The Irish Independent reports that the European Commission has unveiled details of the Small Business Act, which will lessen the regulatory burden on small businesses in Ireland.
The Act includes a general block exemption regulation on state aids, designed to simplify procedures and reduce costs; a new statute for a European Private Company, which will eliminates the need to set up subsidiaries in every member state; a VAT directive that will allow states to levy reduced rates on locally supplied services by micro-enterprises; and a late payments directive amendment, which will help ensure SMEs are paid within the 30-day time limit.
ISME chief executive Mark Fielding said: "While there are certain aspects of the act that need to be clarified, in particular the environmental issue, the guiding principles should help to encourage enterprise in Ireland and Europe," .
Small Firms Association (SFA) director Patricia Callan said the act "places small firms first as a principle part of the entire EU".
While welcoming the act, business organisation Chambers Ireland said it was disappointed the Commission did not make specific references to labour market flexibility.
The Irish Independent also reports that the Government is facing a massive bill for underpaying up to 1,000 part-time teachers over the past seven years, the Irish Independent has learned.
Already, two teachers have obtained more than €100,000 between them in salary arrears.
Those awards -- one in excess of €60,000 and the other of over €40,000 -- were made by the Rights Commissioner, which found the Department of Education in breach of laws which protect part-time workers.
Under the 2001 laws, part-time teachers are entitled to be paid the same as their full-time equivalents to reflect their qualifications and experience.
But the department has been paying them as if they were newly graduated teachers who have qualified with a pass degree, as opposed to the honours degree the majority of teachers obtain.
The Irish Independent can also reveal that the department is unable to quantify the extent of the bill it will have to pay because it has never kept a payroll record for temporary teachers.
It is estimated up to another 1,000 part-time teachers are being underpaid and may be due substantial salary arrears, according to an assessment of the problem by the Irish National Teachers' Organisation (INTO).
In a briefing document prepared for Education Minister Batt O'Keeffe, obtained by the Irish Independent under the Freedom of Information Act, the extent of the problem has now been realised.
"Many of the teachers are likely to be entitled to be on a higher rate of pay than is currently paid to them and are due arrears of salary," the document states. "By not paying the appropriate rate of salary to the teachers concerned, the department could be found to be acting unlawfully."
Under the Protection of Employees (Part-Time Work) Act of 2001, part-time teachers are entitled to be paid a salary appropriate to their qualifications and to receive incremental credit in respect of relevant teaching service.
However, the Department of Education has continued to pay part-time teachers on the second point of the salary scale and only allow for a pass degree qualification. This equates to €43.25 per hour.
But in the case of retired teachers with honours degrees, for example, who returned to teach as temporary resource or language teachers, they are in fact entitled to €83.06 per hour. Given the department's failure to implement the seven-year old legislation, they are missing out on €39.81 per hour.
Such temporary teachers are employed by schools as resource teachers or language support teachers when the number of hours of tuition approved by the Department of Education is not enough to warrant the appointment of a full-time teacher.
Delay
Last night, INTO strongly criticised the excessive delay in paying part-time teachers the proper rate. General secretary of the union, John Carr, said there was a significant failure to resource the department to meet their legal requirements.
"It is completely wrong that any worker would be denied their proper pay rate,"he said."The result is that many teachers have suffered serious financial hardship."
Earlier this week, the Irish Independent submitted 16 questions to the Department of Education in a bid to establish how many teachers were due arrears and what they might be.
In a lengthy response, the department said it could not state how many temporary teachers were due payment because it had never operated a payroll system for part-time teachers. Software development was now "well advanced" to extend the single payroll system for full-time teachers to temporary teachers.
A spokeswoman for the Department of Enterprise, Trade and Employment said that under the 2001 legislation, if a part-time employee feels he or she is being treated less favourably than a full-time comparator, it is open to that employee to refer their case to a Rights Commissioner for adjudication.
The Irish Times reports that motorists and consumers are facing further steep increases in the price of petrol and home-heating oil after the head of Opec, the cartel that produces more than 40 per cent of the world's oil, warned that the price of oil will climb to $170 a barrel before the end of the year.
With oil relentlessly on the rise since breaching a symbolic high of $100 per barrel in early January and after a new record of $142.99 was reached last Friday, Opec president Chakib Khelil reiterated the prediction that significantly higher price levels will be seen within months because of the weakness of the US dollar and political pressure on Iran.
