What are some fallouts of Davos 2023?

The annual meeting of world leaders including business leaders, at the World Economic Forum at the Swiss resort at Davos, included the usual topics of Trade, Tech and Climate Change, but this year Davos had far reaching implications, hardly contemplated. 

Davos 2023 was the 53^rd meeting this year, with the Forum President Borge Brende giving the closing remarks on 21 January 2023, summarising with the words: “We can shape a more resilient, sustainable and equitable future, but the only way to do so, is together.” The UN Secretary General, Antonio Guterras stressed on 18^th January, “There was no perfect solution in a perfect storm.” The sense of unity was contained in the messages, from Alain Berset (President Swiss Confederation) to Sanna Marin (Prime Minister, Finland) and Andrzej Duda (President of Poland) - all of whom expressed their continued support for Ukraine. 

The need for collaboration is beyond Ukraine as global inter-world crises requires moral interlinked solutions, including supply chain disruption, with a looming global recession expected according to some economists later this year.

Kristina Georgieva, MD of IMF stated: “As we navigate an uncertain economic outlook about the future of work we need reskilling in order to prepare current and future workforces. 

Agriculture and Food, Cybersecurity, Forests, Digital Economy, Trade and Investment also featured in the discussions among business and other leaders. 

The Focus at Davos 2023                                             

The focus was on the tension between quality and speed of action. There is the war in Ukraine, which has sent energy and food prices soaring. The resulting inflationary pressures have ignited a global cost of living crisis, leading to social unrest worldwide.

According to The Guardian, China may be forced to make friends again with the West.

This was seen at Davos, with Beijing hinting it may adopt a less hostile approach. Vice President of China, Liu He appeared at Davos to “assure foreign investors that after 3 years of COVID-19 disruption, China was open for business”. Proof of the pudding was when he stated: “We have to abandon the Cold War mentality, we must open up wider and make it work better.” 

A number of themes also emerged from Davos. India’s Action, India’s Phenomenal Growth was reflected in responses from political and private leaders at Davos, this year. The Centre for Economic and Business Research (CEBR) has predicted India will become the Third $10 Trillion economy by 2035, thanks to its demographic dividend. This was also highlighted with top priority by India’s large delegation at Davos, during India’s current G20 Presidency until November 2023. 

What was not stated but is now seen happening after Davos 2023? 

About a quarter of the countries of the world are in debt, distress or on the brink of it. At Davos every one of the multilateral organisations that keep tabs on the financial fragility of poor countries did express concern on debt solutions. 

As countries are having trouble paying their debts amid slower global growth, rising interest rates, urgent action was canvassed. In the case of Argentina and Brazil we are told are wanting to amalgamate their currencies. A new currency, the Austral may be introduced, which it is hoped will be more stable than the Argentinian Peso. The similarities between Brazil and Argentina debt problem is only skin deep. Argentina’s debt was mostly external; Brazil’s is mostly internal. Both sought Debt Restructuring by the IMF. 

In the case of Sri Lanka both, India and China were “told to?” adjust with Sri Lanka in restructuring. India pledged confirmation of its willingness to extend financial assurances as well as freeze debt for two years. India stated in its communique: “We hereby confirm our strong support for Sri Lanka’s prospective EFF (Extended Fund Facility) Support Plan and commit to supporting Sri Lanka with Financial/Debt Relief consistent with restoring Sri Lanka Public Debt Sustainability under the IMF Support Programme ensuring that the Programme is fully financed as projected by IMF Debt Relief. It is to be provided by Export Import Bank of India”. 

China followed suit on 21` January 2023 and responded direct to Sri Lanka’s request on re-scheduling its Debt as a pledge to Bail Out by IMF, with an offer for a two year moratorium. 

Japan and the Paris Club have already confirmed their financial assurances. 

This gives Sri Lanka the potential for a total of $5 Billion that could be generated from these multilateral lenders. Davos was not the lever to this Bail out, it was World Public Opinion and Sri Lanka’s valid and reasonable request. 

Three Ways to Restructure Debt 

 “As to the debt problem itself, there are only three ways out:

1) An internal adjustment economically and politically within a nation, entailing a return to the            world free market system.

2) An assumption of bad debt loss by the lending institutions,if a country is unable to repay its            loans, or

    3) An assumption of risk on the part of the governments of creditor nations (and ultimately on their              taxpayers)". 

Victor Cherubim

The Right of Unions to take strike action

 Are Driver only operation (DOO) of Trains a risk to passenger safety? 

