EU Tourism Skills and Employment with Coronavirus

While Covid-19 has caused much unemployment with lock downs and related economic issues, tourism and hospitality vocational skills are key in developing and driving short term to long term employment for youth and women especially, for broad economic recovery in Europe, Asia and elsewhere.

 

From CEDEFOP The European Centre for Development of Vocational Training:

 

Tourism at a crossroads: skills and jobs demand in the coronavirus era

 

As EU Member States struggle to revive their tourism sectors in the wake of the coronavirus crisis, skills are emerging as the deciding factor for successful economic recovery.

 

Tourism is a key employer of the EU economy. Employing some 13 million people, it contributes to substantial spill-over employment effects in other sectors, especially in construction, retail and healthcare. From 2000 to 2017, more than 1.8 million new jobs were created in the sector.

 

People working in tourism are vulnerable to coronavirus-related challenges and skills development implications. Almost one quarter of them are seasonal and temporary workers. The sector also attracts young workers, acting as a first entry point to the labour market for recent graduates, as well as a response to youth unemployment. It also offers easy employment access to vulnerable groups, such as women (almost two thirds of the workers in the sector), and migrants….

 

EU - tourism - economy - skills

Economic Impact of Tourism (Source: CEDEFOP)

 

….The sector also suffers from negative perceptions regarding working conditions and career prospects. Offering targeted and high-quality training opportunities could be a way to attract more and better-prepared candidates. Reskilling and upskilling of existing employees is necessary to respond to the emerging and persisting new trends in the sector, such as provision of services to targeted groups of visitors (for example, elderly or with disabilities).

 

Understanding the business and societal challenges and opportunities that affect employment levels, occupation tasks and, consequently, skill profiles in tourism is paramount for designing and offering relevant high-quality vocational education and training.

 

Read the full Skills developments and trends in the tourism sector analysis for in-depth information.’

 

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Create Growth for Society not Wealth for the Rich

Much discussion of economic policies, business and government, especially in the Anglo world, revolves around monetarist or libertarian need for lower business and personal taxes, trickle down effect, few government services, smaller government and talk of individual prosperity.  However, the result has led to increasing indebtedness, more wealth for the already wealthy, more significant spread in the gini coefficient and sub-optimal economies.

 

From Inside Story:

 

Need growth? Scrap policies that favour rich people and monopolies

 

Adam Triggs 1 June 2020

 

Breaking self-perpetuating cycles of rising inequality will be key to Australia’s economic recovery

 

The American economy was stuck in a vicious cycle before Covid-19. With highly indebted poorer households spending less, demand was falling and economic growth had been weakened. To stimulate activity, the Federal Reserve cut interest rates to make borrowing cheaper, resulting in even more debt and worry. And so the cycle started over again.

 

New research from economists Atif Mian, Ludwig Straub and Amir Sufi shows that this cycle is fuelled by inequality. Wealthy people have cornered a greater share of national income, and are saving more. Less well-off people are receiving a smaller share of income, and borrowing more. The resulting decline in interest rates has kept the cycle going.

 

It sounds eerily similar to the situation in Australia, and it’s not the only cycle that’s increasing inequality. A lack of competition between firms is having a similar effect: transferring wealth from poor consumers to rich shareholders. Breaking these self-perpetuating cycles will be critical to Australia’s economic recovery.

 

The nub of the problem is that rich people have a nasty habit: they save too much and spend too little. This isn’t necessarily a problem if their savings are invested in expanding businesses, creating jobs and contributing to economic activity. Sadly, though, Australia’s well-documented increase in inequality hasn’t been accompanied by an increase in investment. Quite the opposite: while inequality has grown, investment has flatlined.

 

Mian, Straub and Sufi’s research shows that this “savings glut of the rich,” as they call it, is creating as well as financing the debts of the non-rich. Too much saving and too little investment has depressed interest rates; and lower interest rates are fuelling debt levels among non-rich households, which are borrowing to keep up. For the first time, this research shows, the rise in the share of income taken by the rich can explain almost all of the increased household debt of the non-rich……

 

What to do?

 

Australia’s inequality problem isn’t new, but we are becoming increasingly aware of just how damaging it is economically, politically and socially. More alarmingly, we are learning how the macroeconomic and competition effects are creating self-perpetuating cycles of inequality. The recovery from Covid-19 will require deep structural reform to lift growth, and also presents an opportunity to break these cycles through holistic reform of tax, welfare and competition.

