Day: December 18, 2018

Mexico’s wage commission said on Monday it planned to hike the country’s minimum wage by 16 percent to around $5 per day and leftist President Andres Manuel Lopez Obrador pledged further increases to keep salaries apace with inflation.

The salary commission, made up of government, business and labor representatives, said the daily minimum wage would rise to 102.68 pesos from 88.36 pesos on Jan. 1, the biggest such hike since 1996.

“During many years the minimum wage has lost its purchasing power. Some say it has lost 70 percent of its purchasing power over the last 30 years,” said Lopez Obrador.

“We’re never going to have wage (increases) below inflation,” said Lopez Obrador, who took office on Dec. 1.

Low wages have helped to attract foreign companies to Mexico and create jobs, but also encourage migration to the United States. U.S. President Donald Trump argues that low wages south of the border kill U.S. jobs.

Lopez Obrador has called for doubling the minimum wage in northern states that border the United States in a bid to reduce inequality with neighboring U.S. areas.

In the area within 25 kilometers (16 miles) from the U.S. border, the minimum wage will be increased to 176.72 pesos per day, Mexican employers’ confederation Coparmex said in a statement.

Lopez Obrador’s maiden budget, delivered on Saturday, was welcomed by markets for pledging to stick to fiscal discipline, but the wage policy raised concerns that it could hit inflation and spark higher interest rates.

Benito Berber, chief economist for Latin America at Natixis, said Lopez Obrador’s new take on wages, including the commitment to keep pace with inflation, could push Mexico’s central bank to raise interest rates on Thursday.

“It seems the government is willing to accept higher inflation and perhaps stickier inflation,” Berber said. “Banxico has been clear that wage increases above productivity would entail tight monetary policy.”

($1 = 20.1160 Mexican pesos)
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Women must wait 202 years before they can earn the same as men and have equal job opportunities, according to a global report released Tuesday, which said the rise in robots and the lack of child care were keeping many women out of work.

Women earn about half as much as men, said the World Economic Forum (WEF), reporting a gender pay gap of 51 percent in 2018.

“It’s still a long way from parity, and it’s still a long way from reaching a point where women and men are being paid the same for the same job,” said report co-author Saadia Zahidi, head of WEF’s Center for the New Economy and Society.

There were fewer women working this year than men, mostly due to the lack of child care which kept women from jobs or from progressing to senior roles, according to the annual index ranking 149 countries on their progress to close the gender gap.

“Most economies still have not made much progress in providing better infrastructure for child care,” said Zahidi in a phone interview.

“This continues to be a major source of why women don’t enter the labor market at all or aren’t able to progress as much as they should given the talent that they have,” she added.

Women were missing at the top, the report found, with only a third of all managerial roles taken by women.

There were also just 17 female heads of state this year, with women occupying 18 percent of ministerial positions and 24 percent of parliamentary roles globally, it added.

​Robot takeover

Zahidi warned that emerging technology like robots and artificial intelligence (AI) were also taking jobs traditionally occupied by women, including administration, customer service and telemarketing.

“While a lot of the narrative in the past tended to focus on men in blue collar work in factories, there are a lot of women in blue collar or service work that are also being displaced — and that trend is starting to become more marked,” she said.

The WEF report found that only 22 percent of people working in AI worldwide were female.

According to a 2017 study by the Brookings Institution, a U.S. think tank, the use of digital tools has increased in 517 of 545 occupations since 2002 in the United States alone, with a striking uptick in many lower-skilled occupations.

As technology advances, experts say women and girls with poor digital skills will be the hardest hit and will struggle to find jobs.

Although the number of women in science, technology, engineering or mathematics (STEM) has increased in recent years, they still only account for about 30 percent of the world’s researchers, the U.N. cultural agency UNESCO says.

“More than ever, societies cannot afford to lose out on the skills, ideas and perspectives of half of humanity,” said Klaus Schwab, executive chairman of the WEF.

No country has closed the pay gap yet, WEF said, using data from institutions such as the International Labour Organization, United Nations Development Programme and World Health Organization.

Top spots

Iceland, for the tenth year in a row, held the top spot across all indicators that measured gender equality including social, economic and health, according to the WEF report.

Nordic countries Norway, Sweden and Finland were among the top scoring countries, followed by Nicaragua, which ranked fifth.

Meanwhile Yemen, Pakistan, Iraq and Syria were the worst performing countries.

Last year, WEF said women would achieve economic equality in 217 years, the widest gap in almost a decade.
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Another day of big losses knocked U.S. stocks to their lowest levels in more than a year Monday. Investors dumped high-growth technology and retail companies as well as steadier, high-dividend companies. Oil fell below $50 a barrel for the first time since October 2017.

