German pay backIan Campbell / April 05, 2012, 0:40 IST
As Germany calls for euro zone austerity, its government is easing up on it. A 6.3 per cent wage increase for public sector workers over two years is likely to be followed by even more generous deals in the private sector. And, why not? A low-deficit Germany can afford it. A stimulated euro-powerhouse is what many economists have called for. The risk is that the zone’s economic divides get worse.
The contrasts between Germany and the euro zone periphery could hardly be more stark. Germany has conceded a good deal to two million public sector workers in the Verdi union after tiring negotiations and small-scale strikes. In Ireland, Spain, Italy and Greece, where public wages have been cut or frozen, strikes and unrest have been serious. Unemployment is above 20 per cent in Greece and Spain — way above Germany’s 8.2 per cent.
German domestic largesse might seem hypocritical. But, unlike the euro zone periphery, Germany repressed wage growth during the past decade. That is part of the reason why its economy is so competitive — though German engineering has long been potent. And, macro success is reflected in a fiscal deficit that won’t far exceed one per cent of GDP despite an enlarged contribution to the European Stability Mechanism.
German workers think it’s payback time. They have a good case. In 2010, the economy grew 3.7 per cent and in 2011 by three per cent, but consumer spending rose just 0.6 per cent and 1.5 per cent. Investment and exports have, as usual, led Germany’s way. Higher wages for Germans redress the balance a bit. Domestic spending should be strengthened, helping imports and supporting growth in the rest of zone. Wage shifts should make the periphery relatively more competitive, too. Periphery economies will benefit if they have exports (or beaches) that appeal to Germans.
But, higher German consumer spending carries a big latent threat. German inflation is currently just 2.1 per cent. The Bundesbank’s Jens Weidmann expects it to rise and more generous wages will make that likely. That might mean the European Central Bank will have to raise rates. That’s another policy shift that would go down badly in the euro periphery. And, widen the zone’s divisions.
Hugo Dixon / April 05, 2012, 0:37 IST
Since BSkyB was founded, it has been chaired by either James Murdoch or his father, Rupert. Murdoch Junior’s decision to jump before he might have been pushed means the pay-TV group finally has an independent chairman.
BSkyB is better off without a Murdoch in the chair. Although Murdoch Jr did a reasonable job first running and then chairing the group, his track record overseeing the Murdochs’ UK newspaper business was far from stellar. He failed to get on top of the swirling phone hacking and bribery scandal. He may well be criticised by the UK parliamentary committee investigating the issue.
The failure to get a firm grip on the scandal has attracted such negative publicity that Murdoch Jr had ceased to be an asset for BSkyB, even as it is a totally different business. But this, in turn, has provided an opportunity for BSkyB to build a board that conforms to classic corporate governance standards. Unless there are strong reasons to the contrary, it is best for public companies to have an independent chairman.
The scandal has already cost News Corp, the Murdoch-controlled US-listed media group, the chance to buy out the 61 per cent of BSkyB it does not already control. Ofcom, the UK media regulator, is now investigating whether News Corp is fit and proper to continue even with its current 39 per cent stake. The fact that there is no longer a Murdoch in the chair may take a little of the edge off this probe. But, James Murdoch is still a director. A forced divestiture is now no longer unthinkable, though it is still pretty unlikely.
The same goes for replacing Murdoch Senior as chairman of News Corp. Last month, Christian Brothers Investment Services tabled a shareholder resolution calling for the company to have an independent chairman, arguing that the UK newspaper scandal raised concerns about inadequate oversight. It may be unlikely to winkle Murdoch Sr out of the News Corp chair since he speaks for 40 per cent of the votes. But then again, pretty much the same could until recently have been said about Murdoch Jr at BSkyB.
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