International økonomi A International Economics A Højere handelseksamen Examination type a Appendices 9.00-14.00 hhx172-iøka/a-24082017 Thursday 24 August 2017 9.00-14.00
Page 1 of 11 pages Globalisation and Standard of Living List of appendices Appendix 1: Economic data for Niger, World Economic Outlook Database, October 2016, IMF Appendix 2: A model of the market segment of unskilled workers in Denmark Appendix 3: Danish Construction Association: Give refugees introductory wages until they are worth the money, DR.dk, 4 December 2015 Appendix 4: Integration or wage dumping, arbejderen.dk, September 2015 Appendix 5: Economic Indicators for Sweden, Nordic Economy, January 2017, Danske Bank Appendix 6: The low wage earners are the winners of globalisation, Børsen, 5 January 2017 Appendix 7: Trump can make the Chinese dragon breathe fire, Berlingske Business, 10 November 2016
Page 2 of 11 pages Appendix 1: Economic data for Niger 1985 1995 2005 2015 GDP, current prices, in billion national currency 647.1 876.5 1777.0 4241.5 Population, million people 6.43 8.9 12.79 17.65 Price index (basis year 2008 = 100) 55 69 90 107 Source: World Economic Database, IMF October 2016
Page 3 of 11 pages Appendix 2: A model of the market segment of unskilled workers in Denmark Hourly wage (in DKK) supply 113.39 A B minimum wage C 532,000 591,000 demand labour, unskilled workers Please note: Numbers are based on StatBank Denmark, Statistics Denmark, February 2017 as well as the collective agreement of 3F (United Federation of Danish Workers)
Page 4 of 11 pages Appendix 3: Danish Construction Association: Give refugees introductory wages until they are worth the money, DR.dk, 4 December 2015 Danish Construction Association: Give refugees introductory wages until they are worth the money Unions call proposal of an hourly wage of DKK 70 a gross underpayment of the worst kind. Only 12 per cent of the refugees who have been through local authorities integration since 2010 have acquired a real job. (Photo: Sophia Juliane Lydolph Scanpix) By Sofie Synnøve Herschend Give the refugees the wage which they are worth. Even if it is less than the minimum wage. This is the proposal from the Danish Construction Association and the Danish Refugee Council which believe that new thinking is required to have more refugees in employment. They propose a so-called periodic introductory wage. Many refugees are finding that it is difficult to gain a foothold in the Danish labour market, so we propose a model where the wage increases as you acquire more qualifications, says Anette Christoffersen, who is the Chief of Integration at the Danish Refugee Council. The purpose is to give refugees an actual chance of applying for jobs and earning their own wages. At the same time, it must create a better integration and prevent moonlighting, according to the sources. Newly arrived refugees are seldom worth the wage they get Today many refugees are excluded from the labour market because the employer does not think they are able to produce the work which corresponds to an hourly minimum wage of about DKK 110, says Anette Christoffersen. This is due to perfectly natural causes Introductory wage The Danish Refugee Council and the Danish Construction Association have proposed an introductory wage as a possible solution to the low level of employment among refugees. According to the liberal think tank, CEPOS, an introductory hourly wage of DKK 70 may create 7,000 jobs in Denmark. In August, the Minister for Finance, Claus Hjort Frederiksen (V) made an opening to discuss an introductory wage in the coming tripartite negotiations. such as a lack of Danish language skills and a lack of professional experience from the Danish labour market. Lars Storr-Hansen, among other people, knows about this. He is the managing director of the Danish Construction Association: The problem is that refugees rarely create a value for the company corresponding to the minimum wage in our collective agreements. A more flexible wage level may give the employer a greater
Page 5 of 11 pages incentive to hire refugees, says the managing director. 3F (United Federation of Danish Workers): That would be social dumping However, this proposal makes Of course the idea is the Danish unions very upset. to move up the wage A wage below the minimum ladder as quickly wage goes against the Danish as possible, as you Model, says 3F. are not intended to say at a low wage of The short answer is no DKK 70 an hour. thank you because we actually have good tools today such Mads Lundby Hansen, Cepos as trainee positions and wage subsidy schemes. The proposal put forward by the Danish Construction Association and the Danish Refugee Council represents a gross underpayment of workers of the worst kind, says Søren Heisel, who is Union Secretary at 3F. Both the Confederation of Danish Employers, the Danish Confederation of Trade Unions and the Confederation of Danish Industry fear that the introductory wages model will undermine the traditional model, which exists