Hospitals and health insurers slumped after a federal judge in Texas ruled that the 2010 Affordable Care Act is unconstitutional. Other stocks wobbled in morning trading, then plunged in the afternoon. The Dow Jones Industrial Average fell 507 points after a 496 point drop Friday.

Amazon led a rout among retailers and tech companies including Microsoft turned sharply lower. Some of the largest losses went to utilities and real estate companies, which have done better than the rest of the market during the turbulence of the last three months.

“That is basically retail investors panicking,’ said Mark Hackett, chief of investment research at Nationwide Investment Management. “Investors basically are confusing the idea of a slowdown with a recession.”

But investors dumped almost everything. Less than 40 of the 500 stocks comprising the S&P 500 finished the day higher.

The S&P 500 index, the benchmark for many investors and funds, finished at its lowest level since Oct. 9, 2017. It has fallen 13.1 percent since its last record close on Sept. 20. The Russell 2000, an index of smaller companies, has dropped more than 20 percent since the end of August, meaning that index is now in what Wall Street calls a “bear market.”

Germany’s main stock index also fell into a bear market Monday as companies like Siemens and SAP kept falling.

Smaller U.S. stocks have taken dramatic losses as investors have lost confidence in the U.S. economy’s growth prospects. Smaller companies are considered more vulnerable in a downturn than larger companies because they are more dependent on economic growth and tend to have higher levels of debt.

Hackett said the current drop is similar to the market’s big plunge in late 2015 and early 2016, which was also tied to fears that the global economy was weakening in a hurry. But even though the economy is slowing down after its surge in 2017 and 2018, it should continue to do fairly well.

“It’s a slowdown from extremely high levels to healthy levels,” he said. “The globe isn’t going into a recession.”

The S&P 500 skidded 54.01 points, or 2.1 percent, at 2,545.94. The Dow Jones Industrial Average lost 507.53 points, or 2.1 percent, to 23,592.98. The Nasdaq composite fell 156.93 points, or 2.3 percent, to 6,753.73. The Russell 2000 index dipped 32.97 points, or 2.3 percent, to 1,378.14.

Following the health care ruling, hospital operator HCA dropped 2.8 percent to $123.1 and health insurer UnitedHealth lost 2.6 percent to $258.07. Centene, a health insurer that focuses on Medicaid and the Affordable Care Act’s individual health insurance exchanges, fell 4.8 percent to $121.42 and Molina skidded 8.9 percent to $120.

Many experts expect the ruling will be overturned, but with the markets suffering steep declines in recent months, investors didn’t appear willing to wait and see.

Benchmark U.S. crude fell 2.6 percent to $49.88 a barrel in New York. Brent crude, used to price international oils, dipped 1.1 percent to $59.61 a barrel in London. Weaker economic growth would mean less demand for oil, and traders have been concerned there is too much crude supply on the market. That’s chopped oil prices by one-third since early October.

Bond prices rose. The yield on the 10-year Treasury note fell to 2.86 percent from 2.89 percent.

The Federal Reserve is expected to raise interest rates again Wednesday, the fourth increase of this year. It’s been raising rates over the last three years, and investors will want to know if the Fed is scaling back its plans for further increases based on the turmoil in the stock market over the last few months and mounting evidence that world economic growth is slowing down.

Hackett, of Nationwide, said investors will be happy if the Fed adjusts its plans and projects fewer increases in interest rates next year. But he said investors might be startled if the Fed doesn’t raise rates this week, as has been widely expected.

British Prime Minister Theresa May said Parliament will vote Jan. 14 on her deal setting terms for Britain’s departure from the European Union. She canceled a vote on the deal last week because it was clear legislators were going to reject it. May insists she can save the deal, but pressure is mounting for either a vote by lawmakers or a new referendum on the issue.

Britain is scheduled to leave the EU in late March, and if it does so without a deal in place governing its trade and economic relationships with the bloc, it could bring huge disruptions to the British and European economies and financial markets.

Germany’s DAX lost 0.9 percent. That means the DAX, which represents Europe’s largest single economy, is also in a bear market. France’s CAC 40 and Britain’s FTSE 100 both fell 1.1 percent.

Japan’s Nikkei 225 index added 0.6 percent and the Kospi in South Korea gained 0.1 percent. Hong Kong’s Hang Seng was less than 0.1 percent lower. Both the Kospi and Hang Seng are in bear markets as well.

In other energy trading, wholesale gasoline shed 1.7 percent to $1.41 a gallon and heating oil slid 1 percent to $1.83 a gallon. Natural gas dropped 7.8 percent to $3.53 per 1,000 cubic feet.

Gold rose 0.8 percent to $1,251.80 an ounce. Silver added 0.8 percent to $14.76 an ounce. Copper dipped 0.3 percent to $2.75 a pound.

The dollar slipped to 112.75 yen from 113.29 yen. The euro rose to $1.1350 from $1.1303. The British pound rose to $1.2629 from $1.2579.
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