The Irish Independent reports that up to 1,000 surplus HSE staff are still being paid €180,000 a day although they have no work to do.
The staff are costing an estimated €67m a year in salaries at a time when resources are so stretched that crucial health services are being slashed.
Among the HSE staff targeted were around 200 of its middle managers who earn salaries of up to €83,000. Their numbers have increased from just 10 in 2000 to more than 700 now.
The €67m-a-year cost contrasts sharply with the impact of swingeing cuts at Our Lady's Children's Hospital, Crumlin, Dublin.
The hospital has been at the centre of a recent bitter row between management and HSE chief Prof Brendan Drumm.
The issue of children waiting for critical operations has become central to the entire value-for-money public service debate.
Plans to shed the HSE jobs have collapsed.
An early retirement plan has stalled due to a dispute with unions who are concerned about the redeployment of those left behind.
New figures show that just 150 of the HSE's 111,000 staff (0.1pc) have applied for the early retirement scheme, career breaks or shorter working years that were announced in the emergency Budget.
And the latest figures come as it emerged that the An Bord Snip Nua report may now be published within a matter of days. There is a growing anxiety within government to get the controversial report out as fast as possible.
A senior government source said: "If not Wednesday, then Thursday or Friday -- possibly. Once it goes to Cabinet, that's it. It will be presented as this is what the country needs to do and it needs strong government."
Against that background the fact that there has been virtually nothing done to reduce the public service bill takes on a critical relevance.
The HSE's initial plan for 1,000 voluntary redundancies was put on hold earlier this year due to the estimated €300m cost of providing payments for departing staff. The Department of Finance then announced the early retirement, shorter working year and career-break schemes from the emergency Budget last April would be rolled out instead.
But health service unions decided not to co-operate with the scheme in the absence of an agreement on how staff remaining behind would be re-deployed.
Both the HSE and the Department of Health have emphasised that staff must be flexible about taking on new responsibilities because staff who leave under the schemes will not be replaced.
The IMPACT trade union said it wanted a national framework that would put safeguards in place for staff.
"We obviously don't want a situation where someone in south Dublin is told they are being redeployed to Inishowen (in Donegal) because clearly that would be nonsensical and unfair," a spokesman said.
However, IMPACT said it accepted its members would have to work harder and be more flexible.
Fine Gael health spokesman Dr James Reilly that health workers had rights and should not have to make "unreasonable moves".
But there could be no question of extra payments for being redeployed, he said.
Labour health spokeswoman Jan O'Sullivan said there was an urgent need to engage with the unions to get the scheme up and running.
"Hiding behind unions is not good enough. I firmly believe there is a need to take out the layers of management in the HSE as quickly as possible," she said.
The Irish Independent also reports that Ireland has moved from having the second lowest unemployment rate among the EU-15 countries two years ago to the second highest, calculations from the OECD show.
Joblessness has risen faster in Ireland than anywhere else, reflecting the sudden collapse of the building boom.
The 11.7pc rate recorded for May is 85pc higher than the average for last year.
Among OECD countries, Ireland is followed by Spain, with a 64pc increase, and the USA, where the jobless rate is 62pc higher than a year ago.
Across the 30-nation OECD, unemployment rose above 8pc in May, reaching 8.3pc, compared with less than 6pc a year ago.
The calculations allow for different methods of measuring unemployment in different countries to try to get comparable rates.
In the euro area, the unemployment rate was 9.5pc in May 2009, up from 7.4pc a year ago. France was almost at this average, with unemployment of 9.3pc, up 22pc on last year.
German unemployment has risen more slowly, with a 0.3 percentage point increase over the year to 7.7pc.
British data is available only until March, when unemployment was 7.2pc, which was a 38pc increase in the jobless number compared with a year earlier.
Steeper
Spain's 18.5pc rate is the highest in the OECD. Two years ago, it was just 8.5pc, but the rise in Irish unemployment, from 4.5pc in 2007, is even steeper.
A couple of EU countries continue to have very low unemployment, despite the economic crisis.
The Netherlands recorded a 3.2pc rate in May, while Austria's was put at 4.3pc.
