Connect with us

Business

What would be your reaction if employer says wage hikes for workers should be above inflation?

What would be your reaction if employer says wage hikes for workers should be above inflation?

Published

on

What would be your reaction if employer says wage hikes for workers should be above inflation?

Have you ever talked to your employer about wage hike? What do you expect him to say? If you did, then what was the response? Mostly, the answer is like your demand is too high, we don’t the resources, the business can’t afford it, the costs are rising.

The chances are you may get a much less pay raise if you persist and there is no replacement. In case of being indispensable for and directly linked to the profits, you will get what you want. But such cases are very far and few.

In pay raise talks at individual or group level, inflation is always the standard, as workers want to at least cover their expenditures. However, the real wages are on a decline in most of the countries around the world for an average worker.

But would be your reaction if an employer says the workers should get more than the inflation rate? You must be over the moon and dancing.

Advertisement

JAPAN WAGE HIKES

Actually, it has happened in a faraway land called Japan where the head of the country’s biggest business lobby Keidanren, according to Reuters, on Tuesday suggested pay raise this year that exceed the inflation rate, setting the tone for annual wage talks that may pave the way for the Bank of Japan (BOJ) to exit its ultra-loose monetary policy.

At stake in this year’s spring negotiations between trade unions and large Japanese firms, analysts say, is whether wages will rise far enough to ignite the sustainable inflation that policymakers consider a prerequisite for ending negative interest rates.

The talks are due to conclude in mid-March.

“Our main scenario is for the BOJ to confirm wage hikes at big firms and go ahead with ditching negative rates in April,” said Hideo Kumano, executive chief economist at Dai-ichi Life Research Institute.

Advertisement

In an annual report on Keidanren’s management and labour policy, released on Tuesday, Chairman Masakazu Tokura said the business lobby and companies this year bear “[corporate] social responsibility to aim for wage hikes that beat price rises”.

“There’s a very strong sense of urgency that Japan’s future rests on whether we can step up a gear to achieve structural wage hikes this year and onwards,” Tokura said, adding that present conditions offer a “last chance” to end deflation completely.

The report, which serves as the basis for the lobby membership’s stance in annual talks with Rengo, Japan’s largest labour union group, also said the government and the BOJ are expected to guide policies aimed at achieving “appropriate price hikes”.

Small firms, which employ seven out of 10 employees in Japan and have a greater impact on overall wage growth, tend to begin labour-management talks after big firms wrap up their negotiations in March.

Several large firms have already said they intend to implement big wage hikes, although plans at small companies will only be known around mid-year.

Advertisement

While small firms tend to operate on thin margins, many also face a labour crunch, due largely to Japan’s ageing population, and have no choice but to raise wages to attract talent, analysts said.

Prime Minister Fumio Kishida, BOJ Governor Kazuo Ueda, Keidanren chief Tokura and Rengo head Tomoko Yoshino are all seeking pay raises that beat inflation, after last year’s labour talks brought pay rises of nearly 3.6 per cent, the highest in three decades.

The tighter job market, record corporate earnings and ample cash holdings at many Japanese companies have added to the case for firms to share more of their profits with workers.

Japan’s jobless rate stood at 2.5pc in November, edging close to levels not seen since Japan’s asset bubble burst in the early 1990s. November data from the Labour Ministry also showed that there were nearly 1.3 jobs for every job seeker.

While companies were hoarding 343 trillion yen ($2.4 trillion) in cash and savings as of the end of September, the ratio of wages to profits remained relatively low, analysts said, leaving room for higher labour costs.

Advertisement

Tuesday’s Keidanren report will be followed by a labour and management forum next week, which will kick off the wage talks in earnest. 

Business

Microsoft’s UAE deal could transfer key US chips, AI technology abroad

Microsoft’s UAE deal could transfer key US chips, AI technology abroad

Published

on

By

Microsoft's UAE deal could transfer key US chips, AI technology abroad

Microsoft President Brad Smith said the tech company’s high profile deal with the United Arab Emirates-backed AI firm G42 could eventually involve the transfer of sophisticated chips and tools – a move that a senior Republican congressman warned could have national security implications.

In an interview with Reuters this week, Smith said the sales accord, many details of which are being reported here for the first time, could progress to a second phase that entails the export of crucial components of AI technology such as model weights, a crown jewel of AI systems that determine how powerful they are. Smith said there is no firm timeline for the second phase.

