Monthly Archives: May 2017

European business

European business, Overcoming uncertainty, strengthening recovery, outlines results from a survey of 2,000 C-suite executives conducted by the McKinsey Global Institute in France, Germany, Italy, Poland, Spain, and the United Kingdom. It highlights leaders’ newfound optimism about the outlook both for European economic growth and for their own companies’ prospects. They expect revenue growth of 2.1 percent on average in the coming year, with about one in five companies—especially larger, more internationally focused ones—predicting revenue growth above 5 percent. Business leaders are also upbeat about some key global trends affecting business everywhere, including digitization and the rise of emerging economies.

Along with the European business leaders, we also surveyed executives at more than 400 US and Chinese companies with operations in Europe. Their expectations for GDP growth in the European Union were even higher than that of their European counterparts on average—almost 3 percent and 2.3 percent, respectively.

The survey nonetheless indicates a continuing reluctance among European firms to invest, with many hoarding cash (Exhibit 1). Gross corporate savings rose to almost €2 trillion in 2015, and companies are divided between those saying they are saving to fund future investments (48 percent) and those building reserves for future crises (47 percent). Yet most businesses believe they already invest at the right level and see sufficient opportunity to invest more; weak demand, lack of opportunities, and access to finance no longer feature highly as barriers to investment.

How to explain this investment behavior? European business leaders cite a range of risks and uncertainties, including concern about future crises, nervousness about rising populism and anti-globalization sentiment, and lingering fears about the future shape and direction of the European Union (EU) itself.

We delved more deeply into attitudes toward the EU, asking about the benefits companies had experienced in the past, as well as their hopes and expectations for Europe in the future. These are complicated times for the European Union, which has had to contend with growing political and economic divergence, including the decision by the United Kingdom to withdraw from the EU altogether.

Overall, the response to our questions on the EU was positive. Just over half the companies surveyed think the EU has had a beneficial effect on their business, and the most successful companies are the most positive. Moreover, some 60 percent of business respondents say they want “more Europe,” in the form of greater policy convergence and integration.

Job Creation

If India were to cash-in on this demographic dividend, it needed to give a fillip to labour intensive technology, infrastructure and micro, small and medium enterprises. The Make-in-India campaign, the Digital India coupled with Skill India launched by Mr. Modi is aimed at creating the much needed employment in the country.

The Make in India campaign launched last year is aimed at India becoming a global manufacturing hub, particularly that of labour-intensive production like textiles, garments and small and medium enterprises. Small and Medium Enterprises(SME) sector accounted for nearly 40 per cent of India’s GDP and 45 per cent of exports. Sectors like handlooms, handicrafts too had huge potential for job creation apart from IT and IT enabled services.

But if these sectors were to flourish, the youth should possess necessary skills so as to be absorbed in for production activity. The education provided by many of our schools and colleges do not make them employable and hence required to be skilled. It is precisely for this reason Mr. Modi had decided to lay emphasis on skill development.

 The target is to provide skill development to at least 500 million people in 5-10 years, which is nearly half the population. The government has also made it clear that here on all public and private investments that required its clearance or assistance, will have to make a commitment on the number of jobs that the investment would create.

Mr. Modi followed it up with a meeting with Indian businessmen in October last, in which he emphasized the need for pushing investment in private sector and job creation would be the thrust of such investments. He nudged the businessmen to invest in labour-intensive areas that included textiles. Government’s decision toencourage electronics industry in the country is also expected to boost job creation. Government proposed to encourage $400 billion in electronics, IT software and hardware, mobile manufacture and so on. His visits to Middle East, US, UK, Japan, Canada, France, South Korea, Germany, China and more recently to South East Asia have set the stage for attracting more foreign investment into India.

At the moment India is the only attractive investment destination with growth slowing down in many advanced countries. The growth has slowed down in China as well. With little growth potential in advanced nations, the large global companies see opportunity only in India for investment with ever growing middleclass and young population. India is the only country that can witness consumer demand pick up in the coming years and decades.

This is also the time when India could step up infrastructure development. India had huge infrastructure deficit and with global commodity prices of crude oil, steel, coal, cement and other materials falling, investment in infrastructure will yield better outcome with costs coming down. This will also push up jobs in construction industry.

 The Indian Railways is investing over Rs one lakh crore this financial year and propose to invest Rs 8.5 lakh crore in modernisation of railways in the next five years. This would create substantial jobs besides creating much needed rail infrastructure.

Government proposed to invest $1 trillion in infrastructure development in the next five years. These investments in ports, airports, highways, rural roads, housing, telecom and power will not only kick-start the sagging economy but also create employment. The proposal to create 100 smart cities in the country, promotion of industrial clusters and food parks in the country too would generate additional employment.

The emphasis on renewable energy and raising the target of solar power generation to one lakh Mw and wind power to 60,000 Mw in the next five years entailing investment of $150 billion. Both solar and wind power generation is labour intensive particularly at the time of installation. Off grid applications are spread all over the country.

