Connect with us

International

Europe’s South Takes The Lead

Europe’s South Takes The Lead

By Maartje Wijffelaars, Senior Economist at Rabobank

Brent crude oil extended its gains and broke through the…

Published

on

Europe's South Takes The Lead

By Maartje Wijffelaars, Senior Economist at Rabobank

Brent crude oil extended its gains and broke through the 90 dollars a barrel threshold yesterday, for the first time since end-October last year. The commodity continues its ascend this morning and at the time of writing it’ll cost you 91.2 dollars to buy a barrel. And more support for the commodity is on the table if Russia and Iraq actually stick to the production quotas. Indeed, on Wednesday OPEC+ decided to extend its production cuts through June, but Russia and Iran have produced more than agreed recently. Ukraine strikes on Russian production facilities over the past weeks could ‘help’ Russia lowering its exports, as sites are down. The exact amount of damage is unknown, however, with multiple different figures going around.

Apart from a tighter market, rising uncertainty in the Middle East have fed oil prices since Monday. At the start of the week, Israel hit Iranian military officials in Syria, stoking fears of an escalation of the Israel-Hamas conflict into the broader region.

Yesterday’s ECB accounts of its March meeting showed that uncertainties with respect to the developments of energy prices are on the ECB’s radar. Specifically they mentioned that “Upside risks to inflation included the heightened geopolitical tensions, especially in the Middle East, which could push energy prices and freight costs higher in the near term and disrupt global trade.” And that “It was important to keep in mind that wrong assumptions on energy prices would eventually feed through to all inflation components, either through input prices or indirectly, via wages.”

Overall, the accounts strongly point to a June move, but also underscore the likelihood of a cautious approach for the trajectory afterwards. For more on our ECB view please keep an eye on the preview for next week’s meeting our ECB watcher Bas van Geffen will send out today.   

Meanwhile, yesterday’s PMI figures for March narrowly lifted activity in the Eurozone to expansionary territory, for the first time since May 2023. The composite figure came in at 50.3, despite an accelerated contraction in manufacturing (46.1), owing to improved conditions in the services sector on the back of rising new orders, output and employment (51.5).

Indices for individual member states continued to show quite some divergence among member states. Specifically, they showed that things are going rather well in the South, with a composite PMI of 55.3 in Spain and 53.5 in Italy, but (still) not too good in Germany (47.7) and France (48.3). It’s a story that has been playing out for quite some time now due to a multitude of both longer- and shorter-term reasons.

Lost in thought contemplating the rising southern European PMIs

For example, Germany has been struggling with low demand in China and a loss in competitiveness not only due to the ‘recent’ surge in gas prices, but also due to relatively high labour cost growth – outpacing that of many peers for years now – and increased competition from Chinese car manufacturers. A very tight labour market has also been putting a lid on business’ abilities to grow.

Meanwhile, Italy has benefitted from increased competitiveness due to both relatively weaker wage growth and quality gains over the past years, supporting export growth. Indeed, it’s real effective exchange rate based on relative unit labour costs has been steadily in decline since the GFC. It has furthermore been able to tap into high-growth niche markets such as maritime transport production and has suffered less than Germany from supply chain disruptions during the pandemic.

Another important driver of Italy’s post-pandemic boom is the Superbonus tax credit scheme which has fuelled construction investment since 2020 – support from the latter is expected to come to end, however, as the scheme is being faced out. Finally, Italy has benefitted from EU grants from the Recovery and Resilience Facility (RRF) – also known as the EU pandemic recovery fund. Conditional on reform and investment progress, it is entitled to grants worth in total EUR 72bn (3.4% of 2023 GDP). So far it has received just over half of the amount it’s eligible to, although part of that money is still waiting to be spend.

Both wage moderation and significant support from the EU recovery fund have also helped Spain. The latter is entitled to as much as EUR 80bn in EU grants (5.5% of 2023 GDP) and has so far received a little less than half, although not all money received has been spent yet. More beneficial demographic developments have also helped Spain when compared to both Germany and Italy - this partly results from immigration. Another important factor of Spain’s more recent outperformance is that it has been playing catch up lately. It took longer for its hospitality and tourism driven economy to pick up from the pandemic slump. Furthermore, while its relatively small industrial sector – with a relatively strong focus on car manufacturing – has meant that Spain’s economy benefitted less from the strong industrial production growth during the pandemic years, past year(s)’ slump in the sector has also acted as a smaller drag.