The Irish Times reports that Irish-based financial institutions turned to the European Central Bank (ECB) for cheaper funding last month at the highest level on record as the banking crisis showed no signs of easing.
The institutions, which include international lenders based in the Irish Financial Services Centre, increased their borrowing from the ECB to €130 billion at June 26th, up from €118 billion in May.
Irish-based institutions now account for almost 15 per cent of the total €900 billion of ECB loans into the European banking sector. They are borrowing the equivalent of 77 per cent of Irish GDP from the Frankfurt-based bank.
Irish-based banks have relied more heavily on cheaper, longer-term funding from the ECB as profits are squeezed by elevated borrowing costs in the international money markets and higher deposit rates, and by low interest rates on offer to borrowers.
Banks can use ECB borrowings to improve liquidity and fund day-to-day operations. The high level of borrowing from the bank also reflects the large number of international financial firms trading in Ireland.
Updated Central Bank figures show that Irish-based financial institutions were significant beneficiaries of a massive €442 billion liquidity boost to the European banking system by the ECB in a bid to ease funding pressures.
The aim of the measure was to unblock credit markets by lending banks money for up to a year at an interest rate of just 1 per cent.
ECB president Jean-Claude Trichet warned yesterday that European banks may need time to digest this massive liquidity injection and pass it on to households and companies in new lending.
Mr Trichet urged banks to remember their responsibilities to lend to businesses and households.
However, he indicated that the bank was not poised to rush in new policy measures to compel banks to increase their lending further.
Central Bank figures show that Irish-based institutions increased their longer-term borrowings from the ECB by €39 billion last month, taking almost a tenth of the bank’s €442 billion injection.
The discounted funding relieves pressure on the banks’ profitability and means they do not have to rely on paying higher interest rates for customer deposits.
Institutions have also swapped shorter-term ECB borrowings for longer-term loans as they sought to improve their funding with cheap money that they would not have to repay for a longer period.
Longer-term funding owed by Irish-based institutions rose to €110 billion at June 26th from €71 billion the previous month, while shorter-term borrowing dropped to €20 billion from €46 billion.
A spokeswoman for the Central Bank declined to comment. The bank will publish its 2008 annual report at a briefing this morning.
More detailed figures from the Central Bank to be published in the coming weeks will show which institutions have availed the most from the ECB’s liquidity measures.
Mr Trichet rejected suggestions that it was too early to start considering ways of unwinding economic support from governments and central banks. “I would warn against a common and unfortunate view suggesting that it is currently too early, or even totally inopportune, to envisage appropriate exit strategies. Such a view is, in my opinion, plain wrong,” he said.
There are still concerns within the euro zone that lending remains stalled and that institutions still require ECB funding. Mr Trichet said that forcefully addressing toxic assets on the balance sheets of the banks was also necessary for a normal flow of credit to revive economic growth.
He saw the rate of economic decline slowing in the second half of the year and not returning to positive growth rates until the middle of 2010. He indicated the ECB interest rate would stay at 1 per cent
The Irish Times also reports that cider maker C&C’s shares plunged 16 per cent yesterday after the company was forced to admit that it misstated the revenues it has earned in recent months in the trading update it issued to investors last week.
In what the company said was a “straightforward error in reporting lines”, C&C over-estimated its revenues in all of its key divisions on July 8th.
The company said its revenues over the four-month period up to the end of June had increased 3 per cent, whereas they had declined by 5 per cent.
Revenues from Magners cider in Britain, rather than falling by 1 per cent, fell 12 per cent compared to last year, while revenues from Bulmers, which appeared to have improved 7 per cent year-on-year after a dismal period for Irish bar sales, were actually flat.
C&C’s spirits and liqueurs division, which was reported to have suffered a 12 per cent decline in revenues, instead saw sales fall 22 per cent, according to the restated figures.
A spokesman for C&C said the error was reported to the market as soon as it was identified.
“The trading update was to revise operating profit guidance for the full year, and the basic guidance behind the trading update remains the same,” the company said in a statement.
The drinks group said it still expected operating profit for its current financial year, which runs until the end of February 2010, to be “at the top end of the group’s previously stated guidance of €77-€82 million”.