"Oil prices are expected to reach $170 as demand for fuel is growing in the US during the summer period and the dollar continues to weaken against the euro," said Mr Khelil, who is oil minister of Algeria.
His remarks came ahead of a likely quarter-point increase in euro zone interest rates next Thursday. As well as increasing the cost of mortgages in the declining domestic economy, the likely move by the European Central Bank will further weaken the US currency and put yet more upward pressure on oil prices.
"The decisions made by the US Federal Reserve and the European Central Bank helped the devaluation of the dollar, which pushed up oil prices," Mr Khelil said.
Opec ministers say oil output is sufficient, even as Saudi Arabia, the biggest producer, pledged to pump an extra 200,000 barrels a day next month to calm the market. "There is more than enough oil in the market to meet the international demand," said Mr Khelil.
Fellow Opec member Qatar said yesterday it would not follow Saudi Arabia's lead in increasing crude oil production because supplies are adequate. This follows the United Arab Emirates and Kuwait, which also declined to increase output at a time when record prices are fuelling global inflation and slowing growth.
A survey of 2,570 respondents in Britain for ITV said rising petrol prices are forcing one in five people (19.2 per cent) to cut back on food. Over one-quarter, 26.7 per cent, are reducing the amount they spend on leisure activities, while 15.1 per cent have cancelled outings or holidays outright and half - 49.9 per cent - are using their car less frequently.
In Switzerland, central bankers at the annual meeting of the Bank for International Settlements said rising energy costs risk damaging growth in rich and poor countries. Officials from over 100 central banks exchanged views on the global outlook, agreeing that oil prices were a major concern.
The Irish Times also reports that IDA Ireland warned the Government of the potential for increased competition from the North for inward investment when a plan to enable IFSC firms to move some of their operations across the Border was being finalised, official records show.
The initiative, introduced in April, is designed to address a shortage of skilled financial services workers in the Republic by helping companies to establish offices in the North, where there is a surplus of such graduates. Companies in the funds administration area are expected to take advantage of the facility.
IDA Ireland made no public comment when the plan was introduced in Belfast by Brian Cowen, then taoiseach designate, and Peter Robinson, then first minister designate. While it is understood that IDA Ireland did not oppose the plan, neither did it actively support it.
Records released under the Freedom of Information Act show that IDA Ireland sought information on the chronology of events and contacts with the Northern Ireland side when it was briefed on the plan by the Department of Finance on March 27th, less than three weeks before the statement from Mr Cowen and Mr Robinson.
"IDA stressed the success achieved in the regionalisation of financial services in Ireland building from the strengths of the IFSC and potential for increased competition from NI [Northern Ireland] in the future," said a minute of the meeting.
The Department of Finance said in response that the "Irish funds industry was already considering locations in eastern Europe for back-office administration so the increased capacity in Ireland could help strengthen case for options on island of Ireland".
The minute also said that IDA Ireland "suggested that reciprocity could be mentioned" during a question-and-answer session with journalists when the plan was announced.
Responding, the Department of Finance drew attention to the aim of developing Belfast as a regional hub for British-based financial services "which, with strong Dublin links could build further relationships between UK and Ireland in financial services arena generally".
IDA Ireland also drew attention to the possibility of broadening the scope of the funds initiative in the financial services area generally. "The forthcoming US investment conference was mentioned in that context," it said.
IDA Ireland's spokesman declined yesterday to comment on contacts with the Government before the initiative was agreed.
"Belfast is one other location for financial services of many on the island. IDA will continue to seek these investments as it has done before," he said.
The Department of Finance said it was confirmed to the northern side that moving the operation of some funds "could be achieved within the existing regulatory framework which allowed the FR [Financial Regulator] to approve derogations from minimum activity requirements on a case-by-case basis". The minute also said the northern authorities stressed their interest in a positive statement from the Government to highlight their commitment to the all-island economy.
The Irish Examiner reports that Forfás the government’s chief adviser on industrial strategy, has said further cost increases must be curbed so that Irish enterprise can compete effectively.
“We must maintain an intensive focus on reinforcing Ireland’s competitiveness by sustaining investment in education, research and critical infrastructure, and promoting cost competitiveness and productivity growth,” said Forfás chief executive Martin Cronin at the launch of the agency’s annual report yesterday.
