Unemployment will rise,but not as much as many predict

• ▀ Our forecast sees the UK unemployment rate climbing to 6.5% by the end of the year. This would represent the fastest rise in joblessness since records began. But the consensus view of a much bigger jump looks too pessimistic.
• ▀ Labour Force Survey data for H1 2020 puzzled, with employment rising and unemployment flat. But other metrics have been far weaker, suggesting a strong chance that the LFS numbers will ultimately regress. And the end of the furlough scheme is likely to trigger job cuts.
• ▀ On the upside, Office for National Statistics surveys suggest that a majority of furloughed employees have returned to work. And past recessions suggest that this year's scale of job losses some predict are implausibly high.

     

Gendered giving: the influence of social norms on the donation behavior of men and women

• We study if men and women are subject to different influences when determining their level of charitable giving. In particular, we examine differential sensitivities to social norms among donors to a public radio station. Our survey of 975 donors finds that male donors are more likely than female donors to use social norms to inform their own behavior. We conduct a laboratory experiment to investigate the influence of social information on social norm formation and giving. Our results suggest that temporarily created social norms influence giving by men significantly more than by women. This result replicates and establishes the causal relationship between social norms and donations suggested by our field findings. We conclude with a discussion of theoretical and practical implications of these results.

Copyright © 2009 John Wiley & Sons, Ltd.     

Why the MPC is unlikely to join the negative rate club

• ▀ The economic shock from the coronavirus has warmed up the MPC's long-held coolness toward negative interest rates. But we think there are a number of reasons why such a move is unlikely.
• ▀ While taking rates below zero could lower banks’ funding costs and encourage lending, the net economic effect is ambiguous. Also, ‘sticky’ deposit rates would hit banks’ already strained profitability, risking paradoxical effects.
• ▀ The MPC has better-targeted tools available to it. If the MPC wanted to lower borrowing costs, increasing the generosity of the Term Funding Scheme could deliver the benefits of negative rates while reducing adverse effects. And the present scale of fiscal support reduces the need for looser monetary policy.

     

Barriers to brand building in UK universities?

• Branding in universities has become an increasingly topical issue with practitioners, with some institutions committing substantial financial resources to branding activities. It has, however, received only limited academic investigation, and as the particular characteristics of the sector present challenges for those seeking to build brands, it seems to be timely and appropriate to investigate potential barriers to branding.
• This exploratory study investigates the opinions of the ‘brand guardians’ of UK universities—Vice Chancellors, Principals and Rectors—on the barriers to successfully building brands and draws conclusions on their views of the key challenges facing successful branding activity in the sector. Implications for practitioners are also explored.

Copyright © 2006 John Wiley & Sons, Ltd.     

Global wages: we don't (yet) have lift‐off

• ? Policymakers, most notably in the US, have been expecting wage growth to pick up for some time as job markets tighten. But the data over the last six months have shown few indications of wage lift‐off. Our review of the latest evidence suggests that although labour markets are, on the whole, still tightening, we see increased downside risks to our forecasts for faster global wage growth in 2018–19.
• ? Rates of “churn” in labour markets – a possible precursor to faster wage growth – have continued to rise in the US and parts of Europe.
• ? But other structural factors may still be holding wages down. A recovery in prime‐age participation in the US may be helping to cap wage rises, as may a pool of “underemployed” workers in the US and UK (though this pool is shrinking fast).
• ? Productivity growth also remains weak, running at a 0.5%–1% annual pace in Q1 2017 across the US, UK, Germany and Japan. This compares with a G7 average pace of 1.5% per year in 1985–2006.
• ? Overall, the risks to our baseline forecast of faster wage growth in the major economies in 2018 look skewed to the downside. We expect wage growth to firm in 2018 by 0.5–1 percentage points in the US, UK, Germany and Japan. We would give this modal forecast a probability of around 60%, but with a 25% chance that wage growth is somewhat slower than this and only a 15% chance that it is higher.