Despite the lower than reported revenues, C&C said trading in the March-June had been “encouraging” and that the group had “a greater degree of confidence about its plans for the current financial year”.
However, the company’s statement was not received well by investors, who had been surprised by how positive C&C’s previous trading update had been.
Mistakes of this nature are unusual for companies quoted on the stock market, and one Dublin-based dealer described the incident as a “big, big negative” for the stock.
On a day when trading volumes across the Iseq index of Irish shares were light, some 5.2 million C&C shares were traded – above the average for the stock. It closed at a price of €1.85, down 36 cent on Friday’s closing price.
NCB Stockbrokers analyst Paul Meade said the mistake would “put a question mark over management’s credibility as they continue to try and re-establish the Bulmers and Magners brands”. C&C appointed a new management team in November 2008, replacing former chief executive Maurice Pratt.
The company is now led by John Dunsmore, the former chief executive of Scottish Newcastle (SN), and his two former SN colleagues, Stephen Glancey and Kenny Neison, who are chief operations officer and strategy director respectively.
Mr Glancey is also group finance director.
Goodbody food analyst Liam Igoe said he would not be changing his earnings forecasts for the company because they were driven by volumes. As the company’s guidance on volumes remained unchanged, the error is understood to have related to pricing.
In recent months, C&C has cut its premium prices through various promotion deals in a bid to instigate a turnaround in volumes of Magners cider, which has lost market share in Britain as competition increased.
The Irish Examiner reports that the percentage of the €1.4 billion worth of Irish residential mortgages in arrears for more than 90 days has doubled to 1.5%.
Ratings agency Standard & Poor’s said almost 4% of Irish mortgages are now in arrears or delinquent for more than 30 days – double the level a year ago.
It said higher unemployment and continued house price declines are likely to put further pressure on the performance of Irish mortgage-backed securities.
The rate of delinquent mortgages here is now higher than in Britain.
While loans in arrears are increasing, home repossessions are "relatively low", Standard & Poor’s said.
"This could be due to a number of factors; we understand that the legal system, for example, is generally considered to be ‘borrower-friendly’," Standard & Poor’s analyst Kate Livesey said.
The agency said recent trends in mortgage lending, which is down almost 10% in the year to April, reflect the dire market conditions.
It anticipates that house prices in Ireland will fall by 13% this year and 10% in 2010.
Based on this improved affordability in the housing market, S&P said the current downturn could end in the next year or so.
"However, other variables, such as the absolute level of household debt, also need to be taken into account. There is likely to be a period of deleveraging as borrowers try to reduce their debt, and interest in the housing market is likely to remain stagnant," it said.
The agency’s report covered residential mortgage backed securities (RMBS).
Irish-based banks have issued €37 billion of these securities in recent years.
The Financial Times reports that Europe’s banks will find the practice of betting with their own money twice as expensive in future, cutting their profits, under the terms of a proposed European Union directive published on Monday.
The proposal, which coincided with the publication of draft global rules by the Basel Committee on Banking Supervision that went in the same direction, would require banks to “roughly double current trading book capital requirements”, the European Commission document said.
Proprietary, or “prop” trading, whereby banks use their own money to bet on trading positions, has been lucrative for banks for years. But some in the industry believe that the rule changes could make the practice far less economic.
“This is the first time we’ve actually seen a number. It’s what people were expecting,” said Michael Raffan, a partner at Freshfields.
Simon Gleeson, a partner at Clifford Chance, said the Commission’s proposed rule changes were “not as bad as they could have been” for the banking industry.
The toughest clampdown would come for banks’ holdings in so-called “resecuritisations”, financial products that are derived from existing securitisations. Such repackaging of already packaged securities is widely deemed to be more risky than had been generally accepted before the financial market crisis.
The Commission proposal also spells out how regulators plan to make banks do a better job of understanding and explaining the risks they run when they resecuritise assets into collateralised debt obligations.
If the bank cannot demonstrate that it has done the necessary due diligence, then it will have to multiply the CDO by 12½ times in calculating its risk weighting for capital requirements. The rule would apply only to new resecuritisations issued from 2011.
The proposals are not final and are likely to be amended after consultation, UK officials say.