to ensure fair conditions for both employers and employees. If you introduce introductory wages, I would be nervous about who are to get introductory wages next time. Those who suffer long-term unemployment or those who have just recently become fully qualified? That would be social dumping, says Søren Heisel. Think tank suggests a wage of DKK 70 Earlier, the liberal think tank, Cepos, has made calculations regarding the profitability of hiring refugees at a wage that is below the minimum wage. The short answer is no It is profitable they say. thank you. It represents Not only will an introductory a gross underpayment wage save the state from of workers of the worst the cost of integration kind benefits, it will also provide says Søren Heisel, Union Secretary at 3F. a higher income for refugees, according to the think tank. We encourage the labour market parties to make a voluntary agreement with no governmental interference about an introductory hourly wage of DKK 70, says Mads Lundby Hansen, Chief Economist at Cepos, and he continues: And of course the idea is to move up the wage ladder as quickly as possible, as you are The refugees are flowing to Denmark. We must become better at finding jobs for them, according to the Danish Refugee Council and the Danish Construction Association. (Photo: Jens Nørgaard Larsen Scanpix) not intended to say at a low wage of DKK 70 an hour. Too much bureaucracy According to the Danish Refugee Council and the Danish Construction Association the introductory wage can only be used for a maximum of a year and a half, so a parallel labour market with underpaid workers does not arise. And once you have gone from the introductory wage to the normal wage, you cannot go back, says Lars Storr-Hansen: However, the introductory wage is only one of many factors, which are to help refugees enter the labour market. Focus should also be on language teaching and wage subsidies, but primarily there is a need for easier access to the Danish labour market. It is far too bureaucratic as it is now. Heading towards the political agenda Just being at work and receiving your own salary means a lot for integration, says the chief of integration of the Danish Refugee Council. Regardless of the size of the salary. The best integration is achieved by getting refugees to work as quickly as possible so they become an equal part of the working community and gain an experience that they create value and are included, says Anette Christoffersen. The Danish Construction Association now wants to negotiate with 3F. But the introductory wage is also seriously heading towards the political agenda. Employment Minister Jørn Neergaard Larsen has mentioned it as an obvious theme for the forthcoming tripartite negotiations between the government, the trade unions and the employers.
Page 6 of 11 pages Appendix 4: Integration or wage dumping, arbejderen.dk, September 2015 Integration or wage dumping Immigration wages for refugees divides the opinions Will introductory wages benefit integration and make it easier for refugees to get a job? Or will it put pressure on the collective agreements and have the opposite effect? The discussion is raging. In September, the first big group of refugees arrived from Syria among others. Now the debate is how to help the refugees enter the Danish labour market. PHOTO: Bax Lindhardt / Scanpix The so-called introductory wage has been presented in several rounds as a way to make it cheaper for employers to hire refugees who may not be able to earn their salary from day one. The right wing liberal think tank, Cepos, is among the hottest advocates of the model. According to the think tank's own calculations, the employment rate of non-western immigrants will grow by 7,000 people in the long term if an introductory wage of DKK 70 per hour is introduced. Conversely, employers in the Confederation of Danish Industry (DI) believe that a lower wage for refugees is absolutely unnecessary. The proposals for introductory wages, which have been mentioned, do not give businesses an economic advantage over existing tools. Trainee positions do not cost the companies anything, and they simply cannot be matched by any introductory wages, said Deputy CEO of DI Kim Graugaard at last week's Growth Conference 2015, organized by Cepos. A lower wage is a help At the same conference, the Secretary General of the Danish Refugee Council, Andreas Kamm, also spoke. He believes, contrary to Denmark's most powerful employer organization, that lower wages can pave the way towards better integration. In a debate contribution in Berlingske Tidende, written jointly with the director of the Danish Construction Association, Lars Storr- Hansen, Andreas Kamm says about the problem of employment for refugees: One possibility is to introduce an introductory wage for refugees which can ensure that they get a foothold in the labour market. This should be taken into consideration when wages and other terms are agreed between the parties in the Danish labour market - as a supplement to the existing models. Tasteless campaign Exactly Andreas Kamm s debate contribution