German factory orders for February (0.2% m/m and -10.6% y/y) and industrial production in France (0.2% m/m and -0.8% y/y), out this morning, confirmed both countries’ rather weak start to the year. Yes, both saw a minor monthly uptick after a major contraction in January, but performance was worse than expected and in year-on-year terms both indicators weakened compared to January. At the same time, Spain’s industrial output in February exceeded expectations and picked up both compared to January (0.7% m/m after 0.4% m/m in January) and a year ago (+1.5% y/y in February after -0.6% y/y in January).

On a positive note, figures for Germany, France, and the Eurozone were upwardly revised from preliminary estimates. This suggests that the economy gained some steam in the final weeks of the quarter. This suggests growth in the Eurozone is likely to pick up in Q2, from a rather flat start this year. This is in line with our forecast, as private spending is projected to benefit from improved household purchasing power and a decline in long-term interest rates, while investment in general will be supported by the RRF funds – especially in Southern member states. Overall, Spain is expected to largely outperform peers this and next year, while France and Italy are projected to perform broadly in line with the Eurozone average;  Germany is to underperform.

Tyler Durden Sat, 04/06/2024 - 08:10

Read More

Continue Reading

Government

French Pilots To Go On Strike Against Government’s Proposal To Ban Strikes

French Pilots To Go On Strike Against Government’s Proposal To Ban Strikes

It’s been a week full of absurd news and this certainly is a fitting…

Published

on

French Pilots To Go On Strike Against Government's Proposal To Ban Strikes

It's been a week full of absurd news and this certainly is a fitting end to it.

At a time when workers around the world are striking and demanding higher pay left and right to keep up with soaring prices, the Air France pilot union is doing the same... only with a twist: this strike isn’t due to any current labor issues between the union and company, but rather due to a new government bill that’s currently under consideration; as such the pilots are about to go on strike over a government’s proposed ban on strikes.

As View from the Wing reports, the French government is considering a ban on strikes “over fixed periods, up to 60 days per year" and the French Senate will debate the proposed bill April 9th. In France, strikes are often timed to maximize the impact they have on customers, so the government’s goal is to presumably limit strikes over the busiest periods, especially in the transportation sector (the upcoming Summer Olympics in Paris may also factor into this).

Meanwhile, the SPAF pilot union (Syndicat des Pilotes du groupe Air France), which represents pilots at Air France, believes that Air France is not public transport and not engaged in public service, and thus their right to strike shouldn’t be constrained to benefit the public. Doing otherwise “would “relegate” the country to an authoritarian state” according to the pilots who clearly are unaware that France was relegated to an authoritarian state long ago.

And since the union “cannot accept” such "authoritarian" legislation they are calling on all French pilots to strike April 15-16.

The pilots maintain that there’s a separation between the airline and society, and that they don’t owe a duty to the French public – yet their own actions undermine the claim. They say Air France is private, this new potential policy is government, and they’re protesting the government policy by striking… against the airline.

Meanwhile, it’s surreal to suggest that:

  1. Air France isn’t an artifact of the state The French government owns nearly 30% of Air France KLM. The airline received approximately $17 billion in subsidies during the pandemic. They have received grants of favorable slots at both Paris-Orly and Charles de Gaulle airports, which are property rights gifted by the government and which exclude competition.
  2. French labor law doesn’t already interfere in employee-employer relations French labor law is already tilted heavily towards striking workers. The pilot union doesn’t claim that this risks tyranny. Airlines cannot generally hire replacement workers (and can only reassign duties to existing workers). Here the French state gives labor tremendous leverage over employers through force of law. The French Labor Code also imposes severe conditions on an employer’s ability to dismiss workers, from severance pay to a worker’s right to challenge dismissal in labor courts. It requires consultation with a Social and Economic Committee and developing job-saving plans and plans to minimize the impact of layoffs through transfers and retraining where more than 10 employees are involved.