The remuneration proposals – suggesting that pay should be linked to risk, though the Commission gave scant detail – are closely aligned with the Financial Services Authority’s proposal on pay, UK officials also say.
Senior US officials say they have so far shied away from specifying what the new capital requirements will be. They are afraid that announcing the rules could weaken banks that would have to rush to deleverage ahead of them.
But on Monday the Basel Committee announced it had adopted the final version of its new rules, which will force banks to tie up more capital to offset risky trading-book activities.
The reforms to the so-called Basel II rules, which prescribe capital allocation for banks in the bulk of the world’s main markets, are designed to make the rules less prone to the distortions of market downturns and upturns.
Like those of the Commission, the Basel Committee’s rule changes will also demand that more capital is held against resecuritised products, as well as better disclosure of securitised assets. But full details will not be published until later in the year.
The FT also reports that workers at a failed French car parts supplier are threatening to blow up their factory unless the company’s two biggest clients – Renault and PSA Peugeot Citroen– stump up extra compensation.
Employees of the engine parts maker New Fabris have rigged up a series of gas canisters inside a factory workshop which they say will be detonated on July 31 if the two carmakers fail to pay €30,000 to each of the 366 workers facing unemployment.
The company, which went into receivership for the second time in two years last month, holds an estimated €2m of stock ordered by the two carmakers, as well as a machine belonging to Renault valued at about €2m.
The threat could still be an empty one as government officials said there appeared to be some doubt as to whether the gas canisters were full. Nonetheless, the government is taking the threat seriously, fearful that the lastest hold up marks a significant increase in labour tensions that have been present for several months. The fire brigade has been put on stand-by and emergency service reinforcements sent to the area near the factory in Châtellerault in western France, according to a news agency report.
Earlier this year France was hit by a wave of boss-nappings, where workers held factory managers hostage, sometimes for several days, to force better redundancy payoffs or protest at factory closures. Most ended without violent incident.
However there is real concern within the government that tensions could rise in the autumn, when unemployment and company failures are expected to increase sharply, especially in the car parts sector - hard hit by the automobile crisis. There is already widespread resentment at bailouts for banks and carmakers, while the government has refused to consider a fiscal stimulus package to boost consumer spending.
Christian Estrosi, industry minister, had invited the workers to meet him to discuss the situation, but on Monday withdrew the invitation saying he would not negotiate while the threat of explosion remained in place.
Guy Eyermann, member of the hardline CGT union that appears to be leading the protest, insisted that the battle would not be abandoned. “”Are we capable of blowing up the factory? Yes we are,” he told a gathering of about 100 workers yesterday. “Renault and Peugeot have killed us. We want a share of the cake. They have been helped by the state.”
Both Renault and Peugeot also insisted that they would not give in to the threats from New Fabris workers. “It is not for us to pay,” said a Renault spokeswoman.
Both companies said they had had contributed financially ever since New Fabris ran into difficulties last autumn, with early advances and some wage payments.
“We have done all we could,” the Renault spokeswoman said. “In a way it is understandable. We have not seen a crisis like this before. But in this case they are knocking on the wrong doors.”
The New York Times reports that another bidder said it was nearing a deal for the European operations of General Motors, in a move that could derail plans to sell the unit to a Canadian auto parts maker and a Russian bank.
RHJ International, an industrial holding company listed in Brussels, said on Monday that it was well along in its talks with G.M. for the acquisition of a majority stake in its newly consolidated European subsidiary, Opel, which includes the operations of Vauxhall in Britain.
“These discussions have been taking place over a number of weeks and are at an advanced stage,” RHJ said.
Magna International, the Canadian parts company, and Sberbank, a Russian lender controlled by the Kremlin, signed a tentative deal to acquire majority ownership of Opel in late May, just before G.M. sought protection from its creditors in a United States bankruptcy court. At the time, Magna and Sberbank overcame rival offers from Fiat and from RHJ, and a late expression of interest from Beijing Automotive Industrial Holding. The two companies had said they hoped to have the outlines of the deal by mid-July.
But those negotiations have been stalled for weeks by disagreements over the future of Opel and rights to its technology. During that time, G.M. and the German authorities have continued to explore their options with rival bidders.