The report said over the last year there has been a significant loss in Ireland’s international price competitiveness due to the appreciation of the euro, pay increases ahead of productivity growth rates and high inflation levels.
It said non-pay costs compare unfavourably with other European countries, while property costs, utilities and domestic service costs are significantly higher.
Full-time employment in companies under the remit of IDA Ireland, Enterprise Ireland, Shannon Development and Údarás na Gaeltachta increased by 1,115 to 305,121 last year, according to the report, which also said there are 28,834 more people employed in agency-assisted manufacturing and internationally traded services companies than in 1998.
Expenditure on research and development rose to €2.5 billion, with the average annual growth rate in spending activity on R&D performed in the State over the past decade more than 11%.
Tánaiste and Enterprise, Trade and Employment Minister Mary Coughlan said: “Understanding what are the most important strategic issues for enterprise and science is essential for government in ensuring Ireland continues to deliver an environment in which companies can thrive.”
Meanwhile, in 2006 overall output of agency-assisted firms in manufacturing and internationally traded services increased by 5.4%, while direct expenditure in the economy increased by 4.1%.
Direct expenditure totalled €34.8bn, made up of payroll costs (€12.4bn), Irish raw materials (€12.9bn) and expenditure on Irish services (€9.6bn).
Total corporation tax yield from all sources was €6.7bn in 2006, an increase of 21% on the previous year. It is estimated that agency-supported firms accounted for €3.4bn of the total corporation tax paid in the economy.
Mr Cronin said investment in education, research and infrastructure is vital for a knowledge economy. “We must continue to invest in what is most important and prioritise investments that will make the most significant contribution to our economy. Fortunately, success in this regard is within our own control,” he said.
He also said a continued focus on innovation and flexibility to adapt to change across all business activities is vital to secure higher value-added activities and improved productivity.
“Achieving higher relative productivity growth rates will be important for further international competitiveness and securing sustainable wage growth.
“To achieve this Ireland will need changes in the workplace — a partnership approach to the development of workplaces which are knowledge-based and innovation-driven.”
The Financial Times reports that several Asian countries are looking at spending billions of dollars on shares to support plunging stock markets in a move likely to be welcomed by global investors who fear emerging markets may be about to suffer further dramatic falls.
The development follows a 13 per cent fall this year in the MSCI Asia Pacific index, which looks as though it will end the month on Monday with its worst first-half performance since 1992, when it sank by 23 per cent as the Japanese economic bubble deflated.
Government officials in Taipei, where the local market dropped to a five-month low on Friday, said the cabinet had called on government pension and insurance funds to buy more domestic shares and to hold their investments for a longer period.
Economic and financial ministers and central bank officials met over the weekend to discuss how to boost investor confidence.
They stopped short, for now, of ordering the use of a T$500bn ($16.4bn) National Stabilisation Fund designed to support markets in times of volatility caused by non-economic events. However, the board of the fund, which was last used during political turmoil after the 2004 presidential election, will meet again on Friday.
In Vietnam, state media reported that the stock exchange and securities regulator was setting up a stabilisation fund to support a market that has lost nearly two-thirds of its value this year as inflation surged.
And in Pakistan, the Karachi Stock Exchange is coming under increasing pressure to use a Rp30bn ($442m) stabilisation fund set up last week for use in “volatile circumstances”.
Karachi had one of the hottest stock markets in the world in 2007, but its loss of nearly one-third in value since April has created “systemic risk”, the KSE said.
Official intervention to support share prices has a long history in Asia. One of the most successful examples was in 1998, when the Hong Kong government bought shares in the aftermath of the Asian financial crisis to support the value of the assets backing the territory’s currency, which is pegged to the dollar.
Japan started to intervene in the stock market in 1991 after prices halved after the “bubble economy” burst. Interventions continued for several years, but more than a decade later the Nikkei average is only worth a third of its value in 1989.
“The success [of official support] depends on one thing only: how cheap the market is,”said Khiem Do, head of multi-asset at Baring Asset Management in Hong Kong. “The price-earnings ratio has ideally to be below 10 times, or no higher than the mid-teens, and then you have some chance of it working.”
Taiwan is currently trading at about 11 times forecast profits, Pakistan at 14 and Vietnam at about 10, he said.