The French government is the primary owner of Air France and heavily involved in French labor relations. New legislation threatens to tinker with rules that would limit harm to French citizens from strikes at this business that’s been deemed systemically and socially important (hence billions in subsidies from citizens). With this change, if it were to come to pass, French law would still tilt heavily towards workers.

Meanwhile, Air France pilots are not the downtrodden souls union workers normally want to be seen as: "these aren’t factory workers during the industrial revolution", as VFTW points out. On average Air France pilots earn around $160,000 with senior captains frequently earning in excess of $250,000 per year. And since French per capita GDP is half that of the United States, these numbers are even more impressive.

Bottom line: French pilots striking to push for government policies protecting their privileged positions at the expense of average citizens is an awkward position to be in, but come to think of it not all that different than ALPA in the United States.

Tyler Durden Sat, 04/06/2024 - 07:35

Read More

Continue Reading

International

Two new countries just joined Europe’s passport-free travel zone

The change affects those coming from other European Union countries by land or sea.

Published

on

One of the biggest things that surprise American travelers moving across several European countries for the first time is just how easy it can be to cross between borders. When traveling by train, one can easily discover that you are in a different country only by looking out the window and noticing that the language on the station signs is different.

Established in 1995, the Schengen Zone is an area of open borders between many of the countries making up the European Union. The goal was to remove the need for internal borders within countries that already have freedom of work and movement as well as establish a common EU area.

Related: A country just went visa-free for visitors with any passport

While the initial signatories to the Schengen Agreement were only Belgium, France, Germany, Luxembourg and the Netherlands, the idea worked incredibly well and more and more nations joined over the next 30 years. On March 31, the coalition of 27 countries increased by the partial addition of Bulgaria and Romania — two nations that had long been slated to join the Schengen Zone but needed to complete a number of steps to prove that they properly address illegal migration.

Luxury cars are shown driving toward the Romanian border. Ana Poenariu/AFP via Getty Images..

AFP/Getty Images

Two more countries partially join 'the largest area of free movement in the world'

The two countries' ascension grants EU citizens and visitors who have already crossed through another port of entry free access by air and sea but requires some identity document checks at certain land borders for the time being. Bulgaria and Romania have been on the pathway to join the Schengen Zone since 2007.

More travel stories:

"I welcome the lifting of internal air and sea border checks," Ursula von der Leyen, president of the European Commission, said in a statement. "This is a great success for both countries and a historic moment for the Schengen area — the largest area of free movement in the world."

Prior to this change, Croatia was the last country to join the Schengen Zone in January 2022. The land borders for Bulgaria and Romania remain due to resistance from the member state of Austria about illegal immigration flowing west through those two countries. The partial ascension was called out by some lawmakers who felt like they were being asked to hit a moving target not required of other countries.

Here is what the change will mean for travelers passing through these countries by land, air and sea

"Bulgaria and Romania have been fulfilling all criteria for joining the Schengen area for years – we are entitled to join with the terrestrial border as well," Romanian European Parliament Member Siegfried Muresan said to the Associated Press. "[The partial membership] will offer additional arguments to the last EU member state that has been vetoing the full accession.”

Those coming into Bulgaria or Romania by plane or ship from another EU country will not need to show their passport at the airport or port crossing. Both countries have, in recent years, have seen a significant burst of tourist interest as off-the-radar European destinations that have become particularly popular following the pandemic but the vast majority of border movement occurs by land.

Read More

Continue Reading

International

How the UK’s new rights around flexible working will affect employees and businesses

A statutory right to request flexible-working arrangements was introduced in 2014 but has been little used. New legislation coming into force could change…

Published

on

By

Making everyone fit. Studio Romantic

Employees in the UK have just received a new right to request flexible working arrangements from the first day of a new job. This is courtesy of the Employment Relations (Flexible Working) Act and supporting secondary legislation, which are in force from April 6, and represent an important change to employment regulations for Britain’s 1.5 million employers.

Flexible working covers numerous arrangements that deviate from “standard” employment practices, such as part-time work, compressed hours, job shares, flexitime and remote working. UK employees all received a right to ask for such arrangements when the Flexible Working Regulations were extended in 2014. However, this came with substantial restrictions, such as applicants having had to be in post for 26 weeks, so that in practice most workplaces arranged flexible working either informally or outside of the statutory request process.