Any deal is contingent on government aid, giving Germany a deciding vote. Berlin has already agreed to provide 1.5 billion euros ($2.1 billion) in short-term loans to keep Opel going.
Karin Kirchner, a General Motors spokeswoman in Zurich, confirmed that the companies were talking. “We have received proposals from RHJ International and Beijing Automotive, and we are in discussions with them,” she said.
G.M. said that negotiations with Magna were continuing and that “the wide interest in Opel will produce, in the end, the best outcome for Opel, G.M. and European governments providing support to the process.” General Motors emerged from bankruptcy on Friday after completing a 40-day restructuring under Chapter 11 of the United States bankruptcy code.
Jürgen Reinholz, economy minister of the German state of Thuringia, said that Magna was preferred by the four states in which Opel has plants.
“Magna is still the best solution. The second best would be Fiat,” he told Reuters.
Analysts have argued that a deal with Fiat, which took a controlling 20 percent stake in Chrysler in June, made the most sense, considering the company’s management. The Italian automaker’s desire to streamline and consolidate production, however, raised fears among union and government officials that job cuts would fall heavily on German workers. Fiat has said that it remains interested in a deal but that it will not raise its offer.
Ms. Kirchner declined to comment on G.M.’s communications with Fiat.
Arnaud Denis, a spokesman in Brussels for RHJ, said that with 440 million euros in cash and 60 percent of its invested capital in the automotive sector, “RHJ has the capacity to create a strong stand-alone European carmaker.”
RHJ’s holdings include Honsel, a German company that produces metal products for the automotive, electronics and aeronautical industries, and Asahi Tec, a Japanese auto parts company.
Some analysts questioned whether Beijing Automotive had the management skill to pull off a complicated international merger and run a giant European manufacturer, but they were not counting the company out.
The NYT also reports that when the United States’ top energy and commerce officials arrive in China on Tuesday, they will land in the middle of a building storm over China’s protectionist tactics to become the world’s leader in renewable energy.
Calling renewable energy a strategic industry, China is trying hard to make sure that its companies dominate globally. Just as Japan and South Korea made it hard for Detroit automakers to compete in those countries — giving their own automakers time to amass economies of scale in sheltered domestic markets — China is shielding its clean energy sector while it grows to a point where it can take on the world.
Steven Chu, the American energy secretary, and Gary Locke, the commerce secretary, are coming here to discuss clean energy and global warming with Chinese leaders, and to see if progress can be made toward getting China to agree to specific targets for reductions in greenhouse gases. Agreement proved elusive during the Group of 8 summit meeting last week in Italy.
But Mr. Chu and Mr. Locke arrive as Western companies, especially Europeans, are complaining increasingly about Beijing’s green protectionism.
China has built the world’s largest solar panel manufacturing industry by exporting over 95 percent of its output to the United States and Europe. But when China authorized its first solar power plant this spring, it required that at least 80 percent of the panels be made in China.
When the Chinese government took bids this spring for 25 large contracts to supply wind turbines, every contract was won by one of seven domestic companies. All six multinationals that submitted bids were disqualified on various technical grounds, like not providing sufficiently detailed data.
This spring, the Chinese government banned virtually any installation of wind turbines with a capacity of less than 1,000 kilowatts — excluding 850-kilowatt designs, a popular size for European manufacturers.
Lu Hong, the program officer for renewable energy in the Beijing office of the Energy Foundation, a nonprofit group seeking to support sustainable energy, said that China was willing to invest heavily in renewable energy industries precisely because it helps the Chinese economy.
“The Chinese government won’t consider such a big solar industry without considering the building up of the domestic industry,” she said, adding that China’s policies will also help address global warming.
Zhou Heliang, the president of the China Electrotechnical Society, a government entity that plays a broad role in national and provincial technology policy, predicted at the Wind Power Asia conference here on Friday that Chinese-owned companies would increase their share of the Chinese market by an additional 10 or 20 percentage points this year.
That would give them almost three-quarters of the domestic market, compared with a quarter for European and American companies — the reverse of the ratio four years ago.