     

How low can U go?

• ? Although there is growing evidence that wage growth is building in response to low and falling unemployment in the advanced economies, there is scope for unemployment rates to fall further without triggering a pay surge.
• ? For a start, current unemployment rates in comparison to past cyclical troughs overstate the tightness of labour markets. Demographic trends associated with the ageing ‘baby boomer’ bulge have pushed down the headline unemployment rate – unemployment rates among older workers are lower than those of younger cohorts. And in a historical context, Europe still has a large pool of involuntary part‐timers.
• ? In addition, rising participation rates mean that demographics are less of a constraint on employment growth than widely assumed. In both 2017 and 2018, had it not been for increased activity rates (mainly for older cohorts), unemployment would have had to fall more sharply to accommodate the same employment increase. We expect rising participation rates to continue to act as a pressure valve for the labour market.
• ? Finally, unemployment rates were generally far lower during the 1950s and 1960s than now. If wages stay low relative to productivity, as was the case during that prior era, employment growth may remain strong, with unemployment falling further. In the post‐war era, low wages were partly a function of a grand bargain in which policy‐makers provided full employment in return for low wage growth.
• ? There is evidence to suggest that many post‐crisis workers have opted for the security of their existing full‐time job and its associated benefits despite lower wage growth, rather than change job and potentially earn more; the rise of the ‘gig economy’ has led some workers to value what they already have more. Put another way, the non‐accelerating inflation rate of unemployment (NAIRU) has fallen. So, the role of labour market tightness in pushing wage growth higher may continue to surprise to the downside.

     

“Whatever it takes” may not be enough

• ▀ Concerns over risks to the global economy from actual and perceived limits to fiscal and monetary policy are well-founded. A decade on from the global financial crisis, evidence highlights chronic demand deficiency, related weakness in supply and a prolonged period of underperformance among the most policy-constrained advanced economies. All lie within the eurozone.
• ▀ To gauge the risks from such policy constraints, we model a broadening of the eurozone slowdown. Despite the ECB's commitment to mitigate adverse cyclical developments, we find that - in the absence of significant accompanying fiscal support - a period of protracted eurozone weakness would ensue.
• ▀ The implications are far-reaching. Our analysis suggests that such a protracted eurozone slowdown would spill over globally, taking 0.4ppts off average global growth over the next five years.

     

The paradox of rising wage growth and falling inflation

• ? Strong labour markets and rising wages in advanced economies stand in sharp contrast to recent declines in economists’ inflation forecasts and market expectations. In our view, though, these developments are not necessarily contradictory. Even if wage growth edges higher, we think demand factors will limit any pick‐up in prices. Instead, we expect firms’ margins will be squeezed.
• ? Although the labour share has risen more sharply than we had expected over the past couple of years, we are sceptical that this will translate into substantially stronger underlying inflation. Not only has the rise been small, it has been employment rather than wages that has surprised to the upside. The strength of employment is probably more about firms’ production preferences than workers’ capitalising on a stronger negotiating position.
• ? True, wages adjusted for productivity now look high by historical standards. But neither theory or empirical evidence suggests that this must inevitably lead to stronger CPI inflation in the short‐term. Our forecast for flat wage growth in 2019 and the absence of strong cost pressures elsewhere are also a comfort.
• ? Inflation tends to be more responsive to demand indicators – and the recent GDP growth soft patch suggests any further pick‐up in underlying inflation pressures will be limited (see Chart below).
• ? More generally, we think that the consensus view on inflation for the key advanced economies is high. Market‐based inflation expectations are typically lower than our own, which may reflect the perception that inflation risks are skewed to the downside. Positive economic surprises could lead downside risks to narrow, but ageing expansions and secular stagnation worries suggest this is unlikely, limiting any future pick‐up in bond yields.