The new rules may well make the statutory system mainstream. Around 2 million employees a year are currently leaving their jobs due to a lack of flexible working arrangements (albeit informal flexible-working arrangements increased during the pandemic).

Organisations should therefore prepare for an increase in statutory requests. Most employers are expecting this, according to research by work communications platform Slack, which also finds that a majority have not made their workforce aware of their new rights.

So what are the key changes, and what do they mean for employers and workers?

1. The right to a request from day 1

It will be vital that recruitment teams are well equipped to discuss flexible working during job interviews, and also that managers have the skills to design jobs that reflect the needs of their staff.

The government’s intention is that by encouraging a more diverse range of job applicants, organisations will have a wider talent pool from which to recruit. Many employees, women in particular, stay in posts where they have secured a flexible working arrangement, knowing it might be difficult to obtain a similar arrangement elsewhere.

In many cases this hampers their career progress, which can have lifelong financial consequences. This helps to explain why a survey by the Chartered Institute of Personnel and Development found that 57% of HR professionals favour the new day 1 right to a request.

2. How requests work

Employers must now respond to requests within two months, whereas previously they were allowed three, which can be too long in a crisis situation. Employees under the old system could only submit one request a year, but can now submit two.

The idea is that those with changing circumstances will be supported to work flexibly in different ways over the course of a year. For example, someone supporting their partner through cancer treatment may want to vary their working patterns around anticipated care demands. Employers might find these shifting arrangements challenging, but it will hopefully help them to retain valued staff.

Equally, employees whose first application has been turned down can now make a new request without having to wait too long. For example, they might come back with a new proposal that demonstrates an understanding of their employer’s constraints and proposes a more mutually beneficial arrangement.

Meeting between three people in an office
The new system aims to improve dialogue between both sides. Fizkes

It will be incumbent on employers to make sure their decision-making process is as transparent as possible, since this will help employees to tailor future requests and ensure that there’s a constructive and efficient dialogue.

3. Rejecting requests

In another change to the 2014 rules, employers must not reject a request without first consulting the employee. This is essential to make sure employers understand the circumstances behind requests, particularly given that these are often motivated by rapidly changing, unavoidable things like family health crises. The starting position for employers should always be to consider what may be possible, and to identify viable alternatives if the employee’s request isn’t workable.

4. Applicant requirements

Employees submitting requests are no longer required to explain how their proposed arrangement would affect their employer and how it could be dealt with. This means that line managers will need to have a central role in making decisions about requests, since they will usually have the greatest knowledge about job roles and will have to implement any new arrangement. Employers will accordingly need to train and support their line managers around managing flexible working.

For anyone needing more information, national employment-relations adviser Acas’ code of practice helps to explain what the changes mean for employers and employees.

The case for more flexible working

We recently conducted research for Acas, for publication this summer, looking at how organisations in different sectors have been using flexible working since the pandemic. We found that only a small minority of the huge range of today’s flexible working practices have been organised through the statutory right to request process.

Statutory requests have mostly been restricted to more complicated cases. This might include situations where a line manager is known to be unsympathetic to flexible working, or where a request would run contrary to normal shift patterns, such as in a supermarket or hospital.

Supermarket worker pushing a trolley
Most statutory requests since 2014 have been unusual cases. Michael JP

The large volume of informal flexible working in organisations provides some indication of employee demand for these arrangements. An informal set-up can be fine for everyday demands like needing to take time off to look after a sick family member. But where a flexible arrangement has become more routine, such as working longer or shorter hours on different days, employees might benefit from the enhanced security of having it written into their contracts rather than relying on a verbal agreement.

While some employers will probably regard the legislation as a major shakeup, the government’s impact assessment highlighted business benefits such as improved productivity, more motivated employees and reduced absenteeism. We would also argue that the legislation offers employers a unique opportunity to take stock of how their employees’ needs for flexible working have changed since the pandemic.

Such an approach can enable them to gain a deeper understanding of their employees’ circumstances, and take a more inclusive and fair approach to supporting requests.

Jane Parry has received funding from various government departments and research councils. She is a member of the Labour Party.

Michalis Veliziotis has received funding from UKRI/ESRC and Acas.

Read More

Continue Reading

Trending