 

The tax system is too generous to the rich, and the welfare system is too mean to the poor…..

 

We can also change the welfare system to directly reduce poverty and thus inequality…..

 

To boost competition, the government should reform the laws that shield many industries from competition — including those in airlines, pharmacies, coastal shipping, the legal profession and the medical profession……

 

The laws regulating mergers and acquisitions should be tightened to guarantee more scrutiny of proposed mergers in industries that are already concentrated…….

 

Past epidemics have one thing in common: they made inequality worse. There’s no reason to think Covid-19 will be any different. The Australian economy can’t afford to snap back to old habits. 

 

For more articles about Australian politics, business strategy, consumer behaviour, economics, finance, GDP growth, global trade, small business and strategic management.

 

Asian Century Starts 2020?

There has been much discussion over past decades on the rise of China and the Asian century viz a viz the USA and Europe. In recent months there have been clear Covid19 or Coronavirus amelioration strategies while the US, UK and several European nations have struggled, leading to significant economic impacts. More from the Asia Times:

 

Asian century began in May 2020

 

Region has emerged as an economic zone as closely integrated as the European Union

By DAVID P. GOLDMAN
MAY 21, 2020

 

Economic historians may date the start of the Asian century to May 2020, when most Asian economies bounced back to full employment while the West languished in coronavirus lockdown. Asia has emerged as an economic zone as closely integrated as the European Union, increasingly insulated from economic shocks from the United States or Europe.

 

Google’s daily data on workplace mobility uses smartphone location to determine the number of people going to work – by far the most accurate and up-to-date available reading on economic activity. As of May 13, Taiwan, South Korea and Vietnam were back to normal levels. Japan and Germany had climbed back to 20% below normal. The US, France and the UK remain paralyzed. Google can’t take readings in China, but the available evidence indicates that China is on the same track as Taiwan, South Korea and Vietnam.

 

Asian economic recovery is consistent with success in controlling the Covid-19 pandemic. China, Japan, Taiwan, South Korea, Hong Kong and Singapore have Covid-19 death rates a tenth of Germany’s and a hundredth of the rate in the US, UK, France or Spain. As I reported May 21, the US is struggling to re-open its economy despite a much higher rate of new infections than the Asian countries or Germany. That entails substantial risk. Two Ford Motor plants in the US that had re-opened May 17 shut yesterday after employees tested positive for Covid-19, for example.

 

Asia’s short-term surge followed its success in disease prevention. But the long-term driver of Asian growth is China’s emergence as a tech superpower. This week’s session of the People’s Congress in Beijing is expected to pass a $1.4 trillion of new government investments in 5G broadband, factory automation, self-driving cars, artificial intelligence and related fields.

 

Asia now acts as a cohesive economic bloc. Sixty percent of Asian countries’ trade is within Asia, the same proportion as the European Union. The Google mobility numbers confirm what we learned earlier this month from China’s April trade data. Intra-Asian trade surged year-over-year, while trade with the United States stagnated.

 

The surge in Chinese trade with Southeast Asia, South Korea and Taiwan shows the extent of Asian economic integration. China’s exports to Asia have grown much faster than its trade with the US, which stagnated after 2014.

 

China’s stock market meanwhile is this year’s top performer, down only 2% year-to-date on the MSCI Index in US dollar terms while all other major exchanges are deep in negative numbers. The strength of China’s stock market is noteworthy given the escalation of economic warfare with the US, including a US ban on third-party exports of computer chips made with US intellectual property to blacklisted Chinese companies, and the threat to de-list Chinese companies on US stock exchange……

 

For more articles and blogs about Asia, Australian politics, economics, EU European Union, GDP growth, global trade and nationalism click through.

 

Impact of EU Regulations and Standards on Global Markets

The Brussels Effect – The EU’s Impact upon Global Markets

In her important new book, Columbia Law professor Anu Bradford argues the EU remains an influential superpower that shapes the world in its image. By promulgating regulations that shape the international business environment, elevating standards worldwide, and leading to a notable Europeanization of many important aspects of global commerce, the EU has managed to shape policy in areas such as data privacy, consumer health and safety, environmental protection, antitrust, and online hate speech.

