ILO warns of higher unemployment in Latin America and Caribbean

Monday, December 15, 2014 | 8:37 AM    

BRIDGETOWN, Barbados (CMC) – A new report by the International Labour Organization (ILO) has found an “unusual pattern” in this year’s urban employment rate in Latin America and the Caribbean, which continued to fall despite warning signs of economic slowdown.

The ILO report titled “Labour Overview for Latin America and the Caribbean 2014,” noted that the region’s urban unemployment rate may reach 6.3 per cent in 2015, which means that there will be some 500,000 more without jobs.

“There are warning signs,” said Elizabeth Tinoco, the ILO’s regional director. “The concern is that we are creating fewer jobs despite unemployment remaining at a low level,” she added.

Although unemployment has not risen due to this slowdown in growth, there has been a sharp reduction of new jobs reflected in the employment rate, which fell by 0.4 percentage points to 55.7 per cent in the third quarter of 2014.

“This means that at least one million (fewer) jobs have been created,” Tinoco said.

The ILO said that this “scenario of uncertainty” comes after a decade in which the region enjoyed significant economic growth. The unemployment rate dipped to record lows and allowed for a higher quality of jobs.

The urban unemployment rate of young people dropped from 14.5 per cent to 14 per cent but still remains between 2 and 4 times higher than that for adults. What’s more, the unemployment rate for women is 30 per cent higher than that for men, and 47 per cent of urban workers work in the informal economy.

“Many people who temporarily left the workforce in 2014 will return to search for a job next year, together with young people entering the labour market. The region will have to create nearly 50 million jobs over the coming decade, just to offset demographic growth,” Tinoco said, adding “we are talking about almost 15 million people unemployed.

“So we have to face the huge challenge of rethinking strategies to push growth and a productive transformation of the economy to foster economic and social inclusion through the labour market,” Tinoco said.

The ILO is calling on countries in the region to prepare for the possibility of a labour market which has to take specific measures to stimulate employment and protect individual incomes.

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ILO warns of higher unemployment in Latin America and Caribbean

Going for a higher grade

LAURENT ‘Tippy’ Alfred was only six years old when reggae superstar Bob Marley died in May 1981. Despite his youth, he grasped the occasion’s magnitude and developed an enduring passion for reggae music.

Tippy is founder and principal of I Grade Records, located in St Croix, one of the territories that comprise the United States Virgin Islands. The company is one of the leading sources for reggae in that region.The 39-year-old producer started the company in 2001 and has worked with a number of acts from St Croix, including the Midnite band, and singer Danny I.I Grade has also produced songs and albums by artistes from neighbouring St Thomas, the best known being singers Pressure Buss Pipe and Niyorah.While soca and hip hop are popular on his island, Tippy says “roots-reggae has always been a big part of our culture”. The sound that Marley made universally appealing during the 1970s is also the focus of I Grade’s 47-album catalogue.Midnite, a quintet led by Antiguan brothers Vaughn and Ron Benjamin, is the label’s flagship act with nine albums. Their latest production, Beauty For Ashes, is scheduled to be released in February.Tippy speaks highly of Vaughn Benjamin, the younger of the brothers.“He’s probably the most prolific songwriter in reggae. He’s got so much to say.”Though not many Jamaican acts performed in St Croix when he was a boy, Tippy says that never stopped him from discovering militant bands like Steel Pulse and cutting-edge productions of Jamaican roots luminaries, including Augustus Pablo, Yabby You and King Tubby.The St Croix reggae scene has grown considerably in the last 10 years, thanks to the emergence of domestic acts like Midnite and WSTX FM 100, a 24-hour reggae radio station.For all that progress, Tippy hopes I Grade will spread its wings beyond the US Virgin Islands.“We are never satisfied. One of the things we are looking for is stronger links to the Jamaican market,” he said.I Grade has attempted to do just that. Tippy visited the Jamaican capital Kingston this year and recorded at the Marley family’s Tuff Gong studio with neo roots-reggae singer Jah9 and drummer Style Scott of the famed Roots Radics band.There is no let-up for Lauren ‘Tippy’ Alfred and I Grade Records in 2014. In addition to Beauty For Ashes, albums by Pressure Buss Pipe and Jamaican singer Lutan Fyah are expected to be released in the first quarter of the year.