This year, China passed the United States as the world’s largest market for wind energy. It is now building six wind farms with a capacity of 10,000 to 20,000 megawatts apiece, using extensive low-interest loans from state-owned banks.
By comparison, T. Boone Pickens delayed his plans to build a 4,000-megawatt wind farm in Texas, once promoted as the world’s largest.
Some foreign companies, particularly European businesses, are starting to express misgivings about China’s promotion of the local manufacturers.
European wind turbine makers have stopped even bidding for some Chinese contracts after concluding that their bids would not be seriously considered, said Jörg Wuttke, the president of the European Union Chamber of Commerce in China.
European turbine manufacturers are especially disappointed because they built factories in China in order to comply with the country’s requirement that turbines contain 70 percent local content, Mr. Wuttke said. Yet all the multinational manufacturers were disqualified on technical grounds within three days of bidding for wind farm contracts this spring, even as Chinese companies that had never built a turbine were approved, he said.
European solar power companies are also unhappy. “This is not a level playing field,” said Boris Klebensberger, the chief operating officer of SolarWorld AG, which is based in Bonn.
Mr. Wuttke said he was encouraged that Premier Wen Jiabao of China told Chancellor Angela Merkel of Germany in a telephone call on June 25 that China would not discriminate against foreign enterprises, according to the official Xinhua news agency.
But no new Chinese renewable energy regulations have been issued since then on local content requirements or other rules.
American companies play a smaller role in the global renewable energy industry, but some of them are also growing exasperated with the Chinese market. “That has been a tough market for non-Chinese manufacturers,” said Victor Abate, General Electric’s vice president for wind energy.
Kevin Griffis, a Commerce Department spokesman, said that the agency had not heard from American companies about difficulties in the Chinese market for renewable energy.
“Generally speaking,” Mr. Griffis said, “we support a business environment that is open, transparent, and fair so that all companies are able to compete based on product performance, not country of origin.”
World Trade Organizationrules ban countries from using local content requirements to force companies like the wind turbine manufacturers to set up factories in a country instead of exporting to it. But much of China’s power industry, although publicly traded, is majority owned by the government.
While China promised to sign the W.T.O. side agreement on government procurement “as soon as possible” when it joined the free trade group in 2001 and won low-tariff access to foreign markets, it has never actually signed the side agreement. So its huge state sector remains largely exempt from international trade rules.
Other rules are also making it hard for foreign manufacturers and investors to compete in China.
China’s renewable energy standard requires that renewable energy account for at least 3 percent of the generating capacity of each large power company, excluding hydroelectric power, by the end of next year. But the rules do not dictate how much electricity must actually be generated from that capacity.
So power companies have an incentive to buy the cheapest wind turbines available, so as to increase their renewable energy capacity — even if the turbines break down frequently and do not produce that much electricity.
Turbines from Chinese-owned companies tend to have slightly lower purchase prices than foreign-brand turbines, but have higher repair costs, so the life cycle costs are similar, according to Chinese experts. United Nations data from the trading of carbon credits shows that the Chinese-brand turbines produce less electricity because they are more frequently out of action.
Financial regulations for wind farms also make it harder for foreign-owned farms than domestic-owned farms to borrow money or to sell carbon credits. Even well-connected international funds like Nature Elements Capital have to look hard for projects, while less-connected funds have struggled to find any at all.
Mr. Zhou said that China was also working hard to develop its own capability to manufacture high-tech materials that can withstand the torque, humidity and other stresses that affect wind turbines.
Two American companies are leading suppliers of materials: PPG Industries of Pittsburgh, the leading maker of fiberglass and protective coatings for the wind turbine housings and blades, and the Zoltek Corporation of Bridgeton, Mo., the world’s dominant supplier of carbon fiber for the support struts inside the most high-tech blades.
A report last month by IHS, a global data company, concluded that Chinese wind turbine makers would soon start exporting. That is because Chinese wind farm installations could level off temporarily as the power grid struggles to install enough high-power lines to use all the electricity wind produces.
Asked whether European turbine manufacturers risked sharing Detroit’s overconfidence in the 1970s in the face of challenges from Japan, Mr. Wuttke said that European makers believed that their reputations for quality and reliability would protect them.
