Wednesday, May 27, 2009

In Japan, Secure Jobs Have a Cost

When the sheet metal orders coming into his small business, High Metal, fell by half last October, it never occurred to MInstead, he set about brainstorming new projects to occupy them. An indoor vegetable garden? A handicrafts workshop?

Because of government subsidies, Mr. Taruki in the last three months installed rows of parsley, watercress and other plants, using factory space that has been empty since the company disposed of unused machinery. High Metal’s staff tend the sprouts religiously, topping up the water supply, adding fertilizer and adjusting the fluorescent lights.

When sales at the machinery maker Shinano Kogyo in central Japan plunged some 70 percent late last year, the company started dispatching its idle workers to sweep the streets and pick up trash in the wider community, while remaining on the payroll.

According to statistics released Wednesday, the Japanese economy suffered its worst contraction since 1955 in the first quarter, declining 15.2 percent on an annualized basis. But a far smaller portion of workers have lost their jobs in Japan than in either the United States or the European Union. (Japan’s unemployment rate in April was 4.8 percent, compared with 8.9 percent in the United States and Europe.)

Analysts say this is because lifetime employment is alive and well in Japan, with the state playing a big role in keeping it so.

“Job tenure in Japan remains remarkably long,” said Peter Matanle, an expert on Japanese employment at the University of Sheffield in Britain. “Companies get rid of the buffers first. They’ll get rid of temporary workers, reduce overtime, reduce bonuses. They would squeeze their suppliers. They would do anything before considering cutting regular workers.”

But Japan’s obsession with keeping workers employed — even those who are not needed — comes at a cost.

Companies slash wages, which reduces consumer spending. Businesses become more reluctant to take on new recruits, shutting young people out of the labor force. And productivity plummets, hurting Japan’s competitiveness in an increasingly aggressive international market.

“By helping to maintain excess employment, you face the risk of keeping alive businesses that are no longer competitive, and perhaps whose productive era is over,” said Hisashi Yamada, an economist at the Japan Research Institute, a private research group in Tokyo. “This could hurt employment in the long run. What you need is more structural change.”

The lifetime employment system, cemented in Japan’s postwar economic boom, bound dutiful workers and paternalistic employers together, producing a mutual loyalty (and labor harmony) rarely seen in the West.

By law, employers can cut workers’ hours but must pay at least 60 percent of their hourly wages during that time. The government has budgeted 60 billion yen, or about $624 million, this year to reimburse companies for half of those payments. In March, about 48,000 companies sought subsidies for 2.38 million employees, government figures show.

Even large exporters, like Nissan Motor and NEC Electronics, have used the subsidies to keep workers employed despite shorter factory hours.

In a recent survey by the Nikkei financial daily, zero percent of large business owners said they had plans to lay off permanent staff members, compared with 39 percent in South Korea. Experts say that without subsidies, Japan’s unemployment rate would be as much as 2 percentage points higher.

Since Japanese workers are hard to lay off, companies have turned to temporary workers, who receive lower pay and fewer benefits, and can be cut more easily. Such workers now make up a third of Japan’s work force.

But keeping all those permanent staff members occupied is its own challenge.

Mr. Taruki’s factory has been abuzz with activity over the vegetable garden. Using another government subsidy, Mr. Taruki spent 5 million yen to start a handicrafts workshop, installing a laser etching machine in a tiny room that had housed employee lockers. There, an employee practiced etching patterns onto lacquerware boards, small sheets of glass and other materials.

The company wants to make key chains and other trinkets, and is exploring ways to make ornaments for Buddhist altars.

“Even if the economy starts recovering, I’m doubtful whether we’ll ever bounce back entirely,” said Mr. Taruki, whose grandfather started the factory in Osaka decades ago. “So I need to start filling in what we’ve lost. It’s the responsibility of companies to protect jobs, to grow them.”

But some analysts wonder whether the recession will be so bad that Japanese companies will have to eventually start cutting regular workers.

Labor leaders say cases are increasing in which employees are subjected to such humiliating wage or hour cuts, or demotions, that they are driven to quit.

Some analysts say a cold-eyed look at bloated payrolls is just what Japanese companies need.