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Going for a higher grade

Grass-roots Football Programme moves to a higher level

Sport

Saturday, September 14, 2013

The Digicel/Jamaica Football Federation (JFF) Grassroots Programme moves to a higher level when the 18th festival moves to the Three Hills Community Football field in St Mary today.When the JFF announced the programme, which is aimed at introducing the rudiments of the game to children aged 6-12, it indicated that the programme would have four components:1 The staging of festivals in all parishes, targeting 100 children at each. To date, 17 festivals have been held with over 2,000.2 The staging of coaching education workshops aimed at teaching coach educators, at the parish level, the best means of imparting the basics of the game to this age group. To date, over 500 coach educators across the island have been involved in these workshops.3 The appointment of Grass-roots coordinators in each parish. All parishes have recently appointed a Grass-roots coordinator.4 The provision of equipment to the parishes to facilitate a continuous Grass-roots programme at the parish level.Today, the first stock of equipment will be handed over to the St Mary FA at the end of the festival, which is scheduled to begin at 1:30 pm. It is expected that the parishes will use the equipment to have small festivals.The JFF had made representation to FIFA for some assistance with Grassroots equipment and FIFA recently approved an allocation to the JFF.

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Grass-roots Football Programme moves to a higher level

Step-up bonds: Achieving higher risk adjusted returns

A step-up bond is simply a bond that has a coupon which increases by specified amounts over time. The coupon on a step-up bond increases at regular intervals until the maturity date. The coupon rates, their rate of increase, and the terms and conditions governing the instrument are established at the point of issuance.

Let’s say an investor purchases a five-year step-up bond from Company A. This step-up bond has a rate of three per cent for the first three years and five per cent for the last two years.BenefitsA step-up bond provides a fixed stream of income to an investor. This reduces some of the uncertainty inherent in standard variable rate notes and allows the investor to plan his finances for the future with greater accuracy. Essentially, these bonds minimise interest rate risk to the investor over time.These bonds were very popular at the beginning of the global recession as investors sought to hedge against the decline in economic activity. Step-up bonds are issued by Government agencies as well as private corporations. Weak or just below investment grade corporations issue step-up bonds as a way to encourage investors to purchase their debt in spite of a less than perfect financial position. For example, Anheuser-Busch InBev NV (rated A by S&P), the world’s largest brewer, issued step-up bonds in 2010 with a condition that interest increases by 25 basis points for every one rating notch the company is cut below investment grade, up to a maximum of 200 basis points.However, US Government Sponsored Enterprises and Federal Government Agencies also issue these instruments to provide investors with more attractive rates of return. This debt is rated AAA by Moody’s and Fitch, and is implicitly backed by the US Government and can provide investors with higher risk adjusted rates of return.Downside risksMost step-up bonds have embedded call options. A callable bond gives the bond issuer the right to purchase the bond back from the bond holder before the maturity date. Issuers are more likely to call bonds during periods of low interest rates. This creates an element of reinvestment risk as investors may have to reinvest the proceeds from their redeemed bond at a lower rate.When to invest in themStep-up Bonds are particularly attractive in low interest rate environments. The idea is that as interest rates increase so too will the coupon on the bond, but at predetermined intervals. If short-term interest rates do not increase in the near term then the bond continues to offer attractive rates of return and when the step-up occurs.OpportunityStep-up bonds issued by US Government agencies are an effective tool which can be used to obtain higher rates of return. The slightly more intricate structure increases the coupon, but on an instrument of investment grade credit quality.Leverage can be a beneficial tool that can be used to further enhance returns. Let’s say an investor purchases US$100,000 of a five-year step-up bond from Company A. The initial coupon on this bond is three per cent per annum. The investor could borrow up to 80 per cent of the value of the bonds or $80,000 and use $20,000 of his/her equity to purchase $100,000 of the bonds. This allows the investor to earn a return on equity of 11 per cent per annum.These strategies and instruments can be employed to maximise the return on your investment portfolio. However there are numerous risks that one must consider before pursuing these types of activities. Contact an investment advisor to help you assess the risks and benefits of these instruments.Dave Cameron is Vice President — Securities Trading at Sterling Asset Management Limited. Sterling provides medium to long-term financial advice and instruments in US and other world market currencies to the corporate, individual and institutional investor. Feedback: If you wish to have Sterling address your investment questions in upcoming articles, e-mail us at: info@sterlingasset.netStep up bonds carry coupon rate which increases by specified amounts over time, or based on certain conditions. For example, Budweiser maker Anheuser-Busch InBev NV issued step up bonds in 2010 with a condition that interest increases by 25 basis points for every one rating notch the company is cut below investment grade. (PHOTO: DAQUELLA MANERA)

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Step-up bonds: Achieving higher risk adjusted returns

Clearance fees, higher prices hit used-car dealers

Business

Shelly SalmonFriday, August 09, 2013

JAMAICA’S used-car dealers are reporting a decline in sales, largely due to the increase in clearance fees and prices from suppliers in Japan.Linvalle Hamilton, president of the Jamaica Used Car Dealers Association (JUCDA), says that between January and now, costs are up 20 per cent when compared to the same period last year.He said the slump is most evident in sales of its most popular car — the Nissan Tiida, models of which were sold for under $1 million last year but now fetch prices of up to $1.2 million each.“The industry faced an increase in duty fees on vehicles in excess of 2000CC, resulting in importers paying almost $70,000 in administrative fees to the Jamaica Customs in some cases,” Hamilton told Caribbean Business Report.Meanwhile, he said dialogue continues with Government to resolve issues concerning the age of some vehicles from Singapore, which he said are determined in the licences admitted by the Government.“We are still in dialogue with the Government regarding the issue,” he said, noting that the association expects that the results of the discussions will be favourable for both the dealers and consumers.With regards to complaints that manuals for some imports were printed only in Japanese, he said that issue, too, is being worked on.“Previously, the imports were sourced through New Zealand. This is not the case anymore as vehicles are imported directly from Japan,” he said, noting that local dealers are working with their counterparts in Japan to correct the matter.

