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TRADE WARS
South African wage deal aims to save textile jobs
by Staff Writers
Johannesburg (AFP) Oct 13, 2011


A novel wage agreement for South African textile workers will lower salaries for new hires by 30 percent, in a bid to save the industry from cheaper Chinese competition.

The deal is being closely by watched by other industries in a nation where unemployment is mired around 25 percent. According to unofficial estimates, using a broader definition, it is as high as 40 percent.

President Jacob Zuma has promised to create five million jobs by 2020, and his government has already indicated that lower wages could be needed to reach that goal.

That's raised the hackles of his allies in the labour movement, who generally have sought to push for better conditions for workers who already have jobs -- which businesses say has discouraged creation of new ones.

Under the deal, the Southern African Clothing and Textile Workers' Union agreed that new hires will be paid a minimum 427 rands ($55, 43 euros) a week, about 30 percent less than current levels.

In exchange, employers have promised to create 5,000 new jobs within three years.

"This is not an unreasonable intervention, in a country like ours," said Andre Kriel, the union's secretary general.

Employers will not be allowed to sack existing workers in order to replace with lower-paid new hires, he said.

South Africa's textile industry is already battered, shedding half its jobs over the last decade.

Some textile mills have already moved to cheaper neighbouring countries like Lesotho, and others have threatened to follow suit, particularly in eastern KwaZulu-Natal province.

In that region, businesses already pay qualified workers as little as 200 rands a week, Kriel said.

But the industry is now in triage.

South Africa shed nearly 400,000 jobs last year, despite an economic boost from hosting the football World Cup.

For textiles, South Africa has already been swamped by cheaper Chinese imports, which accounted for 86 percent of the market in 2004, before quotas were scrapped.

South Africa's own clothing exports have tumbled, especially to the United States, dragged down by a strong rand and then the economic crisis in 2008.

Aside from the costs, South Africa has a problem with production capacity, which has dropped as businesses have folded.

South Africa's labour force also compares poorly with other countries. In the World Economic Forum's Global Competitiveness rankings, the country stands at 95th for labour efficiency.

The same report puts South Africa's labour hiring and firing practises as among the most rigid in the world, while putting labour-employer relations as among the worst on the planet.

"I'm still buying in South Africa, especially for the small quantities that I need for the next week or the next month," said Dudley Kaye from Duck Hook Marketing, which produces shirts, caps and bags as corporate gifts.

"But the people here are very unproductive and slow, the quality is not so good," he told AFP. "The Chinese products are cheaper, the quality is better and the embroidery technology is nicer."

He said the wage deal will help small businesses compete against imports, especially since the rand has weakened in recent weeks.

"It is unfortunate for the people, but half a loaf of bread is better than no bread."

Other industries have already urged their unions to follow suit, with the South African Chambers of Commerce and Industry hailing "the brave example" of the textile deal.

The National Employers Association of South Africa on Monday proposed lowering entry-level wages for metalworkers by 50 percent, noting that the industry lost nearly a quarter of its 450,000 jobs since the recession in 2009.

"There is a long way to go" before other industries adopt such a scheme, said labour analyst Andrew Levy.

"It is terribly low wages but it's better than unemployment."

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Moody's downgrades LG's outlook to negative
Seoul (AFP) Oct 13, 2011 - Credit ratings agency Moody's on Thursday downgraded its outlook on South Korea's LG Electronics to negative, saying its position in the mobile phone business has weakened considerably.

Moody's Investors Service said in a statement that the outlook for LG's Baa2 issuer and senior unsecured debt ratings has been revised from stable to negative.

LG Electronics (LGE), the world's third-largest handset maker, is battling to turn around its loss-making handset operations, where it lags Samsung Electronics and Apple in offering high-margin smartphones packed with features.

LGE's mobile unit posted a record loss in the second quarter of 2010 due to a falling share of the booming global smartphone market.

Moody's said it expects LGE to face "a major challenge in significantly turning around the operating performances of its different business segments in the near term, given an uncertain global economy."

"We expect continued volatility in operating profits at LGE, reflecting partly the ongoing weakness in its handset unit and the intense level of competition," said Moody's senior analyst Annalisa DiChiara.

On Monday the company launched a new 4G smartphone with ultra-high-speed network technology based on Long-Term Evolution (LTE).

LGE will rely on the adoption of LTE smartphones and further gains in its 3D TV market share to restore profitability, but the achievement of both carries "significant execution risk", she said.

Despite some progress in the second quarter of this year, delayed launches for subsequent versions of its Optimus One model may hurt LGE's competitiveness in the third quarter and adversely impact earnings, Moody's said.

A recovery of its mobile division next year depends on the successful adoption of LTE and whether it can capture significant market share, the agency said.

"This will require aggressive action in view of the uncertainties surrounding the company's competitive positioning," it said.



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TRADE WARS
China's trade surplus narrows in September
Beijing (AFP) Oct 13, 2011
China's politically sensitive trade surplus fell to $14.51 billion in September as exports slowed sharply, hit by economic turmoil in the United States and Europe, official data showed Thursday. The data is likely to boost Beijing's argument for its control of the yuan currency but fuel concerns about the country's vast manufacturing sector, which employs millions of workers and has been con ... read more


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