Silicon Valley models value of noncompete ban 24 Apr 2024 A new FTC rule forbids US companies from stopping employees joining a rival, or starting one. Freeing up opportunities for a fifth of the workforce should boost pay. California’s tech hub also showcases other benefits of labor mobility. Intel, for example, exists because of it.
Germany sovereign pension fund is sound but small 3 Apr 2024 Berlin will borrow to invest up to 200 bln euros in global equities to help pay for the retirement of the country’s fast-ageing population. The vehicle’s modest size will limit its long-term impact, but Europe can learn from this blend of public and private schemes.
Profitability is next sacrifice at inflation altar 2 Apr 2024 Central bankers want LVMH, Pepsi and others to pay higher wages without raising prices. Bottom lines in the euro zone already have dipped to 40% of output, the lowest rate since 2020, and Big Tech accounts for most US margin growth. CEOs and investors can expect leaner times.
BoE gears up to unnecessarily prolong worker pain 20 Mar 2024 The Bank of England is set to keep rates steady because it wants to see slower wage growth before easing policy. But pay rises are already falling and won’t cause inflation. The central bank could help 30 mln employees, and 11 mln borrowers, by cutting borrowing costs sooner.
Starbucks union is labor’s mighty mouse moment 6 Mar 2024 An organization representing workers withdrew its board nominees for the $103 bln coffee company after getting some concessions, which look perfunctory. But the structure of Starbucks’ workforce isn’t amenable to successful collective bargaining. Even a small labor win is a win.
Capital Calls: Volkswagen in Xinjiang 15 Feb 2024 Concise views on global finance: The German carmaker is discussing its future in the troubled Chinese province with state-owned partner SAIC. A slowdown in the domestic auto market and the rise of exports could make the pair’s potential retreat from Xinjiang easier to bear.
Japan loses a big title, and perhaps its way 15 Feb 2024 A surprise technical recession means the country is no longer the world’s third-largest economy. Even more unnerving is a slew of weak data that make it harder for the central bank to end an era of ultra-low interest rates. Companies’ wage negotiations will be a deciding factor.
Uber gets the hang of navigating multiple lanes 14 Feb 2024 An inaugural stock buyback, at $7 bln, helps validate the hybrid business model under CEO Dara Khosrowshahi. The company commands a premium to ride-sharing rival Lyft, but a discount to food-delivery specialist DoorDash. It’s safe for investors to let go of the grab handle now.
American unions can’t bargain with the inevitable 1 Feb 2024 Workers in industries from coffee to movies rose up in 2023, but long-term trends are working against organized labor. Some, like auto workers, are a threat to employers. But even there, a combination of legal and societal shifts make for a less-united future.
Capital Calls: SAP, Abrdn 24 Jan 2024 Concise views on global finance: The German software giant is cutting 7% of its workforce, sending shares to an all-time high; outflows at the British fund manager accelerated in the second half of 2023, exacerbating the company’s effort to turn itself around.
ECB is battling an imaginary wage spiral 24 Jan 2024 European Central Bank President Christine Lagarde is set to hold rates this week because she fears rising salaries will boost inflation. Yet euro zone workers are getting raises of just 3.8%, down from a year ago. Frankfurt may not want to cheer bigger pay, but it can ignore it.
Capital Calls: Telefonica cutbacks 4 Jan 2024 Concise views on global finance: The telecoms group and unions have agreed a plan to lay off more than 3,400 staff at a cost of 1.3 bln euros. The number looks high but it’s lower than expected cost savings and a previous accord. Labour representatives could have done better.
Spotify and Netflix hum different content tunes 4 Dec 2023 The music-streaming service is slashing its workforce by 17% to stem losses. Like Netflix, Spotify is beholden to onerous content costs. But Reed Hastings’ company is making shows and has higher gross margins. Spotify boss Daniel Ek’s ‘buy’ strategy hasn’t borne regular profit.
Starbucks strike is a union buzzkill 16 Nov 2023 Baristas at 200 stores will walk out during the $118 bln chain’s “Red Cup” promotion. It’s bold given the state of organized labor, but threatens little impact. A coffee shutdown just isn’t as disruptive as freezing capital-intensive, lengthy production cycles for cars or movies.
Biden’s economic scorecard touts fragile advantage 9 Nov 2023 Low unemployment and easing inflation should aid the US president’s reelection push. Yet most Americans aren’t impressed, and rising borrowing costs don’t help. A Breakingviews tally gives Biden a narrow economic lead over Republicans. The next 12 months will test that advantage.
Stellantis’ China deal maths may amplify US woes 27 Oct 2023 CEO Carlos Tavares is paying up to speed up his green push. At 4.4 times sales, the $1.6 bln deal values Chinese upstart Leapmotor more richly than larger EV peers. Splurging on a rival in the People’s Republic is also a bad look as he negotiates tense pay talks with US workers.
Cooled auto hotheads give labor disputes hope 26 Oct 2023 Ford Motor’s new union agreement could cost $2 bln in pay rises. That stings, but is well short of earlier asks while also recompensing workers. Much about the agreement seems reasonable. As labor pressures continue, the agreement suggests sensible outcomes are possible.
GM earnings give its restive workers an inch 24 Oct 2023 The automaker’s strong third-quarter earnings have raised the stakes in a strike costing it $200 million a week. The union continues to push aggressively. But with Detroit’s gas guzzlers doing relatively well, a tough-but-survivable compromise seems possible.
Capital Calls: US government shutdown 29 Sep 2023 Concise views on global finance: Civil servants, who already earn 24% less than the market rate, lose their pay when Washington closes. Legislators, meanwhile, keep collecting their $174,000 salaries. Having skin in the game would help focus congressional minds.
Long US shutdown is avoidable but seems inevitable 26 Sep 2023 A group of Republicans are holding up approval of a $1.5 trln budget because they want $60 bln in cuts. Fiscal responsibility is fair enough, but they’re being contradictory and unreasonable. Even if Republicans were to reach an agreement today, other issues will get in the way.