The UK rail safety regulator, the Rail Safety and Standards Board (RSSB) has stated that its research found no increased risks from driver-only operation. They state they have 30 years of data which they have analysed. We have found that the driver performing the task does not increase the risk to passengers at all. 

If this is the considered opinion, why is there such a hue and cry by the Rail Unions? The more militant RMT Union is accusing ASLEF, the Train Drivers Union of shafting a fellow Trade Union, by accepting a compromise. This is with particular reference to the industrial dispute involving franchise operator Mersey Rail and the RMT Union where removal of train guards is planned when new Stadler rolling stock is delivered in a couple of years’ time. ASLEF has negotiated an agreement with Southern Rail for replacements for Guards. 

Job security and Inter rivalry in Train Unions – Drivers, Guards and Station staffing? 

To a certain extent the division of labour which this dispute has created goes back to the times prior to privatising the Railways, by P.M. Margaret Thatcher, in the 1980’s. 

Of course, in a sense, safety is at risk, as women passengers on trains have over time complained of harassment on trains. The cameras on board have much to take care of this problem, with the Console in the Drivers’ Cabin able to monitor the passengers in carriages on the train. But, other than action being taken when the suspected incident is investigated at the next station, by Rail Station Staff and Transport Police, it seems, nothing earlier could be done, but alert the Train driver and Station Control? 

 What other action can be in place, for health hazards and security need more scrutiny? 

Train Franchise Companies around UK – modernisation vs passenger safety? 

But the bigger issue, is modernisation of railways. Train Franchise Operators and Network Rail the Consortium, want new technology in keeping with cost and progress. But it appears, Unions members of varied Unions, are in a time warp. They demand that jobs will be lost with Drivers Operated Only trains. Job preservation v Operator Cost-Benefit analysis?  

Unsurprisingly, the RMT union which represents Train Guards are not agreeable, at present willing to negotiate, but one that they have to accept and in effect justify and promote! The dispute is ongoing with little sign of a solution so far despite many RMT strike days.

In the meantime, public are moving on to the roads and other means of transport, a cost to environment? 

The Commons Select Committee on Transport and strike moderation? 

In view of the impasse between the Conservative Government of P.M. Rishi Sunak and the Unions, the Commons Select Committee on Transport invited the three Big Rail Trade Unions involved in strike disruption, over weeks, if not months since autumn 2022, Each Union presented their case to a Question/Answer Session last week before the Select Committee Panel at the House of Commons. It was attended by RMT, ASLEF and TSSA (Train Salaried Staff) Unions. Serious questions have still to be resolved as well as the threatened action by Government to bring in legislation to curtail the right to strike. 

ASLEF which represent train drivers and the infamous Southern Trains Rail franchise, where the most significant dispute over DOO has been taking place over a very long time period, had stated a settlement had been reached with Southern Rail, but were still in negotiation with other franchises, In effect, it looks as if, it buys them out of one dispute. 

What does a “Buy Out” mean in real terms? 

A “Buy Out” could seemingly not be a more appropriate phrase as they, the train drivers, have gained a 28.5% pay rise over 3 years! What’s more, we are told that other than in exceptional circumstances, a second safety trained member of staff (an On Board Supervisor or OBS) will be on board all Southern Trains. It appears that is not all but, an “alternative speak for a train guard”? 

Ironically, the Southern Train dispute was being propped up by the Department for Transport (DfT), who were seemingly out to break Trade Union refusal to accept more DOO trains. Well, it has cost the DfT in the end. Now, Train Guards with a different name but doing a remarkably similar job, will be in place? 

Dispute at Mersey Rail with RMT is still unresolved?

The dispute resolution on Mersey Rail is ongoing with RMT, who probably are motivatedto fight on, if their members will continue to back to prolong strike action.                                                                              

Is there public support for the “Right to Strike” action?

The Guards and indeed the RMT, seem to be holding the public support they have had since the dispute started as rail users, particularly female ones, want to keep an on-board a second person for customer safety reasons. Mersey Rail are only offering this facility on some trains, where problems and disorder seem more likely. On this basis, a resolution of the dispute would seem to hang on Mersey Rail extending the second on-board member of staff to all trains?

Seeing ASLEF and the RMT being caught in a “Divide and Rule type situation,” is very nfortunate. However, sadly Trade Unions too, do have the ability to act in very selfish ways, which they usually claim to be very much the opposite,

Restrictive practices by Rail Unions are not a thing of the past?

What happens in London Underground and around the country is at variance. As a Londoner, used to the Tube which runs without guards, I find it difficult to understand why the Mersey Metro needs them for “safety reasons”. Staff are on duty on central London station platforms during the ‘rush hour’ to control boarding and ensure that trains depart without delay, but we have no guards on the Tube trains, or on the Elizabeth Line in London.