The FT also reports that leaders of the Group of Eight rich nations are set to backtrack on their landmark pledge at the Gleneagles summit in 2005 to increase development aid to Africa to $25bn a year.
A draft communiqué obtained by the Financial Times, due to be issued at the group’s July summit in Hokkaido, Japan, shows leaders will commit to fulfilling “our commitments on [development aid] made at Gleneagles” – but fails to cite the target of $25bn annually by 2010.
This goal – which was repeated at last year’s G8 summit in Germany – was seen as an important boost for Africa. The ambitious plan was a cornerstone of former UK prime minister Tony Blair’s G8 presidency and championed by his successor, Gordon Brown.
The dropping of the explicit target marks a further stage in the G8’s failure to honour the commitments they made in Scotland at Gleneagles. Most of the G8 countries’ aid budgets have already fallen well behind their promises to increase overseas assistance.
The step could be awkward for Japan, which has made support for Africa a summit theme, along with climate change. Yasuo Fukuda, Japanese prime minister, used a meeting last month in Japan with 40 African leaders to announce a doubling of aid to Africa by 2013. Eight African leaders are due to attend the G8 summit on July 7.
The draft communiqué, dated June 25, might still change, diplomats insisted, especially if pressure from African countries or from the public grew next week.
In a further retreat, the G8 is set to abandon its Gleneagles promise to provide universal access to Aids treatment and prevention by 2010. The pledge has been a benchmark around which health campaigners and others have been organising their work, especially in Africa.
The draft says the G8 will continue “working towards the goal of universal access to HIV/Aids prevention, treatment care” but it does not mention the 2010 deadline.
In addition, G8 leaders are divided on how to fulfil one of the headline commitments at last year’s Heiligendamm summit in Germany to provide $60bn “over the coming years” for tackling malaria, tuberculosis and Aids, and for strengthening healthcare systems in developing countries.
This promise remains in brackets in the draft, indicating that no agreement has been reached. Countries are divided on the time period for achieving the target, with proposals ranging from three to eight years, according to one person familiar with the issue.
The New York Times reports that Siemens, the German engineering and electronics company, plans to cut 17,200 mostly white-collar jobs as it reorganizes to reduce its cost base, a person who has been briefed on the plans said on Sunday.
The payroll cuts, which will include 6,400 jobs in Germany, represent one of the boldest moves yet by the new chief executive, Peter Löscher, to bring costs under control at the company as part of the reorganization. They also reflect the belief among top Siemens executives that the company must quickly move to streamline its operations before a slowing global economy takes away its room to maneuver.
The person spoke on the condition of anonymity because the plans will not be officially announced until the Siemens workers’ council meets with management on July 7 about the layoffs.
Mr. Löscher has given the plans to workers and managers to prepare for the talks, the person said.
Siemens, based in Munich, was founded more than 160 years ago and employs about 400,000 people globally.
Under the reorganization, Siemens has rearranged its vast array of businesses into three main divisions: industry, energy and health care. Mr. Löscher put the leaders of the three sectors on the central managing board. Siemens has also reduced to 20 from 70 the number of national companies that oversee its business overseas.
All told, those moves have sharply reduced the number of mid- and upper-level white-collar employees Siemens needs, setting the stage for the layoffs, the person said.
Over the years, Siemens’s cost base has swollen to double the size of its competitors’ in several areas, the person said. Siemens expects the work force reductions to save it 1.2 billion euros ($1.9 billion) by 2010.
Speaking on Tuesday in London, Mr. Löscher said that Siemens’s goal was to be either No. 1 or No. 2 in all of its business areas and that the overhaul was bearing fruit.
“With our new setup, clear responsibilities worldwide and more efficient processes, we’ve laid the basis for reaching our goal,”he said. “Leveraging our innovative technologies will enable us to grow twice as fast as global G.D.P. and, at the same time, achieve a high level of profitability.”
Mr. Löscher, an Austrian, took over as chief executive in May 2007 after his predecessor, Klaus Kleinfeld, left as a result of a bribery scandal.
Mr. Löscher’s term has not been without missteps. In February, he said Siemens was on track to meet its earnings targets for the year. A month later, he said that delays and canceled orders would knock about 900 million euros off its first-quarter profit.