“Companies have hardly shed workers so far in this episode,” Carl B. Weinberg, who runs the economics analysis firm High Frequency Economics, said in a note to clients this month. “Massive layoffs are imminent, but they won’t come soon enough.”

asaaki Taruki to lay off his workers

To Get a Business Loan, Know How the Bank Thinks

To hear some small-business owners talk, getting a loan remains all but impossible. And yet, many bankers claim that their small-business loan volume is up significantly. So, is the small-business credit crisis over or not?

At first blush, the evidence seems contradictory. On one hand, many national banks have drastically cut back small-business lending. In addition, Advanta, a major issuer of small-business credit cards, declared on May 12 that it was closing customer accounts to new charges.

On the other hand, the Federal Reserve’s April survey of lending practices showed credit conditions have loosened. The Small Business Administration says the weekly volume of loans to small businesses is up more than 25 percent since March. And community banks, those smallish, old-fashioned institutions that make up the vast majority of the country’s 8,300 banks, say that they are ready to take back customers from the national lenders.

Much of the confusion has its roots in contrasting banking strategies. Big national banks are much more likely to have been drawn into the morass of securitized loans, credit-default swaps and the like, which has forced them to preserve capital by curtailing lending.

The smaller banks, meanwhile, have traditionally made their livings off of loans that they carry on their own balance sheets to individuals and small businesses. For them, despite the economic crisis, the current situation is more or less business as usual.

Indeed, a May survey of 1,500 small businesses by Barlow Research Associates found that companies that applied to small banks for loans in the past year were three times as likely to get credit as those who applied to large banks.

Nick Sarillo, owner of two Chicago-area pizza restaurants called Nick’s Pizza & Pub, says he recently found himself on the wrong side of that divide when he sought to borrow $2.3 million to open a third location.

In late 2007, he was engaged in the loan review process with LaSalle Bank — historically a popular regional lender for Chicago-area small businesses — when LaSalle was acquired by Bank of America, the financial giant.

Bank of America told Mr. Sarillo it wanted 20 percent down, twice what LaSalle had been requesting. Then, he said, after two months of slow sales last year at his restaurant in Elgin, Bank of America doubled the required down-payment again, forcing him to postpone the deal.

Now, he said, he is shifting his business to the First Community Bank in Elgin. A spokeswoman for Bank of America said the bank does not comment on individual customers. But she said, “We continue to develop small business relationships and are committed to the small business customer and space.”

Bankers say that some of the confusion in the marketplace has been caused by ill-founded complaints by small-business owners. Consider that most small companies are not looking for loans: the Barlow survey found that 70 percent of small businesses had not applied for any credit in the past year. That, said Bob Seiwert, head of the American Banker Association’s Center for Commercial Lending and Business Banking, is because fewer businesses see opportunities to grow in a down economy — and the businesses that do come looking for loans tend to be financially vulnerable and thus most likely to be turned down for sound banking reasons.

“The fact is, a lot of borrowers just aren’t creditworthy,” said Sherrill Stockton, senior vice president of Sonoma Bank, which is part of Sterling Savings Bank in Spokane, Wash. “But it’s human nature, if you get turned down, to go around saying that there are no loans available.”

Bankers say that small-business owners looking for a loan should start by knowing which business measures — debt-to-equity ratio, for example, or net margins — lenders focus on when evaluating loan applications in their industry. Bankers say would-be borrowers should demonstrate exactly how they plan to use the money and why the plan makes sense.

This month, for instance, Chandan Patel borrowed $3.7 million from Sonoma Bank to buy her second hotel property, a Comfort Suites hotel in Castro Valley, Calif. She said she had demonstrated to her banker that she would be able to increase the property’s average daily rate, a critical yardstick in the hotel industry, by raising room prices while improving customer service and adding amenities. It helped that she was able to point to a track record of maintaining an unusually high daily rate at her other property.

Both bankers and borrowers say the human side of lending requires as much attention as the technical aspects. Small-business owners should cultivate a relationship with a local banker — ideally, long before they need a loan — and treat that relationship as a long-term partnership.

Bob Davis, chief executive of Virtual Driver Interactive, which makes driving simulators, benefited from a personal banking relationship when he was looking to buy his California business from his former employer late last year in the early days of the financial crisis. For tax reasons, the deal had to happen in just 90 days, or it would not happen at all. And because the business had been part of a larger operation, its financial performance was difficult to demonstrate. “It wasn’t an easy sell,” Mr. Davis said.