     

Blame the baby boomers for depressed wage growth

• ? While ‘blame’ may sound harsh, the reality is that in an ageing society, the over‐60s accounting for a bigger share of the workforce equals lower wage growth. This is particularly pertinent for the eurozone right now with the baby boomer generation entering the last phase of their working life. Our analysis shows that the very sizeable over‐60 cohort is depressing aggregate wage growth by up to 0.3 ppts annually. That may also help explain why inflation is still subdued .
• ? European policy makers are scratching their heads about why wage growth has not picked up in line with economic growth over the past two years. For the ECB this is relevant as it tries to understand why inflation remains low. While much of the debate centres around unemployment and the Phillips curve, this article looks at the impact of an ageing society on wage growth.
• ? Even though this is more of a structural, rather than a cyclical, perspective, it is particularly important for the eurozone economies right now, because the large post‐World War II baby boomer generation is strongly pushing up the elderly share of employment (measured as those aged 60 and above). As the share of the over 60s in total employment grows, so does their weight in aggregate wage growth.
• ? The crucial point is that wages increase with age, but at a decreasing rate, and stay essentially flat above 55. The main reasons are that the elderly invest much less in continued education and are less inclined to switch to better‐paying jobs.
• ? Our analysis shows how substantial the negative impact of an ageing workforce is on wage growth in the eurozone. By simulating an alternative demographic scenario, we estimate that wage growth in 2015–17 would have been 0.3 ppts per year higher had it not been for the ageing baby‐boomers. Similarly, forecasts for 2018–20 not accounting for the baby‐boomers may overstate wage growth by some 0.2 ppts or more annually.

     

Why deflation may be a bigger risk than inflation

• ▀ Concerns about high inflation in the medium term are in our view overdone. In fact, we think the bigger risk is some economies sliding into deflation, due to the coronavirus pandemic's long-lasting negative impact on demand, which will intensify existing global disinflationary trends.
• ▀ We do not think the recent acceleration of monetary growth will lead to rapid inflation, despite the strong historic relationship between the two. The current monetary growth is taking place in extremely unusual circumstances, which may alter the usual link with inflation, and may also be temporary.
• ▀ Meanwhile, most market-based measures of deflation risk have risen recently – in some cases to historic highs. Some household surveys point to slightly higher inflation, but this may reflect short-term volatility in prices for key goods.
• ▀ A slide into deflation would have a variety of negative consequences, including feeding back into private saving, weakening growth, and potentially raising debt sustainability issues in some economies.

     

Tighter labour markets to finally lift global wages

• Wage growth has been relatively slow since 2007 in advanced economies, but an upturn may be in sight. Slow productivity growth remains an issue but tighter labour markets make a positive response by wages to rising inflation more likely and there are signs that compositional and crisis‐related effects that dragged wage growth down are fading – though Japan may be an exception.
• Overall, our forecasts are for a moderate improvement in wage growth in the major economies in 2017–18, with the pace of growth rising by 0.5–1% per year relative to its 2016 level by 2018 – enough to keep consumer spending reasonably solid.
• Few countries have maintained their pre‐crisis pace of wage growth since 2007. In part this reflects a mixture of low inflation and weak productivity growth, but other factors have also been in play: in the US and Japan wage growth has run as much as 0.5–1% per year lower than conventional models would suggest.
• The link with productivity seems to have weakened since 2007 and Phillips curves – which relate wages to unemployment – have become flatter. A notable exception is Germany, where the labour market has behaved in a much more ‘normal’ fashion over recent years with wage growth responding to diminishing slack.
• ‘Compositional’ factors related to shifts in the structure of the workforce may have had an important influence in holding down wage growth, cutting it by as much as 2% per year in the US and 1% per year in the UK. There are some signs that the impact of these effects in the UK and US are fading, but not in Japan.
• The forecast rise in inflation over the next year as energy price base effects turn positive is a potential risk to real wages. But the decline in measures of labour market slack in the US, UK and Germany suggests wages are more likely to move up with inflation than was the case in 2010–11 when oil prices spiked and real wages fell.