In April, Siemens reported profit of 412 million euros in the first three months of 2008, down more than 67 percent from 1.259 billion euros a year earlier, on revenue of 18 billion euros, up 1 percent.
The company’s shares have lost nearly a third of their value over the past 12 months.
Siemens very much wants to put the bribery scandal behind it. Currently, Reinhard Siekaczek, a former executive for its fixed-line information and communication networks business, is on trial in Munich, charged with breach of trust, the first criminal trial in the scandal.
The company has said that it identified suspicious payments totaling 1.3 billion euros that might have been used as bribes to win contracts overseas.
The person close to the company said that the scandal had nothing to do with the rationale for the job cuts, but that a sense of crisis had created an awareness that major steps were needed to get the company back on sound footing.
The NYT in a report from Bangkok, says that at least 29 countries have sharply curbed food exports in recent months, to ensure that their own people have enough to eat, at affordable prices.
When it comes to rice, India, Vietnam, China and 11 other countries have limited or banned exports. Fifteen countries, including Pakistan and Bolivia, have capped or halted wheat exports. More than a dozen have limited corn exports. Kazakhstan has restricted exports of sunflower seeds.
The restrictions are making it harder for impoverished importing countries to afford the food they need. The export limits are forcing some of the most vulnerable people, those who rely on relief agencies, to go hungry.
“It’s obvious that these export restrictions fuel the fire of price increases,”said Pascal Lamy, the director general of the World Trade Organization.
And by increasing perceptions of shortages, the restrictions have led to hoarding around the world, by farmers, traders and consumers.
“People are in a panic, so they are buying more and more — at least, those who have money are buying,” said Conching Vasquez, a 56-year-old rice vendor who sat one recent morning among piles of rice at her large stall in Los Baños, in the Philippines, the world’s largest rice importer. Her customers buy 8,000 pounds of rice a day, up from 5,500 pounds a year ago.
The new restrictions are just an acute symptom of a chronic condition. Since 1980, even as trade in services and in manufactured goods has tripled, adjusting for inflation, trade in food has barely increased. Instead, for decades, food has been a convoluted tangle of restrictive rules, in the form of tariffs, quotas and subsidies.
Now, with Australia’s farm sector crippled by drought and Argentina suffering a series of strikes and other disruptions, the world is increasingly dependent on a handful of countries like Thailand, Brazil, Canada and the United States that are still exporting large quantities of food.
On a recent morning here in Bangkok, sweaty and heavily tattooed dock workers took turns grabbing 120-pound sacks of rice from a conveyor belt and carrying them on their heads to cranes that whisked the sacks deep into the hold of a freighter bound for the Philippines. Most of the one million tons of rice that leaves the dock here each year follows the same spine-crushing routine.
“I’ve been here 28 years,”said the assistant port manager, Suchart Wuthiwaropas. “This is the busiest ever.”
Powerful lobbies in affluent countries across the northern hemisphere, from Japan to Western Europe to the United States, have long protected farmers in ways factory workers in Detroit could only dream of.
The Japanese protect their rice industry by making it nearly impossible for imported rice to compete. The European Union severely limits beef and poultry imports, and Poland goes further, barring soybean imports as well.
Negotiators have been working for years to free trade in farm goods, but today’s crisis actually makes that more difficult for them. Food protests in places like Haiti and Indonesia that rely heavily on imported food have convinced many nations that it is more important than ever that they grow, and keep, the food their citizens need.
“Every country must first ensure its own food security,” said Kamal Nath, the minister of commerce and industry in India, which has barred exports of vegetable oils and all but the most expensive grades of rice.
But as the United States trade representative, Susan C. Schwab, noted in a telephone interview, “One country’s act to promote food security is another country’s food insecurity.”
International relief groups are trying to help people who can no longer afford food at today’s higher prices, but it is not easy. “We’re having trouble buying the stocks we need for emergency operations,” said Josette Sheeran, executive director of the World Food Program in Rome.
Restrictions have delayed efforts to ramp up feeding programs in Somalia and Afghanistan. The food program had long purchased grain from Pakistani traders or national stocks. When Pakistan imposed a ban on most wheat exports this spring, the food program was forced to find a new supplier, creating months-long delays.