What we are seeing is an example of the old restrictive practices from RMT? The difference on Southern is that the train can still be run if a guard is not available (for example, through sickness) whereas without this agreement, the train would have to be cancelled to the detriment of the passengers. 

Why the right to strike is an inalienable right? 

Passenger numbers on trains into London has dipped this year (probably as a result of the RMT strikes); any continuing decline calls into question the need for more investment in public transport, and hence jobs for RMT and ASLEF members. The RMT may not be seen as a progressive union, but they do have the fundamental “right to strike” and “safety of passengers,” in these disputes. The difficulty with Rail Franchise, is that they inherited restrictive practices of Unions, which they are having difficulty in modernisation with new technology. 

The Rishi Government has rushed in a “Minimum Safety Levels during Strike Action” Bill in Parliament on 10 January 2023. MP’s are due to debate the Bill at a second reading on 16 January, According to the Labour Opposition the proposed legislation will do nothing to end current disputes, instead it is vague and will give Ministers dangerous new powers. 

Positive noises about possible rail strikes resolution is heard in Government circles. 

But according to The Guardian, the new Bill is not only a provocation and a distraction. It is to tickle Labour to be on the back foot. It picks an entirely avoidable fight with Trade Unions across a number of industries, including Transport, Health, Nursing, Ambulance Drivers, Education, Fire fighters, Postal Workers as well as Civil Service Unions., on “what is right, and reasonable during strike action. Call it “Union Bashing” by another name.

Victor Cherubim

 

What goes up, must come down, said Isaac Newton?

What goes up, but never comes down, is a chord of music, your age. your crossword puzzle clue. But according to Isaac Newton's law,"the force of gravity," must always come down. 

Energy prices have shot up in recent months, but recent mild weather in UK and over Europe, according to The Guardian, is driving down wholesale gas prices. The milder conditions have reduced demand for heating and have contributed efforts by the Government, Business and particularly households, to cut their energy consumption and their bills.

Norway has helped the effort in UK to fill gas storage facilities with Liquefied Natural Gas (LNG) to reduce dependence on Russian gas.                                                           

Consolation for the hard pressed

The question on the minds of consumers is that if wholesale gas prices is sustained, consumers could reap benefits in a few months.

Britain has averted power cuts during one week of sub-zero cold snap in December 2022, without emergency measures. The rationale is that energy suppliers typically buy their Gas and Electricity in advance allowing them to fix some of their costs. This means wholesale price rises and falls are not immediately passed on to consumers. But, we cannot read much into this optimism.

How much have prices fallen?

On Wednesday, 4 January 2023, Gas price closed at 155p/per therm compared with 200p/per therm at start of the Russian invasion of Ukraine. 

Oil prices as the pumps have also come down with Brent crude $150 per barrel. But, this is no argument for delay of imposition of a “Windfall Tax” on oil companies. However, according to Exxon Mobil, such a tax would result in lower investment in fossil fuel extraction. What about Climate Change?

Noticeable change in mortgage rates and CPI

With the dawn of the New Year, mortgage rates which have increased exponentially over the past 12 months, peaked around 6.65% after previous Chancellor Kwarteng Mini Budget, have since come down to below 6% - 5.99% for a two year fixed mortgage and 5.78% for a 5 year fixed mortgage, When you consider a year ago in January 2022, it is miniscule.

The latest figures seem to suggest inflation has peaked as CPI fell to 10.7% in November 2022, from a 41 year high of 11.1% in October 2022.

What is the New Year tweaking?

“What goes up, must come down,” is a phrase often quoted by politicians, around the world. But just the other day, Halifax research has revealed that over the past 40 odd years house prices have gone sky high, making it impossible for young people wanting to get on to the property ladder in UK.

The days of owning a property in UK is beyond the reach of many who are unable to save enough in their working career to place the required 10% deposit for a house mortgage. The new mantra is “Shared Ownership” rather than outright mortgage.

The days of thinking of an Englishman’s home as his castle, is long over. Over the past years there has been a staggering +974% in house price increase seen since 1983.

Thus, while at present there is a drop in house prices in London due to cost of living pressures driven by higher food and energy cost, when viewed through a historical lens, a 10% or even a 15% drop over the next few months, would only represent a minor blip. House and Flats prices in London, in my opinion, would never ever reach a drop of more than 5% as house building has never met demand. We would very soon be competing with Europe, to be a nation of renters, not owners of property.

Victor Cherubim