Jobs Council Issues Growth Proposals, Acknowledges Dysfunction

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It's a vicious cycle: the economic downturn has helped to create political discord. Prolonged, political discord has hurt Americans' confidence in government. As a result, the economy suffers even more.

Confidence is a cornerstone of the latest report from the President Barack Obama's Jobs Council: "Taking Action, Building Confidence." In June, the council presented its first proposals, aimed at fostering immediate hiring. Now, the group has turned to larger macroeconomic issues. While the report issued today proposes broad initiatives intended to boost growth and restore economic confidence, like spending on infrastructure and encouraging foreign direct investment, it also acknowledges the U.S. crisis of political confidence: "[T]he Council believes that bipartisan action on this agenda in Washington—even on modest issues, to start—would boost confidence at this juncture and have a positive effect on our economy." Indeed, Americans' disenchantment with government can itself have the power to significantly slow the economic recovery.

[Read analysis of the September jobs report.]

The council, a diverse mix of 27 leaders, including Facebook COO Sheryl Sandberg, AFL-CIO President Richard Trumka, and GE CEO Jeffrey Immelt, who chairs the council, put together ideas that it believes can foster political agreement as well as job growth. "The Council has avoided politics, and focused on producing common-sense proposals that should attract broad-based support," a spokesman for Immelt said in an e-mail.

Gary Burtless, a senior fellow in economic studies at the Brookings Institution, believes that it is hard to argue with many of the council's ideas: "A lot of them of course would be excellent recommendations even if the U.S. had 4 percent unemployment and were growing at 3.5 percent a year."

However sensible the recommendations, Americans are pessimistic about Washington's abilities to pass job-creating measures. "I think there's little question that most people look at Washington, they see the dysfunction, [and] they say, 'We're not going to get any help from that direction,'" says Joel Naroff, president of Naroff Economic Advisors, a Pennsylvania-based economic consulting firm. A recent USA Today/Gallup poll shows that 67 percent of Americans believe the president and Congress are doing a "poor" or "very poor" job on dealing with America's problems.

Lawmakers' inability to reach consensus is again coming into sharp relief as the Senate prepares to vote on the President's jobs bill. Already foreseeing defeat at the hands of Republicans and perhaps a few moderate Democrats, the White House has formed a plan B: introduce the bill's proposals piece by piece.

In a speech at an IBEW training center in Pittsburgh today, Obama addressed the politics surrounding his jobs bill: "I think [Republicans would] have a hard time explaining why they voted no on this bill," he said, acknowledging that some Republicans may not approve it purely to prevent the White House from scoring a political victory. "This is not about getting me a win. That's why folks are fed up with Washington," Obama said.

Being "fed up" can hurt the economy in several ways, one of which is in a lack of consumer activity. When consumers see no chance of economic boosts on the horizon, they get timid, making very few or just very safe investments. The effect of a political crisis of confidence on the economy, says Naroff, is "a lot larger than people believe." He adds, "What we're seeing is sluggish spending not just from those people who have reasons to be sluggish [like the unemployed] ... but from the people who have the money to spend."

[See where the population of same-sex couples is growing.]

Even if Congress manages to push through some sort of job-creation legislation, the cumulative effects of harsh political messaging could cripple such a policy. With both parties having roundly declared each others' economic policies as potentially ruinous, says Naroff, any economic proposal that should happen to pass could create further economic worries among a significant share of the population. And a worried consumer is a hesitant consumer.

In addition, a pervasive, dark economic outlook can potentially make politics even more dysfunctional, as worried voters fall for poor economic logic, says Burtless: "I think when people don't have much confidence, then all of the nasty arguments that opponents to sensible policy make seem to make a lot of sense to people who are not particularly economically sophisticated," Burtless says.

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IMF cuts growth forecast for Asia

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13 October 2011 Last updated at 06:08 GMT The IMF says Asia faces a "delicate balancing act" with its economy The International Monetary Fund (IMF) has cut its growth forecasts for Asia over worries about eurozone debt and new fears for the US economy.