 

The Brussels Effect shows how the EU has acquired such power, why multinational companies use EU standards as global standards, and why the EU’s role as the world’s regulator is likely to outlive its gradual economic decline, extending the EU’s influence long into the future.

 

From Politico EU on The Brussels Effect:
THE BRUSSELS EFFECT: Anu Bradford, a professor at Columbia Law School, wrote the book on EU influence — literally. In early 2020, she published “The Brussels Effect: How the European Union Rules the World.” It details how the European Union manages to unilaterally regulate the global market.

 

“All the EU needs to do is to regulate [its internal] single market, and it is then the global companies that globalize those EU rules,” she told me during a pre-coronavirus trip to Brussels in early March. The most obvious example of this phenomenon, she said, is the EU’s General Data Protection Regulation.

 

Global influence: As international awareness of the EU’s regulatory power has grown, there’s been “a massive increase in the presence of foreign companies in Brussels” and their efforts to lobby institutions, said Bradford. “Because when you think about it, if you manage to influence the regulatory process in the EU, you can influence the regulations across the world.”

 

Despite the increased international lobbying effort, “we don’t see that lobbying [has] led to weak regulations,” according to Bradford. She contrasts this with the U.S. where corporate influence often undermines U.S. regulations. She chalks up this difference to the comparatively stronger influence of civil society in the legislative and rule-making process in the EU.

 

Bradford said this leads to “a more balanced outcome in the end, but certainly there is an awareness and attempt on behalf of the corporations to influence the outcomes.”

 

Civil society strength: Alberto Alemanno, founder of civil society NGO The Good Lobby, offers a slightly different view. He says that corporate influence in the EU, as well as the U.S., “is on average more successful in bureaucratic arenas” compared to NGOs and citizen groups. But, he added, “the different role EU civil society plays in shaping policymaking may have more to do with institutional features (EU technocratic apparatus’ incentives to engage with civil society, European Parliament’s increased power, lesser role of money in politics) than with NGOs’ inherent strength.”

 

And what about the coronavirus? Of course, Bradford’s “Brussels effect” will be tested by the pandemic. She believes that “unless globalization comes to a drastic halt (which it likely will not), the Brussels Effect will continue,” she wrote to me more recently via email.

 

But she is monitoring a few developments. This includes whether the crisis leads to more or less regulation, depending on whether there is an appetite for more or less EU after things settle down.

 

She also believes the technocratic nature of EU rule-making “insulates it to some degree from the crises.” But the uncertainty and disruption “will likely slow down the regulatory process in the immediate future.” This includes the EU’s new digital strategy, where the crisis may force officials to rethink its regulation of data and technology more broadly.

 

For more related blogs and articles on the EU European Union, economics, environment,  digital marketing and the EU GDPR click through.

Using Government Debt in COVID-19 Crisis

After decades of neo-liberalism, especially the Anglo world, with demands to cut budgets, taxes and government services due to supposed unaffordable and unsustainable government debt, the truth is otherwise. Australia has relatively low government debt of little over 40% of GDP while household debt has become high and possibly unsustainable at more than 120%.

 

However, with the COVID-19 crisis and historically low interest rates, Australia is an excellent position to use debt attractive globally, in supporting the economy, not unlike the GFC period Labor government’s Keynesian money drop which allowed Australia to be less affected than most economies and not going into recession.

 

Following is an excellent article summarising the benefits and countering the supposed negatives of using debt in challenging times.

 

From Inside Story:

 

Before anyone asks: no, Australia does not have a debt problem

 

ADAM TRIGGS

 

30 MARCH 2020

 

And that means government spending is overwhelmingly beneficial in these crisis conditions.

 

Much is uncertain about the Covid-19 crisis, but two things are clear: government debt is about to become much bigger, and there’ll be no shortage of commentators who will say that’s a problem.

 

G20 governments have collectively announced more than $5 trillion in fiscal stimulus, with more to come. The Australian government’s measures, including yesterday’s $130 billion spending package, are broadly in line with other countries. So should we be worried about the consequent growth in government debt?

 

The answer is a clear and resounding no. Whether this new debt is justified depends on the benefit of the increased spending versus the cost of that spending and, in the current environment, the benefit is substantial while the costs are minimal.

