didn’t have too much leverage to bargain given their disproportionate dependence on the US for trade. For example, both had their exports to the United States accounting for 70% of the total proceeds while imports also had close to a 50% share. On the other hand, the two neighbours represented a cumulative 27% of the United States’ trade value. 

Meanwhile, the people’s republic has far more diversified trading partners with 20% of its exports directed towards the US and only 8% or so imports originating from the same. Over the years, China has expanded its trade base to virtually every part of the world, thus eliminating too much dependency on any one country. In addition, its rapidly growing economy offered American companies cheap suppliers and thus became a central part of their supply chains. 

As a result, the US  doesn’t enjoy the same bargaining power with China as it did with its neighbours and hence, won’t be able to dictate the terms of any agreement reached between the two countries.

L'articolo USCMA and Trump’s Art of the Deal proviene da InsideOver.

Two years ago, Germany’s Chancellor Merkel launched the “Compact with Africa” ​​program during Germany’s G20 presidency. The program had two goals in particular: African statesmen promised to create better conditions for trade and investment while the Chancellor promised economic development and private investment from Germany. A development investment fund was supposed to support German companies with up to one billion euros in their business on the African continent – a plan the government called the “core element of new cooperation with Africa”.

The previous week, leaders from twelve African countries met with Merkel in Berlin again. The project’s record so far? Subpar. In 2019, the German government has provided only €255 million. Still a significant amount of money, but far from the “up to one billion” pledge. Even worse, the project has already been gridlocked. German companies have submitted 220 inquiries regarding the fund and the option of facilitating a partial relocation of their operations to Africa. The amount of monetary support that has been distributed to these companies by now? Zero.

According to the Ministry of Economy, it has invested €5.3 million in 2019 for the so-called “Economic Network Africa”, a component of the investment fund. For 2020 “a significant increase” is considered, namely just under €18 million. However, it is still working with other foreign trade promotion programs in Africa and plans, as well as the Ministry of Development, to spend more money in the coming years.

So far, the “Compact for Africa” project has therefore been rather unimpressive, despite all good intentions. The reasons are as plentiful as obvious. First, a significant increase in private investment and jobs has been lacking so far. Second, Africa, despite being a protagonist, is being treated as a sideshow in the project, namely due to lack of inclusion of the African representatives. Third, fundamental developments such as poverty or unemployment, especially among young people, may have been underestimated in the participating countries, with the strong population growth in many African countries potentially aggravating these issues in the coming decades. Hence, utilizing foreign companies to establish new industrial centres in capitals may not be a sustainable solution, but rather results in increased inequality in African societies.

The latter becomes evident in the example of Senegal, which is a member of the “Compact with Africa”. Senegal is considered a positive example and has been called a “reform champion” by the German government. However, despite solid economic growth, structural barriers such as inadequate power supply have limited private investment in the country, while also struggling to offer young people promising job perspectives. Other participating states are facing even more serious issues. Burkina Faso, for example, has been facing severe terrorism that causes many casualties even amongst foreigners and with no end in sight.

Another participant, Egypt, is one of the largest economies of the African continent and one of Germany’s most important trading partners. At the same time, President al-Sisi governs the state increasingly authoritarian, which, in addition to the crippling bureaucracy, could scare off foreign companies in the future.

“Compact for Africa” was Germany’s approach to become a player on the continent. Just like most other nations, Germany has realized the economic potential of Africa also. However, the commitment so far has simply been unsatisfactory, and much more than promises will be needed to provide momentum to the African economies, overcome the aforementioned issues the countries are facing and make the collaboration a winner for all sides involved.

L'articolo Germany and Africa: Good Intentions, Subpar Record proviene da InsideOver.

With the country’s unemployment rate rising to a 45-year high at 6.1% in 2017/18 fiscal year, slowdown in the agriculture growth rate, and declining GDP growth rate, can India achieve the great Indian dream of a 5 trillion US dollar economy by 2024? Reports of slowdown in the global economy cast a shadow on the government’s target. Whereas the Annual Report 2018-19 of the Department for Promotion of Industry and Internal Trade (DPIIT), states that India has received the highest-ever FDI inflow of $64.37 billion during the fiscal ended March 2019 and FDI worth $286 billion in the past five years. This presents India as a bright spot for investment and vindicates the governments target of USD 5 trillion economy by 2024. Economists and subject matter experts termed the target as ambitious but achievable with reforms and a higher growth rate.

Chief economic advisor to the government of India, K V Subramanian said, “Even though the target looks ambitious, it is realistic and achievable considering notable successes in all domains of governance in the last five years.” Addressing assistant collectors and senior officers at Dr. MCR HRD Institute in Hyderabad, Prof. Subramanian said that investments and the GDP growth of 8% per annum would be the key driver in reaching the $5 trillion economy by 2024. He also reflected that India took 55 years to reach the first trillion economy mark and then grew rapidly and reached $ 2.7 trillion in the last five years (2014-2019).  

Prof Subramanian said that many enterprises prefer to stay small to derive the benefits of government incentives, as a result, their growth is lower than their real potential. Prof. Subramanian pointed out that larger firms can generate more employment opportunities in the long run, while the micro, small, and medium enterprises may become less impactful in generating employment.

Talking to InsideOver, Dr. SP Sharma, Chief economist, PHD Chamber of Commerce and Industry (PHDCCI) said, “With an anticipated GDP growth rate of 8% India can achieve the five trillion dollar target even if we take into account the inflation rate of 4%. Dr. Sharma said his logic is based on the government’s announcement of spending INR 100 lakh crore on infrastructure over the next five years. Infrastructure spending produces a multiplier effect on economic growth and enhances GDP growth by 1%. For better results, the government needs to spend INR 20 lakh crore on infrastructure each year over the next five years. On agriculture slowdown, Dr. Sharma is hopeful that the agro sector would revive and increase its contribution in GDP. The government is working on supply chain and developing infrastructure facilities; with a check on wastage and development of irrigation facilities, farmers’ income will increase in the coming years. 

A Delhi-based economist, who was an Economic Advisor to the Ministry of Finance, Department of Economic Affairs, India and the International Monetary Fund, said that the target is achievable with sustained economic growth. The government’s focus on development programs and upliftment of poor coupled with the various economic reform programs, like the GST, the Insolvency and Bankruptcy Code 2016, and others, will result in INR 5 trillion dollar economy. The only concern is whether India can sustain that growth rate or not. He added, “India’s GDP was higher than China in 1980, but they are now four times than India as China began growing rapidly at annual rates of more than 8% per year. We can become a 5 trillion dollar economy by doing the same.”

According to other economists, 8% GPD growth rate is a must over the next five years for the realization of the target. The government has to encourage exports and open more sectors for foreign investment. The agriculture and allied sectors’ growth rates have to be doubled over the next five years. The economists surmised that the government needs to attract foreign investment in the infrastructure sector and encourage investment via build-operates-transfer (BOT), toll-operate-transfer (TOT ), and public-private partnership (PPP). According to them, the model of equi-focus on both large as well as small enterprises should be the recipe of development in the coming years. Micro, small & medium enterprises (MSME) play a substantial role in generating employment and contribute to GDP.

L'articolo India Dreams of a Five Trillion Dollar Economy: Myth or Reality? proviene da InsideOver.