     

Overview: Strategic human resource management in five leading firms

This article synthesizes findings from five case studies conducted in firms known to be leaders in the management of people. We drew three broad conclusions:

• 1 The foundation of a value‐added HR function is a business strategy that relies on people as a source of competitive advantage and a management culture that embraces that belief;
• 2 A value‐added HR function will be characterized by operational excellence, a focus on client service for individual employees and managers, and delivery of these services at the lowest possible cost; and
• 3 A value‐added HR function requires HR managers that understand the human capital implications of business problems and can access or modify the HR system to solve those problems.

© 1999 John Wiley & Sons, Inc.     

Japanese women in management: Where are they?

The two economic superpowers, Japan and the United States, have different patterns of contribution by their female populations. The authors travelled to Japan to research and observe firsthand the contributions made and the roles filled by the Japanese female. A comparison of costs and benefits to each country created by the different roles of females is discussed. Questions such as the following are explored:

• Does the Japanese female contribution to child-rearing and nurturing of new coporate members outweigh her lost contribution to the workplace?
• Has the United States gained or lost ground economically due to women integrating the American workplace?
• Will Japanese women be content to be on the fringes of the economic system for another generation?
• What is the likely future scenario for the workplace for both economic superpowers?

     

Can Germany save itself from negative rates?

• German inflation looks set to rise in response to diminishing slack in the economy. But this will be a mixed blessing for those in Germany hit by negative policy rates and ECB asset purchases. Higher German inflation may eliminate the need for further ECB policy action, but it is unlikely to trigger imminent rate hikes. As a result, the rise in inflation will merely lower real interest rates for German savers.
• Structural cross‐country differences mean that the ECB is better able to hit its inflation target when the peripheral economies rather than Germany are the region's growth engine. A key reason for this is that the German Phillips curve is flat by Eurozone standards, meaning that policymakers need to work hard to generate sufficient inflation in Germany to offset sustained weakness elsewhere.
• Despite this, there is evidence to suggest that the tightening labour market is beginning to push German wage growth higher. And if productivity growth remains subdued, this will lead to faster unit labour cost growth.
• While firms could respond by lowering their margins, the strength of household spending suggests that firms may be more inclined than in the past to pass on higher costs to consumers.
• In all, we expect German inflation to rise more sharply than elsewhere to around 2% in 2017, meaning that the ECB will not unveil further unconventional policy support. But it would take much sharper rises in German wage growth and inflation than in our baseline forecast to prompt the ECB to bring forward interest rate rises.

     

The short‐term impact of Brexit

• A scenario run on the Oxford Global Model suggests that Brexit would leave the level of UK GDP 1.3ppt lower by Q2 2018 compared with our baseline forecast that the UK votes to stay in the EU. A vote to leave would mainly shock business confidence but consumers would be adversely affected too. Exporters in price‐sensitive sectors would benefit from a weaker exchange rate.
• Market pricing suggests that sterling could initially fall by around 15% before recovering some of its losses, while the heightened uncertainty would also be expected to drive a sharp drop in equity prices in H2 2016.
• Brexit would present something of a dilemma for policymakers. While a weaker pound would cause inflation to initially spike upwards, we would expect the MPC to look through this and cut Bank Rate in order to support activity. And with the UK likely to retain its reputation as a safe haven, this would also see gilt yields stay lower for longer.
• Weaker growth would also put the Chancellor in breach of the fiscal mandate, though we would expect him to plead extenuating circumstances, rather than tighten policy and potentially exacerbate the slowdown.