If India were to shine and growth to become inclusive, rural India comprising six lakh villages will have to develop. The fruit of development has to percolate down to village level. This will happen only if there are jobs in small towns. In this context, government’s proposal to encourage industrial clusters will help.

 Urban development initiatives -AMRUT, Smart Cities Mission and Housing for all unveiled by Mr. Modi recently are expected to help create additional 34 lakh jobs. The initiative to build 100 smart cities across the country is a “decisive step” and will create a significant multiplier effect for over 250 crore and ancillary sectors including infrastructure, logistics and modern retail, according to ASSOCHAM President Rana Kapoor.

Weak external demand meant pick  up in labour-intensive sectors like textiles and gems and jewellery that depend on exports for growth will not see a  pick up in the near term. The government, therefore, would have to  focus on newer areas like food processing, urban and rural infrastructure, highway development for job creation.

Government has already taking steps to improve ease of doing business by simplifying rules and states have started competing with each other to promote single window clearance to attract foreign investment. All these augur well for the economy and it has to be a constant endeavour to improve the situation on the ground, which government and states have started working on. The business confidence is returning, the feel good factor among foreign investors is visible but the government needs to hasten reforms to fully win back the trust of investors. India is set to achieve economic growth rate between 7.5-8 percent this year. The improvement in the ease of doing business coupled with roll-out of GST will push the growth rate to 9-10 per cent, which will be close to India’s growth potential. Also with inflation moderating, fiscal deficit and current account deficit under control, surgingforeign exchange reserves and falling interest rates, the investment would pick up with consumer demand surging in the country. The economic prospects can only improve.

A Lie-Detector Test

1. Conduct multiple interviews.
Interview multiple people for a single position, and call promising candidates back for a second, or even a third, interview. Although this is time-consuming for both of you, it’s a valuable way to gain insight into the person you’re thinking of hiring.

And when you interview someone, try to have other managers in the room. It’s important to get feedback from colleagues about potential hires. Another manager’s gut instinct could save you from making a potentially costly mistake.

2. Do a background check.
Internet search tools and social networks are good resources for checking on applicants. After all, Thompson’s resume offense was caught by a Google search. But it’s wise to do a background check on each new hire.

Companies such as IntelliCorp provide employee-screening services for small and midsize businesses. IntelliCorp’s packages range from $1,595 to $7,495, according to Kelly Ansboury, the company’s director of business development and marketing.

Decide first how wide and deep you want to go, and then choose a service that meets your needs. As a minimum measure, Challenger recommends checking potential employees’ criminal records and citizenship status. Looking into their credit history or asking them to submit to a drug test are further steps you can take.

3. Seek out employment and character references.
Challenger advises interviewing candidates who have been recommended by people you trust. But even then, you should still conduct your own background check on the person. With a candidate who doesn’t have a personal recommendation, you should search out personal references. Go beyond those listed on his resume. Reach out to former co-workers or others who can verify the applicant’s employment history and give you insight into the person’s character.

Although it’s necessary to take precautions when adding someone to your company, Challenger said, lying on resumes is uncommon, especially in our age of information transparency.

Small businesses

Small businesses, often hailed as the nation’s engine of job growth, are hiring at a much slower pace than they were earlier in the year, according to two employment reports released this week.

All businesses are hiring less: The private sector added 119,000 employees last month, down from the 201,000 jobs added in March, according to a payroll processor ADP. Of the jobs added in April, nearly 97% were in small- and medium-sized businesses. Only 4,000 of the April jobs were at large businesses, defined as those with 500 or more employees. About 58,000 jobs were from small business payrolls (defined as having up to 49 employees) and all in the service sector; the goods-producing sector actually lost 1,000 jobs. Meanwhile, 57,000 jobs were added by medium businesses (between 50 and 499 employees).

The April figures show the smallest increase in hiring among small business owners in seven months. Previously, small businesses averaged an increase of 102,000 jobs a month from October 2011 to March 2012, according to the ADP National Employment Report.

Meanwhile, a separate report that focuses on small businesses with fewer than 20 employees, echoed the slow in hiring. Financial services company Intuit, maker of popular software programs like QuickBooks and TurboTax, said small businesses added 40,000 jobs in April, fewer than the revised 45,000 jobs added in March.

In addition to its monthly employment index, Intuit added a Small Business Revenue Index, new for April. In its first iteration, the Revenue Index showed that small business sales are just now returning to levels of sales seen in 2007, before the recession began. Businesses in the scientific, technology and professional fields performed the best, with revenues topping pre-recessionary levels. The real estate and construction industries, however, continue to struggle.

Those small-business hourly employees saw their week shrink very slightly in April down to 24.8 hours per week, according to Intuit’s survey of 210,000 hourly employees. The workweek for hourly small business employees had been getting longer since early 2010, but over the last half a year has been pretty consistently shrinking.

Even as the workweek got shorter and small businesses hired fewer people, those employees that did have a job at a small business were paid slightly more in April (about $3 per month), continuing a trend that has existed at least as far back as 2007, according to Intuit. The average monthly pay at a small business was $2,680 in April, or about $32,200 per year.