 

Fiscal stimulus will avoid the current crisis turning into an economic catastrophe, a fact that appears to be well understood by the public. The lesson from the Great Depression is that my spending is your income, and your spending is my income. If we all stop spending at our local restaurants, the owners and workers in those restaurants lose their income. They spend less in other businesses, which lose their income too, producing a vicious downward spiral that ends in economic collapse. The solution is for the government and Reserve Bank to step in and substantially increase spending and support businesses to fill the gap until the private sector recovers.

 

Failing to expand government significantly would have catastrophic long-term consequences: huge increases in the number of unemployed people (many of whom will never work again), the destruction of thousands of healthy businesses (many of which will never recover), and the permanent destruction of income, wealth and the earning potential of our young people, to say nothing of increased suicides, increased mortality among the very young and very old, increased domestic violence, increased attacks on minority groups, the rise of political extremes and the increased probability of war. The benefits of increased spending are simply enormous.

 

Conversely, the costs of increased government spending are very low. These costs typically come in three forms.

 

The first is the potential for increased government spending to “crowd out” the private sector. When governments run budget deficits they are borrowing money from investors, money which is no longer going to other worthy investments. Increased demand on the limited pool of savings, in normal times, means higher interest rates (which make it more expensive for businesses to invest and households to borrow) and an appreciated exchange rate (making our exports more expensive than those from other countries). The increased government spending stimulates inflation, meaning higher prices for all of us. In normal times, then, increased government spending can hurt businesses, households and individuals.

 

But these are not normal times. Even before Covid-19 the world was awash with savings, which is why interest rates and inflation were so low. The current crisis means even more savings, even less demand for those savings and even lower interest rates and inflation, and an exchange rate that’s less responsive to increased government spending. Put simply, the costs of increased government spending in normal times do not apply.

 

The second potential cost of increased government spending is the future cost of paying interest on that debt. This is minimal in the current environment. The interest rate the Australian government pays on new debt is at its lowest level in history — just 0.8 per cent for money borrowed for ten years. Households and businesses can only dream of being able to borrow that cheaply. This is why it makes perfect sense for the burden of stimulating the economy to be placed on the government since it can borrow so much more easily and cheaply than households or businesses. This is also why it makes no sense to be asking households to access their superannuation (especially given they are already losing their jobs, taking wage cuts and watching their super balances plummet) or asking small businesses to take out loans (whether profit-contingent or otherwise). Stimulus should come from the lowest-cost supplier, and that’s the government.

 

Some might worry whether this increase in debt would mean higher taxes in the future, but there is no reason this needs to be the case. The reason a $10 million debt is a bigger problem for me than it is for Gina Rinehart is the same reason economists look at debt as a percentage of GDP — the denominator matters. The best strategy for reducing debt is to generate economic growth. The maths is simple. If the Australian economy resumes its long-run average growth rate after the current crisis, any increase in debt as a percentage of GDP will halve within twenty years. People would need to start having kids very early in life for this to become an intergenerational debt burden.

 

The third cost of increased government spending is that it can be unsustainable (meaning it can cause problems if that level of spending continues) or can destabilise financial markets. The sustainability of Australia’s current increase in spending is not a concern because it is temporary and doesn’t change the long-run growth rate of debt. Financial stability is not a concern given Australia’s debt is seen as a safe-haven by financial markets: this is why investors are willing to accept pathetically low interest rates for the honour of being able to finance our debt. Even if private investors stopped financing the government’s debt, or charged prohibitively high interest rates to do so, the Reserve Bank would take over that debt, safe in the knowledge that inflation is non-existent and the debt is denominated in our own currency.

 

All of this means that Australia won’t come out of this crisis with a debt problem. The International Monetary Fund ranks Australia’s fiscal position as being in the highest category possible, meaning there is ample room to substantially increase spending. The Australian government could increase debt by three-quarters of a trillion dollars — far more than anyone is suggesting — and still have less debt as a percentage of our economy than the average among its G20 peers.

 

Sadly, this will not prevent a flood of commentators and politicians in the coming months warning of an impending debt crisis in Australia. As soon as the health crisis shows the faintest sign of abating, or perhaps even before then, the government will face tremendous political pressure to cut spending and pay down debt. It is no doubt already facing calls to limit stimulus out of fears of future debt. To protect the living standards of Australians, it must withstand this deeply misguided advice.’

 

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