He happened to meet Greg Patton, the chief executive of Sierra Vista Bank in Folsom, Calif., at a local golf course, and Mr. Patton invited him to spend a couple of hours talking about the business. “No numbers, no spreadsheets, let’s just talk,” Mr. Patton told him.

After the talk, Mr. Patton became an advocate for the deal, Mr. Davis said. He asked for a set of financials and a two-year projection for the business. More important, though, he coached Mr. Davis through the loan review process. More than once during the process, issues came up that could have scuttled the deal. Each time, Mr. Davis says, huddled with his bankers and found a solution. The $900,000 loan went through in February, just ahead of the deadline.

Still, business loan applicants should expect to be closely scrutinized, especially by smaller community banks that have generally eschewed the formula-based lending practices many national banks adopted in recent years.

But Ranjit Kushwaha, who recently borrowed in the high six figures to buy the building in Monterey, Calif., that houses his Indian Summer Restaurant, was glad to see his bank being careful. “They made me jump through all kinds of hoops,” he said. “They’re very cautious — but that’s good. Otherwise, we’d all end up with the same problems again.”

Baby P sentences to be reviewed by attorney general

The attorney general is to ask the court of appeal to increase the sentences handed down in the Baby Peter case after several complaints from child welfare organisations and the public that they were disappointingly short.

Lady Scotland has intervened in the case, using powers which allow her to ask the court of appeal to look again at "unduly lenient" sentences as long as she acts within 28 days of them being passed.

The mother of Baby P, or Peter, as he can now be named, was given an indeterminate sentence of "imprisonment for public protection" with a minimum term, or tariff, of five years to be served before she can be considered for release. However, she will be able to apply for parole in just over three years because she had already spent 644 days on remand awaiting trial.

Jason Owen, the mother's lodger, was also given an indeterminate sentence for public protection with a minimum tariff of at least three years. He had already spent 289 days in custody when the sentences were handed down by the Old Bailey judge last Friday and so could, in theory, be out in just over two years. The mother's boyfriend was given 12 years for Peter's death and ordered to serve a life sentence for the rape of a two-year-old girl, serving a minimum of 10 years.

Peter was 17 months old when he was found dead in a blood-spattered cot in August 2007 having suffered a broken back and fractured ribs. He had more than 50 injuries despite having been on the at-risk register and visited 60 times in eight months by social workers, doctors and police. Neither the mother or her boyfriend can be named for legal reasons.

Passing sentence, the Old Bailey judge, Judge Stephen Kramer QC, stressed that the minimum terms he had specified did not mean that they would be automatically released at that point: "The making of a direction will be for the parole board to determine when or if you are deemed no longer to be a risk to the public and in particular to children."

But the minimum terms provoked confusion and anger with the National Society for the Prevention of Cruelty to Children (NSPCC) in particular saying they were disappointed that the minimum tariffs were so low that two of those found guilty could be freed within a few short years: "It raises the question of how bad the abuse has to be before offenders get a longer minimum time in prison," asked the NSPCC's chief executive, Andrew Flanagan.

He said two of Peter's abusers could walk free at a time when their victim should be a schoolboy with a new world in front of him: "These three caused or allowed the torture and death of a defenceless baby. They may be behind bars now but when released from prison they must be put under the most stringent monitoring so they can never harm another individual."

In setting the minimum tariff of five years in the case of the mother, Judge Kramer said the maximum sentence for the offence of causing or allowing the death of a child was 14 years. He would have given her a 12-year sentence for that offence but since she had pleaded guilty he would have reduced it to 10 years, of which she would have spent half of it in custody. So he set her minimum tariff for the indefinite sentence at five years, less the 644 days she had already spent in custody awaiting trial.

For the lodger, Jason Owen, the judge said he had set a minimum term of three years because if an indefinite sentence had not been appropriate he would have given him a fixed term sentence of six years, of which he would spent half in prison.

The attorney general's office said they had called for the papers from the case since Baroness Scotland has the power to refer certain sentences to the court of appeal for review if she thought the sentence was unduly lenient.

"Within this power, the attorney general can look at minimum tariffs imposed on life and indeterminate sentence prisoners. However, it is important to understand that such prisoners are not released automatically after the minimum term has been served – they are only released when the independent parole board is satisfied that their continued detention is no longer necessary to protect the public."