“We had to slow down the scale-up of our operation as a result of having to redesign our supply lines,” said Ramiro Lopes da Silva, director of transport and procurement.“That means on the ground there were beneficiaries that went without rations or went without full rations for a portion of time. In the case of Afghanistan, some didn’t get into the program.”
The current dispute over food exports highlights choices that nations have confronted for centuries.
One relates directly to trade: Is it best to specialize in whatever food grows best in a country’s soil, and trade it for all other food needs — or even, perhaps, specialize in services or manufacturing, and trade those for food?
Or is it best to seek self-sufficiency in every type of food that will, weather permitting, grow within a country’s borders?
The usual answer from economists, and the United States’ position for decades, is that the world benefits most if every country specializes in growing (or servicing or making) what it can most efficiently, and trading for the rest.
Rainfall and other limits make it prohibitively difficult for some countries to grow all their own food. “If Egypt had to be self-sufficient in food, there would be no water left in the Nile,” Mr. Lamy said in a telephone interview.
“If every country in the world decided it wanted to produce its own food for consumption,” Ms. Schwab said, “there would be less food in the world, and more people would be hungry.”
But relying on food imports becomes much dicier if other countries are prepared to shut off the tap.
An obscure rule of the World Trade Organization requires members to notify the agency when they restrict food exports. But there are no penalties for ignoring the rule, and not one of the countries that has imposed restrictions in the past year has complied, according to the W.T.O.
Japan and Switzerland are leading a group of food-importing nations so alarmed by restrictions that they are seeking an international agreement preventing countries from unilaterally limiting food exports. The agreement would be part of the current, already-rocky Doha round of trade talks, named for the city in Qatar where negotiations began.
But the proposal ran into a procedural snag right off: food export restrictions are such a new issue that they are only tangentially mentioned as part of the Doha round agenda, which is not easily modified.
In some of the nations concerned about shortages now, past policies have discouraged farming. From Indonesia to West Africa to the Caribbean and Central America, poor countries have frequently cut farm assistance programs and lowered tariffs to balance budgets and avoid charging high prices to urban consumers. But they have found that their farmers cannot compete with imports from rich countries — imports that are heavily subsidized.
As a result, steps that could have taken place decades ago, resulting in more food for the world today, were abandoned. These included changes like irrigation schemes and new crop varieties.
“The subsidies given by developed countries to their farmers have led to lack of investment in agriculture in developing countries” in Africa and elsewhere, Mr. Nath said.
To make matters worse, the World Bank and the International Monetary Fund frequently pressured poor countries in the 1980s and 1990s to lower tariffs and to cut farm support programs, mostly to reduce budget deficits.
Indeed, the World Bank concluded in 2006 that not enough attention had been paid to the negative effects of its policy prescriptions on farmers in developing countries.
The current export restrictions, which mainly help urban consumers in poor countries, are the latest blow to farmers in the developing world.
Arfa Tantaway Mohamed, who grows rice on three-quarters of an acre outside the bustling town of Aga in northern Egypt, is frustrated at Egypt’s export ban, which is suppressing rice prices.
“For sure it has a negative impact,” said Mr. Mohamed, 50, as he smoked a Cleopatra brand cigarette during a break from working his fields, while 18 members of his extended family labored nearby.
Some countries reject the notion that restricting exports has pushed up prices on the world market, and point instead to higher prices for fertilizer, diesel and other farm expenses. India takes that position, but so does Thailand, in defending sharp markups in prices set by its Rice Exporters Association.
“The main cause of rising rice prices is the rising cost of rice planting,” said Surapong Suebwonglee, the finance minister of Thailand, the world’s largest rice exporter.
India and other countries, as well as some nonprofit groups, are quick to point out that economic arguments — that countries specialize in the production of whatever they can make most efficiently — are unconvincing, as long as rich countries heavily subsidize their farmers.
In fact, negotiators have a rough framework for a possible compromise on agriculture in the Doha round talks, including deep cuts in farm subsidies.
One possible compromise not being discussed in the Doha round may be for countries to continue relying on trade for most food imports, but hold bigger reserves in case of crises. World rice reserves, for example, have plunged to 9 weeks’ worth of consumption, from 19 as recently as 2001.
But United Nations officials are wary.
“I would not object to building up reserves,” said Supachai Panitchpakdi, the secretary general of the United Nations Conference on Trade and Development. “But like foreign exchange reserves, some countries go to huge extremes.”