The IMF said risks for Asia were "decidedly tilted to the downside" because of these concerns over its two major export zones.

It said gross domestic product (GDP) growth across Asia would average 6.3% in 2011, and 6.7% in 2012.

In April, it had predicted close to 7% growth in both years.

The body warned about a risk of capital outflows from the region, and the possibility that oversees investors may reverse the large positions they have built in Asian markets since 2009.

In addition, inflation is still high in a number of Asian countries, the IMF said.

But it believes consumer prices could ease after peaking this year, as food and energy prices "gradually moderate".

The IMF also said that Asian policymakers were faced with "a delicate balancing act".

"They need to guard against risks to growth but also limit the adverse impact of prolonged easy financial conditions on inflation," it noted.

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UK economic growth revised down

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5 October 2011 Last updated at 09:15 GMT Industrial output fell less than previously thought The UK economy grew by 0.1% between April and June, less than the 0.2% estimated previously.

Output from the service sector grew by 0.2%, compared with the previous estimate of 0.5%, the Office for National Statistics (ONS) said.

However, industrial output fell by less than previously thought.

The latest GDP revision is likely to raise further questions about the strength of the UK's fragile economic recovery.

The ONS said household consumption fell by 0.8% in the three-month period.

'Continued expansion'

Separately, figures suggested activity in the UK's service sector increased in September.

The Markit/PMI survey recorded a figure of 52.9 for the month, up from 51.1 in August. Any figure above 50 indicates growth.

Figures from the same company published earlier this week showed surprise growth in the manufacturing sector.

"While the UK cannot insulate itself from what is happening to our major trading partners, with financial turbulence in the eurozone and a weaker outlook for global growth, the economy is still growing and this week's survey data for the manufacturing and service sectors are consistent with continued expansion," said a Treasury spokesperson.

The government has been criticised in some quarters for concentrating too much on cutting the budget deficit at the expense of stimulating growth.

However, the Treasury reiterated that it did not intend to hold back on its spending cuts.

"The government will stick to the deficit reduction plan which has won the UK credibility and stability, but the most important thing for the economy now is restoring confidence, which will depend on the eurozone decisively dealing with its problems."

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India's call centre growth stalls

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27 September 2011 Last updated at 00:08 GMT By Rajini Vaidyanathan BBC News, Mumbai India's call centre industry has grown rapidly in the past decade, but recent research suggests it's no longer the world's biggest. Some British and American companies are moving operations back home, so what's the future for Indian phone bashers?

In a classroom above a bus station in Mumbai, a group of students is being given a language lesson.

"B-U-T is pronounced as 'but', however P-U-T is pronounced 'poot', [like foot] not 'putt'," explains teacher Stephen Rosario, as he coaches the class in how to enunciate English words.

The students, who are mostly college graduates in their 20s, are doing vocal exercises: "Cake, Lake, Take," they chant in unison, trying to perfect their accents, as Mr Rosario waves his hand in encouragement.

The lessons here at the Let's Talk academy are designed to teach young Indians to speak with a "neutral-sounding accent" to train them for work at a call centre.

The sound of an Indian accent at the end of the customer service line has been frustrating for many consumers in English-speaking countries who have had difficulties understanding or being understood.

And some customers evidently just don't like accented speech even when they can understand it.

It can often lead to irate and heated conversations, which workers at the Indian end are also trained to deal with.

"First and foremost, I tell the students when the customer is angry do not interrupt... just listen.

"I teach them to maintain a soft demeanour - because when a customer is aggressive you mustn't retaliate," says Mr Rosario.

Continue reading the main story "We give them mouth and jaw exercises which correspond to vowels and consonants," says Aakash Kadim, owner of Let's Talk academiesMr Kadim says in order for workers to get rid of their regional Indian accents, they use sounds to build words"For instance, an Indian might pronounce water, 'Vatter' so we teach them how to say 'awe' sounds so they pronounce the word w 'awe' ter"They also teach various idioms, like "eye-opener" "bear the brunt" and "pull your socks up" to familiarise them with British EnglishIn the past decade, the Indian call centre industry has boomed, and along with it complaints from customers. Now dissatisfaction with accents has prompted some British and American companies to move operations out of India.