There has been an explosion in the use of indefinite sentences since their introduction in 2005 with more than 5,000 prisoners now without a definite release date. Concern up until now has centred on more than 1,000 prisoners who were given a very short tariff but have remained in prison long after because of the lack of courses inside to address their offending. Fewer than 50 prisoners have been released after their minimum tariff date.

John Butterfill claimed £17,000 MPs' expenses for servants' … er, staff quarters

In the beginning there was the viscount's moat. Then, as the expenses saga developed, there was a floating duck island funded by the taxpayer on behalf of a knight of the shire.

And now, just as the nation was beginning to tire of the great 2009 expenses scandal, we have servants' quarters paid for out of the public purse.

Sir John Butterfill, a Conservative grandee hoping to serve out his last year as the MP for Bournemouth West, Dorset, in some style, was last night having to embark on the rather vulgar business of explaining how the taxpayer paid for an extension which housed the gardener and the gardener's wife.

To the horror of the Tory leadership, which believes the expenses claims of grandees are reviving old stereo-types, Butterfill appeared slightly confused as he explained that today's Daily Telegraph had mistakenly claimed that he had servants. "It is a gross misrepresentation of what I said to the young lady at the Telegraph," he told the BBC Newsnight programme as he denied having built servants' quarters from his parliamentary allowance.

"I purchased a house in Woking in ­derelict condition. I gutted and rewired it. I extended the living room, I extended the kitchen, and made a family room off the kitchen; and I extended it to make a wing for my gardener and his wife."

Then, with a slip of the tongue, he indicated that he did have servants' quarters. "The mistake I made was that, in claiming interest [from the expenses allowance] on the home, I didn't separate from that the value of the servants' … er the staff … wing. I claimed the whole of that and the whole of the council tax related to that.

"I cleared that with the fees office and wasn't told that I didn't need to separate out the part of the house that was being occupied by my gardener and his wife from the whole house. I understand that I should have done that."

Butterfill's claims came to light after the Daily Telegraph noticed that he failed to pay capital gains tax on the sale of his country house for £1.2m in 2005.

He will repay £40,000 to cover the tax, after designating the property to the inland revenue as his main residence but designating it to the Commons authorities as his second home, allowing him to claim allowances.

As for the servants' quarters in Woking, Butterfill will be handing back £20,000.

Together, it will cost him a mere £60,000 to leave Westminster with a clean bill of health at the general election.

DNA 'proves Argentine's incest'

An Argentine man accused of incest fathered seven children with his daughter, officials have said.

DNA tests showed that Armando Lucero, 67, was the father of the children, according to Ricardo Puga of the Mendoza provincial legislature.

The alleged incest with the 35-year-old woman started when she was eight.

Officials are waiting for the results of psychological tests on Mr Lucero, also accused of raping two of his other daughters. He remains in custody.

Mr Lucero faces a maximum penalty of 50 years in prison.

His daughter's seven children are aged between two and 19.

They all lived together, with Mr Lucero's second wife and stepmother, AFP news agency reported.

The daughter, who has not been publically named, went to local authorities for help after her father threatened to sexually abuse one of her daughters.

Taliban blamed for Lahore attack

Pakistan's government has blamed Taliban fighters for a bomb attack in Lahore which killed 23 people and left hundreds more injured.

A group of men shot at police officers before detonating a powerful car bomb, damaging buildings belonging to the police and intelligence agency the ISI.

Rescuers are searching the rubble and warn that the death toll could rise.

Officials said the Taliban carried out the attack in revenge for a military offensive against them in Swat valley.

Interior Minister Rehman Malik told reporters: "Enemies of Pakistan who want to destabilise the country are coming here after their defeat in Swat.

"There is a war, and this is a war for our survival."

A group calling itself Tehrik-i-Taliban Punjab claimed responsibility for the bombing in a Turkish-language statement posted on jihadist websites, the SITE monitoring group said.

The claim could not be verified and the group's relationship to the Taliban, if any, was unclear.

'Attack on the state'

At least one ISI agent, 12 police officers and one child were reported killed in the attack, at about 1030 local time (0530 GMT).

Local officials have speculated that the military intelligence agency could have been the target.

The ISI's offices were damaged by the bombing, and a police emergency-response building was flattened.

The BBC's Owen Bennett-Jones, in Lahore, says it is not clear which organisation the perpetrators were attacking - but it is clear that they were attacking the Pakistani state.

A least two arrests were made, but police officials later told the BBC that those detained appear to have been innocent bystanders.