     

Supply surprise is a ‘nice’ reprise

• ? This year advanced economies have enjoyed a rare positive supply surprise: output is higher than expected and inflation is lower. The initial China‐related boost not only proved to be a great antidote to secularly weak global demand, but it has also engendered unexpected global momentum and a benign inflation response. As a result, 2016–17 resembles a mini‐reprise of the “nice” 1990s, a non‐inflationary, consistently expansionary decade.
• ? The global momentum has been propelled by a strong international trade multiplier. This has contributed to strength in several advanced economies, particularly the Eurozone. We expect global growth in 2018 to be bolstered by US fiscal stimulus as the impulse from China fades.
• ? It will remain “nice” in 2018, albeit in the context of weak secular trend growth. We expect the benign output‐inflation trade‐off to continue. Several of the factors that are underpinning low inflation and unemployment as well as weak wage growth are likely to be present for some time.

     

No-trade-deal Brexit would lower GDP by 1ppt by 2022

• ▀ A no-trade-deal Brexit would result in UK GDP being 1ppt lower than our baseline forecast at the end of 2022. Increased trade frictions and a negative reaction from financial markets would more than offset looser policy settings.
• ▀ Even if an FTA is agreed, trade between the UK and EU will be subject to new customs and regulatory trade barriers. If a trade deal is not agreed, tariffs will also be levied on UK-EU trade, while non-tariff barriers are likely to be higher.
• ▀ A no-trade-deal outcome would almost certainly see the BoE undertake further quantitative easing. A further, temporary, loosening of fiscal policy would also be likely, with higher government investment an obvious option.

     

Alternative approaches to decreasing maternal anemia: identifying the need for social marketing strategies to promote iron-folic acid supplementation in the Peruvian highlands

• Anemia is the most common health condition affecting women during pregnancy, and leads to adverse health outcomes of both the mother and infant. Despite national fortification and supplementation programs in Peru, 21% of women of reproductive age are anemic. Adherence to iron-folic acid (IFA) supplements in this vulnerable population is low and influenced by side effects of the tablets, such as nausea and vomiting, caused by the generic formula of the tablets. The trust within a patient–provider relationship and the provider's competency at effective counseling increases women's adherence, whereas late entry into prenatal care and government regulations limit early initiation of IFA supplementation. It is important for partners to support women during supplementation and participate in their prenatal care. Social marketing strategies targeting the product, price, place, promotion, and policy of IFA supplements should decrease barriers to women's ability to obtain IFA tablets and adhere to the supplementation regimen and reduce iron deficiency maternal anemia. Public health practitioners implementing supplementation programs should consider different behavioral influences at the intrapersonal, interpersonal, and community levels that affect adherence.

Copyright © 2012 John Wiley & Sons, Ltd.     

Looser financial conditions carry a sting in the tail

• ? Against a long list of headwinds facing the economy, one apparent saving grace has been a relaxation in financial conditions since the start of 2019. Our UK Financial Conditions Index presently sits at its loosest in 18 months.
• ? Some of the lowest real interest rates in the world and a currency trading close to the weakest on record represent, all else equal, are powerful reflationary forces for the UK. But the fundamental cause of loose conditions ‐ the rising no‐deal Brexit odds ‐ mean they carry a sting in the tail.
• ? Conversely, the likely rise in market interest rates and sterling that would follow our expectation of a Brexit deal implies an overall positive for the economy could be dampened by tighter financial conditions.

     

Improving media campaigns promoting physical activity: the underutilized role of gender

• As the obesity epidemic worsens in the United States and globally, resources are increasingly being allocated to address this public health threat.
• Media campaigns promoting physical activity are receiving funding from government and private sources, and some of these campaigns have achieved modest success. Still, more can be done to increase the effectiveness of these campaigns.
• Drawing on facets of consumer behavior, psychology, and public policy, this work represents a cross‐disciplinary theoretical analysis suggesting that the effectiveness of media‐based campaigns promoting physical activity could be enhanced by making use of gender‐specific advertising.
• Research is reviewed suggesting that gender differences in information processing styles and values lead to gender‐specific responses to media campaigns.
• Recommendations are made to help practitioners improve physical activity campaigns by crafting advertisements that specifically appeal to the unique preferences of each gender.

Copyright © 2007 John Wiley & Sons, Ltd.