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Clearance fees, higher prices hit used-car dealers

US stocks end week higher

Business

Sunday, August 04, 2013

NEW YORK, USA — THE stock market is closing slightly higher after erasing an early loss.The Dow Jones industrial average rose 30 points, or 0.2 per cent, to close at 15,658 Friday. It had been down as much as 69.The Standard & Poor’s 500 rose three points, or 0.2 per cent , to 1,709. The Nasdaq rose 13, or 0.4 per cent, to 3,689.The Dow closed out its sixth straight weekly gain.A government report that hiring slowed last month stalled the market in early trading Friday, but indexes recovered throughout the day.The government reported that 162,000 jobs were created in July, fewer than economists expected and the least since March.The number of jobs added was the lowest since March and well below the 183,000 economists polled by FactSet were expecting.Brad Sorensen, Charles Schwab’s director of market and sector research, said the jobs report was “moderately disappointing”.“That tepid growth we’ve seen, (the economy) not being able to reach escape velocity, continues to be the story,” Sorenson said.Investors have been watching economic reports closely and trying to anticipate when the Federal Reserve will start easing back on its economic stimulus. The central bank is buying US$85 billion in bonds every month to keep long-term interest rates low and encourage borrowing.

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US stocks end week higher

PHOTO: Higher ground

News

Wednesday, July 10, 2013

Asuncion, Paraguay — Residents transport their belongings to higher ground, away from their flooded homes in the Santa Ana neighbourhood in Asuncion, yesterday. Paraguayan officials said that about 60 000 people have been evacuated in recent days due to flooding caused by days of torrential rain, resulting in the rising of the rivers Parana and Paraguay. (Photo:AP)

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PHOTO: Higher ground

Stocks head higher for fourth day

NEW YORK, USA – INVESTORS yesterday bought companies that fare best when the economic outlook is bright.

All major stocks indexes rose, but gains were led by the riskier parts of the market. The Russell 2000, an index of small-company stocks, climbed for a fourth straight day. The Dow Jones transportation average, seen as a leading indicator for the broader economy, also jumped.The Dow Jones industrial average rose 75.65 points, or 0.5 per cent, to 15,300.34 The S&P 500 index gained 11.86 points, or 0.7 per cent, to 1,652.32. The Nasdaq composite rose 19.43 points, or 0.6 per cent, to 3,504.26.The gains suggest that investors are getting more confident about the outlook for the US economy. In the first half of the year, stock markets were powered by the safer companies that paid large dividends.“When you see that leadership from the smaller caps that’s probably a good sign overall for the bigger blue chips to potentially follow suit,” said Ryan Detrick, a senior technical strategist at Schaeffer’s Investment Research. “People are leaving the more defensive areas.”The Russell 2000 rose eight points, or 0.9 per cent, to 1,018.05. It has gained 4.2 per cent in July and is moving deeper into record territory. The index has risen more this year than its large-company counterparts, the Dow Jones industrial average and the Standard & Poor’s 500 index.The Dow Jones transportation index rose the most among major US indexes yesterday, led by strong gains for Alaska Air Group and FedEx.The index jumped 148 points, or 2.4 per cent, to 6,446. Alaska Air Group rose seven per cent after it forecast an additional US$50 million a year in revenue from increased fees. FedEx rose six per cent on speculation that William Ackman’s hedge fund, Pershing Square, could invest in the company.Wall Street is also turning its attention to corporate earnings. The second-quarter results should give traders and investors fresh fodder after they spent most of June trying to figure out where the Federal Reserve was headed with its economic stimulus programme.Along with the quarterly results, investors want to see how confident companies are about the rest of the year, said Cam Albright, director of asset allocation for Wilmington Trust Investment Advisors.Major US stock indexes have notched a series of all-time highs this year on expectations that earnings will remain at record levels.“A lot of what the market has justified its advances on is a strong second-half for the economy and a strong second-half for earnings,” said Albright. “It’s important that we see verification of that.”Alcoa was the first major company to announce second-quarter results. The aluminium maker late Monday reported a second-quarter loss that wasn’t as big as financial analysts feared. The company benefited from strong demand for aluminium used in autos and aeroplanes, although that was offset by weaker prices.

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Stocks head higher for fourth day