Meanwhile, the military says it expects the main town in the Swat valley, Mingora, to be cleared of Taliban insurgents within two or three days.

The military said two other areas away from Swat which have also seen heavy fighting - Mohmand and Sultanwas - were now safe enough for residents to return home.

Sustained violence

Lahore, in Punjab province near the Indian border, is known as Pakistan's cultural capital and is far from the Swat valley.

But in March militants laid siege to a police compound in the city, killing eight people, and weeks earlier the Sri Lanka cricket team was attacked there.

The BBC's Shoaib Hasan, in Pakistan, says Lahore is facing a sustained campaign of violence unlike any it has seen before.

He says security officials believe the city is under attack because it is seen as a stable home for Pakistan's Punjab-dominated army.

The army is claiming sweeping victories against Taliban insurgents in the Swat valley, near the Afghan border - saying more than 1,000 militants have been killed in the past month.

Militants had threatened revenge attacks in Pakistan's cities after the military stepped up its operations in the Swat valley.

Global condemnation

After the latest attack, television footage showed rescue workers sifting through the debris, pulling half-conscious police officers from the rubble.

Bulldozers and other heavy lifting equipment have been brought in as many people are feared trapped under the debris.

Officials told reporters a car pulled up near the police headquarters and a group of gunmen got out and opened fire.

When police returned fire, the gunmen's car exploded.

BBC News website readers in the city described hearing a huge explosion.

Zubair Bukhari, who was in his office about 500m away from the blast, said it rocked the entire building.

"Glass windows shattered to pieces and the ceiling came down on the floor," he said.

Another reader, Matthias Gattermeier, said: "I ran out of the building and saw a surreal huge ring of white smoke rise into air."

Politicians from around the world have condemned the attack and offered condolences to Pakistan.

US ambassador Anne Patterson said the attacks "show the lengths extremist elements are willing to go to as they attempt to force their agenda on to a people who only wish to go about their daily lives in peace".

Saturday, May 23, 2009

Rahul knows that India’s real strength lies in villages

24 years have passed when Late Rajiv Gandhi dreamt of taking India into 21st century. Today, India is emerging as a strong country and Rahul Gandhi, who is following the footprints of his father, has tossed an important question and the question is; from where does India gets it' s strength?...
In the course of Lok Sabha election 2009, Rahul often raised this question and he tried to find the answer himself. He talked about his visit to Amethi with a British minister (David Milliband) where they had food and spent night with villagers. Rahul said, “The British minister asked me as to where do India gets it's strength? I told him that if he wanted to feel the strength of India he would have to go to villages. The strength of India could not be understood in an air-conditioned room in Delhi. Thereafter Rahul went on telling as to how he took Milliband to Amethi, had food, talked to people and spent a night. He said that a foreigner easily understood the strength of India but BJP could not understand it. He criticized opposition for not recognizing the hard labour, struggle, optimism and honest values of the villagers and said that the opposition was trapped in the complete hangover of India shining and urbane glitter.

When Rahul talks about the villages and hinterland, Rajiv Gandhi appears again before people in their mind. Due to IT revolution, Rajiv Gandhi is considered as the symbol of urban development but the silent revolution Rajiv Gandhi initiated through Panchati Raj has become Rahul’s main campaign plank.
Rahul Gandhi is showing the world how villages are being transformed through Panchayats. There is great similarity between the father and the son; both are great listeners as experienced by this correspondent during various tours with both leaders.

Rajivji listened to the villagers for hours as Manishankar Aiyyar a long time associate of Rajivji recalls. “When Rajivji talked to villagers it was difficult to guess how much time had passed. It is interesting that Rahul Gandhi does not tell one thing about his visit to Amethi with Milliband that he played the role of a translator for hours between Milliband and the villagers.

Rahiv Gandhi strengthened the base of grass root democracy by empowering villages through Panchayati Raj. On the same line, Rahul is making new experiments in Youth Congress and student organization of the party by bringing democracy within them. He has successfully conducted elections of Youth Congress and NSUI in Punjab and Uttarakhand under the supervision of ex-CEC J M Lyngodh. The party swept the election in both these states bagging all the five seats in Uttarkhand and 9 out of 13 in Punjab. However, Rahul’s strategy in winning these seats are yet to be analyzed.
excerpts from http://pressbrief.in/