US officials have said that AI systems could pose national security risks, for example by making it easier to engineer chemical, biological and nuclear weapons. The Biden administration in October required the makers of the largest AI systems to share details about them with the US government.

To move forward, the deal would require the approval of the US Department of Commerce. Microsoft executives said the agreement has safeguards to protect Microsoft’s technology and prevent it from being used by Chinese entities to train AI systems.

Advertisement

But those measures have not been made public, and some US lawmakers question whether they are adequate.

The closed-door nature of the negotiations between two private companies over the terms and safeguards on transfers of US technology have alarmed some lawmakers.

“Despite the significant national security implications, Congress still has not received a comprehensive briefing from the executive branch about this agreement,” Michael McCaul, the Republican chairman of the foreign affairs committee in the US House of Representatives, told Reuters.

Read more: Economic diversification: UAE and US to see more AI partnerships

“I am concerned the right guardrails are not in place to protect sensitive US-origin technology from Chinese espionage given the (Chinese Communist Party’s) interests in the UAE.”

Advertisement

The Commerce Department already requires notifications and, in several regions, export licences to send AI chips abroad. But the Microsoft-G42 deal highlights gaps in US laws as regulators rush to keep up with fast-moving technology.

At present, for example, there is no regulation restricting the export of AI models, though McCaul and a bipartisan group of lawmakers this week advanced legislation that would give US officials more explicit power to do so.

Microsoft executives said the company welcomes a debate on a new legal framework governing the transfer of AI technology and that the deal with G42 requires the UAE firm to comply with US regulations as they evolve.

“Fundamentally, what we’re focused on is trying to ensure that American technology can move around the world safely and securely,” Smith said.

BEYOND UAE

Advertisement

When Microsoft and G42 announced the deal last month, it was billed as drawing G42 closer to the US and spreading US technology influence amid strategic competition with China. Microsoft is investing $1.5 billion in G42 with Microsoft’s president, Smith, taking a seat on its board.

The companies did not give details about which technologies might be transferred to the UAE or other countries or which specific security safeguards would be put in place. Some of those details are being reported here for the first time.

The broad intent of the deal is for Microsoft and G42 to jointly take AI technology into regions where neither could do so as effectively alone. An early example is a deal in Kenya announced by the two companies on Wednesday.

Read more: US lawmakers advance bill to make it easier to curb exports of AI models

The Microsoft-G42 deal is an agreement between the two companies that requires each to give security assurances to their respective home governments, but there is no direct agreement between the US and UAE governing the transfer of sensitive technologies. The two companies could seek to transfer those technologies to other markets beyond the UAE, including places like Turkey and Egypt, Microsoft executives said.

Advertisement

Smith said many of the details of the deal remain to be worked out, including how to protect what are known as AI “model weights,” which is the critical part of an AI model that defines how it responds to questions or prompts. Those weights are obtained by training an AI model with huge amounts of data, often at great expense.

Model weights currently cannot be encrypted while in use, and Smith estimated the promising technical approaches for doing so remain at least a year away.

Smith said Microsoft has considered several alternative options to protect its technology, including a “vault within a vault” that would involve physically separating parts of data centers where AI chips and model weights are housed and restricting physical access.

“I suspect by the time we’re done, we’re going to end up with a regulatory regime or trade export control approach that will be applicable broadly and not just to Microsoft and G42,” Smith said.

Under the Microsoft deal, G42 will also follow a “know your customer” rule to determine who is using Microsoft’s technology and will not allow Chinese firms to use it to train AI models, Microsoft executives said. US regulators have proposed a similar rule, but they have not yet enacted it.

Advertisement

“We adopted a strategic commercial decision to partner with US companies when it comes to advanced technologies. And we’re very clear on the fact that in order to do so, we will need to adhere to the requirements and our partners and government regulatory requirements or export control regulations,” Talal Al Kaissi, an executive who handles partnerships for G42’s AI work, told Reuters.

Under the deal, Microsoft would have the ability to impose financial penalties on G42 and enforce them in arbitration courts in London, Microsoft said. That means Microsoft would not be forced to work through the UAE legal system to ensure G42 complies with its obligations and could seize assets in many countries if G42 is found in violation of the agreement, Microsoft said.

Precisely how US Commerce Secretary Gina Raimondo will allow the deal to move forward remains unclear. Smith said the provisions are “informal” and that “certainly with this Secretary of Commerce, one knows pretty clearly whether she approves or rejects something.”