Spanish-owned bank Santander recently moved all its English-language call centre work back to the UK. Earlier in the year, insurance group Aviva moved some operations back to Norwich, while New Call Telecom recently relocated its customer service work from Mumbai to Burnley.

"Customers often find it difficult to communicate to someone sat out in India," says New Call Telecom's managing director Nigel Eastwood, who hopes to improve efficiency and call handling times as a result of the move.

New Call Telecom, and other companies that have made a similar decision, hope it will improve service, and be more cost-efficient. But some Indians are hurt by what they interpret as disdain for their accents.

'Abusive words'

At his desk in a busy call centre in Mumbai, Valerian (whose call centre name is "Andy") is talking to a customer back in England. Valerian has spent the past 18 months wearing a headset and a microphone to talk to people in their kitchens and living rooms in the UK.

"Sometimes we're just calling to help people but... they abuse us and that's really upsetting because we're just here to do our job," he says.

Some firms have moved operations back home

"I've had some abusive words thrown at me, but it's fine," says Michael, another worker at the centre. "I'm used to it now."

But the call centres are facing other pressures too. A job in a call centre in India is no longer as prized as it used to be, says Aakash Kadim, the owner of the Let's Talk academies.

"A call centre today is no longer a prestigious career here in India. Initially you wanted to get into the call centre industry to make quick money," he says. Over time, young graduates have become more aware of the downsides, such as night shifts and lack of career progression.

Mr Kadim says the number of people hired into jobs through his academy has fallen drastically in recent years - he now recruits hundreds of students annually rather than tens of thousands.

The rising cost of living is also pushing up the price of running a call centre in Indian cities, including Mumbai and Delhi, where rising interest rates and inflation are having an impact on property prices, which is giving South East Asian countries an edge.

India now faces stiff competition from the Philippines, according to recent research from IBM. The study for the Contact Center Association of the Philippines estimates that 350,000 Filipinos work in call centres, compared with 330,000 Indians.

But India's growing economy could provide other opportunities, says Akil Nabilwala, who owns Altuis services, a call centre operation in Mumbai. With more Indians now owning cars, credit cards and mobile phones there is a growing domestic market that has a need for call centres.

"Indian companies have taken up a lot of the slack from companies that stopped outsourcing working from the US and the UK.

"They have now started doing a lot of domestic work. Customer service has become a lot more important to companies over here and they don't mind paying for it," he says.

Falling property prices and the recession were other reasons New Call Telecom decided to pack up operations from India to England.

But the Indian economy is still growing fast, and is likely to keep its call centres in work for years to come.

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Analysis: Obama jobs plan strengthens growth prospects

United States President Barack Obama arrives to address a joint session of Congress on Capitol Hill in Washington, September 8, 2011.

Credit: Reuters/Jason economy Editor ReedBy Stella Dawson, U.S.

WASHINGTON | Fri 09/09/2011 12:41 EST

WASHINGTON (Reuters)-the jobs of President Barack Obama package could lift economic growth by one to three percentage points in 2012, add more than one million jobs and reduce the unemployment rate at least half a percentage point, judging by initial estimates.

Not exactly he can deliver the "jolt" Obama said in his speech to Congress Thursday night, but it would be enough to make a difference.

The basic idea is to give sufficient impetus to get recovery stop on the hunchback where families, banks and businesses have paid more than their debt loads and regained the confidence to start spending, loans and hire again.

Once demand picks up, the private sector will kick in and start hiring, and tax the props may disappear.

He would deliver economic medicine prescribed in recent weeks by Federal Reserve Chairman Ben Bernanke and the International Monetary Fund to prevent a worrying slowdown in global economic growth into recession.

Treasury Secretary Timothy Geithner also ensure their officials finance partners in the G7 meeting of leading industrial Nations in Marseille on Friday the United States is pulling its weight.

The wild card is of course if a Republican dominated House of representatives will agree with the complete package of $ $447 billion, a prospect unlikely given his criticisms that the stimulus program $ $830 billion in February 2009 was unable to deliver the takeoff of the economy and added to the huge budget deficit.

The American economy is so 2007 scars implosion of the housing credit, the bank failures resulted in 2008 and the deepest recession in 70 years that he's taking a long time to recover and create jobs.

"What you come up is that there is no silver bullet, no magic formula that this President or any person may propose that would bring unemployment below 5% next year," said Joel Prakken, Macroeconomic Advisers Chairman, economic modeling firm in St. Louis.

"He has to come from the private sector and for which you have to work with the slack with the housing crisis is repress aggregate demand," he said.

This suggests that the programme of work of Obama, that would probably serve as a palliative, not a cure, leaving room for the Federal Reserve provide more monetary stimulus to prevent the economy returned to fall out of recession.

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Analysts in the Capital Economics estimated that the Obama plan is equivalent to 3% of GDP of the United States and must be sufficient to significantly increase the growth of 2012 if fully passed by Congress.

The biggest single impetus could come from a reduction of $ 250 billion in payroll taxes. Obama proposes to extend an existing 2 percent cut in payroll tax and increase its size to 3.1% for employees and adding a hack for employers.

"These reductions in payroll taxes are the proposals that have the greatest chance of being approved by Congress because it will be more difficult for Republicans to vote against the proposed tax cuts," said Paul Ashworth, Chief Economist of the U.S. economy of the Capital.

Tax cuts could add as much as $ 375 billion in economic output for the u.s. economy of $ 14 trillion, based on Congressional Budget Office estimated in August, the economic impact that fiscal stimulus programs can have on GDP.

But not all that would be money new impetus, since a cut payroll taxes of $ $112 billion is already in force and would simply be extended. In addition, the overall impact could be reduced because it does not target lower income workers.

"Gives money disproportionately people at the top of the income scale. Higher income individuals are more likely to save money, they don't need to spend it in essence, therefore, the actual impact is minor, "said Roberton Williams, senior fellow centrist Brookings Center for urban policy-tax.

Macroeconomic Advisers still estimated that the payroll tax of 2 percent cut extension alone would add 400,000 jobs and increase GDP in 2012 at 0.5%. The largest sum may increase that to about 0.7% GDP and 600,000 jobs.

The second largest in terms of Obama is US $ 105 billion in infrastructure investments, which could add as much as $ 262 billion for the economy, based on the CBO numbers.

Macroeconomic Advisers estimates that could create about 150,000 new jobs in the first year and add more than half a million jobs in three years-good news but small for an economy that usually generates more than two million jobs per year when in good health.

The challenge would also find "shovel-ready" projects where the highways, railroads, or renovation of school plans are on the drawing board is awaiting funding. Otherwise it can take years for major construction projects underway.

Extending unemployment benefits, which total US $ 49 billion in Obama's plan, also has a significant impact. He could add up to US $ 102 billion to the economy. Macroeconomic estimates of advisers would add 0.25% growth of GDP in 2012 and create 200,000 new jobs, putting more money in the pockets of consumers.

Economists were re-run computer models at the end of Thursday night to update your data. Based on a stimulus package of $ 300 billion less than Obama revealed, Ian Shepherdson, Us Economist at high frequency economics, had estimated an increase of 1.3% to GDP and 1.7 million jobs over the life of the programmes.

His initial reaction was if it were adopted in full, that is rather unlikely, the plan would reduce the rate of unemployment 9.1 per cent to 8 per cent in 2012 and give a welcome boost to an economy which grew at an annual rate of 1 percent in the second quarter. But is does not guarantee a solid recovery.

"This is going to be more than a panacea for our problems? It's hard to say, "said Williams. "This crisis has been deeper and longer than anything we've seen since the late 1930 and totally do not understand it. What we do know is that what we did in 2009 was not large enough. "

(Editing by Mary Milliken and Philip Barbara)

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