In a statement, a Commerce Department spokesperson said any technology transfers would be governed by export controls, “including currently in force licensing requirements” for AI chips and “potential future controls.”

Advertisement
Continue Reading

Business

Pakistan domestic, external debt to witness a substantial increase in FY25

Pakistan domestic, external debt to witness a substantial increase in FY25

Published

on

By

Pakistan domestic, external debt to witness a substantial increase in FY25

The International Monetary Fund (IMF) and Pakistan are currently also deliberating upon a framework concerning new government borrowings, as both the sources in finance ministry and the Washington-based lender fear an increase in loans in the next budget covering the fiscal year 2024-25.

Read more: More gas tariffs hikes planned as Pakistan eyes another IMF programme

Hence, the sources say that Pakistan could borrow from domestic and external sources another Rs10,433 billion – a massive amount that will propel the total debt burden to Rs87,346bn.

Out of this total, the sources say, domestic borrowing will witness an increase of around Rs7,636bn while external debt can jump by Rs2,797bn in 2024-25.

Advertisement

Thus, the addition of these amounts will raise the total domestic debt to Rs53,878bn and the overall external debt Rs33,648bn.

Previously, it was reported that the government economic team has given an initial estimate of external financing of around $22 billion for the next fiscal year.

Read more: Pakistan external financing needs estimated at $22bn, lower power tariffs proposed for industries

As far as the current fiscal year is concerned, the sources are expecting domestic debt to reach Rs76,913bn by the time 2023-24 ends on June 30, as high interest rates are further worsening the already complicated debt repayment equation for Pakistan.

Read more: Govt bonds are borrowing instruments. High interest rates means more deficit

Advertisement

On the other hand, external debt will jump to Rs30,671bn at a time when Pakistan is trying its best to revive economy amid record high interest rates.

The Pakistani authorities have also shared a macroeconomic framework for the next fiscal year with the IMF mission during the ongoing talks, sources say, with an estimated GDP growth rate of 3.7 per cent and inflation rate dipping to 11.8pc.

Read more: Pakistan sees 2024-25 inflation at 11.8pc, IMF thinks it will be 12.7pc

However, the IMF thinks that the GDP will grow at a slightly lower pace of 3.5pc while inflation is going to stay at 12.7 pc – a projection that is 0.9pc higher than the suggested by the Ministry of Finance.

Earlier this week, the IMF and Pakistan started policy-level talks, as the cash-starved Islamabad is looking forward to clinch another deal with the Washington-based lender while meeting all the tough conditions being attached to it.

Advertisement

Continue Reading

Business

In India heatwave, Delhi labourers toil in ‘red hot’ conditions

In India heatwave, Delhi labourers toil in ‘red hot’ conditions

Published

on

By

In India heatwave, Delhi labourers toil in 'red hot' conditions

Working on a highway project in one of India’s hottest areas this summer, Banwari Singh handles iron bars that he says often turn “red hot”.

Temperatures hit 47.8 degrees Celsius (118 degrees Fahrenheit) last Sunday, among the highest recorded in India this year, in Najafgarh, an area on the outskirts of New Delhi where Singh works.

“This is among the hottest it has been in this area,” Singh, in checked trousers, a half-sleeved shirt, a bright orange safety vest and a hard-top hat, said.

“But we have no option. If we want to eat, we have to work whatever the conditions are,” said the 40-year-old, resting near a pillar he is helping to build.

The northwest of India is experiencing an unusually hot summer and the national weather office has forecast three times the usual number of heatwave days this May. Experts say climate change adds fuel to the heat.

Advertisement

Read more: Climate change is slowing heatwaves, a phenomenon visible in Pakistan too

Delhi shut schools earlier this week as temperatures rose. Voters in India’s national election face the prospect of queuing this weekend in the sweltering heat.

Singh and other labourers, who earn around 500 rupees to 700 rupees ($6-$8.4) a day, say they dread the heat and some fall sick as a result of the hot conditions.

Water is available for workers to douse themselves regularly to beat the heat and some buy cool drinks from a makeshift shop nearby.

The deputy project manager, Vinay Sahani, said the company provides water for workers, and sometimes lemonade, and asks workers to rest after noon when temperatures peak. Work can resume after sundown, he said.

Sumit Goswami, 21, who had to take time off this week after a heat-related illness, said he has worked in hot conditions before.

“But this year it has become extreme,” he said. “Still, we have to continue because we have to support the family.”

Advertisement

Continue Reading

Trending

Copyright © GLOBAL TIMES PAKISTAN