Page 7 of 11 pages in Berlingske and his speech at the Cepos conference upsets Simon Thøgern, the Union Chairman of HK Privat. He does not mind that the refugees get help to enter the labour market, but he thinks that the Danish Refugee Council is running a specific campaign for lower wages. I find it hard to see it differently than Andreas Kamm being in a real campaign for introductory wages. Why does he otherwise speak as a spokesperson for introductory wages at a Cepos conference and write a contribution in a large newspaper together with the Andreas Kamm advocates striking another hole in the collective system Simon Thøgern, HK Privat director of the construction employers, asks Simon Tøgern. The HK Chairman, like the employers of the Confederation of Danish Industry, believes that there are already plenty of opportunities to lock people gradually into the labour market without the employers paying full wages. When Andreas Kamm nevertheless poses as a spokesperson for introductory wages, Simon Tøgner believes it may be because he has another agenda. He advocates striking another hole in the collective system and, what is more, using refugees as a battering ram - I think it is tasteless, says Simon Tøgern til Arbejderen. Speaking the refugees case Andreas Kamm is by no means using refugees as a battering ram to break down the Danish agreement system, the Secretary General explains to Arbejderen. We will disprove of and be worried about models that create wage dumping or wage pressure. We want refugees to have a better future in Denmark and become integrated. Therefore, we go out and appeal to the labour market parties to help pave the way to the labour market, says Andreas Kamm. He has worked with refugees and integration for about 35 years, and according to him, the road to a better integration goes through respect and work. When he calls for new models for the integration of refugees into the labour market, it is based on the experience that the current schemes are not working. I may get a little tired referring to existing schemes. Apparently, they do not seem to be working as intended. We are not saying that we have the model, but we have an appeal, and so we hope that those who know about labour market conditions will help contribute to finding solutions, says the Danish Refugee Council Secretary General. Fire Andreas Kamm The anger about the Refugee Council s proposals made Simon Tøgern write an update on facebook on Friday last week with the headline: Boycott the Danish Refugee Council. He writes, among other things: The unions LO, FOA, HK, Denmark's Teachers' Union and other professional organizations are members of the Danish Refugee Council Either Andreas Kamm must cancel his campaign immediately, or the Danish Refugee Council must fire him. If neither of the two things happen, I will work for the professional organizations to sign out of the Danish Refugee Council. Looking back, Simon Tøgern believes that the wording of the update might have been a bit square. However, he welcomes the fact that it has made the Danish Refugee Council seek a meeting with HK on the situation. Andreas Kamm is also pleased that a very important debate has been started and he hopes that ways will be found to help refugees get jobs. I speak the refugees case and I know they want to work, but that it is very difficult here in Denmark. The meeting is expected to take place at the beginning of the new year. LO: A bad idea HK's Simon Tøgern is far from the only one being concerned about the prospect of implementing introductory wages. Also LO Chairman Lizette Risgaard is critical towards the idea. Introductory wages are a bad idea and not in accordance with the way we have agreed that the labour market should be working in Denmark. I have also said this to Kamm on several occasions. We have good models for getting refugees into the Danish labour market, but they are simply not being used by the companies. So let them start by opening the doors to companies, and then we will find solutions in accordance with the schemes we already have, says Risgaard, according to Finans.dk.
Page 8 of 11 pages Appendix 5: Economic Indicators for Sweden, Nordic economy January 2017, Danske Bank Sweden: The prognosis in numbers - changes in percentage in fixed prices, unless otherwise stated Prognosis Supply balance 2015 2015 2016 2017 2018 SEK billion (current prices) percentage year on yea Private consumption 1884.2 2.7 2.1 1.5 2.0 Public consumption 1086.4 2.5 3.5 2.0 1.3 Gross fixed investments 988.7 7.0 6.5 1.9 2.1 Growth contribution from stock changes 23.4 0.3 0.2-0.1 0.1 Domestic demand 3982.6 3.7 3.6 1.7 1.9 Exports 1906.2 5.6 3.1 3.5 4.1 Total demand 5888.8 4.0 3.8 1.6 2.0 Imports 1707.7 5.5 4.3 3.4 4.4 Growth contribution from net exports 198.5 0.3-0.3 0.2 0.1 GDP 4181.1 4.1 3.3 1.7 1.9 Economic indicators 2015 2016 2017 2018 Balance of trade, SEK billion 125.5 78.0 79.6 78.1 - in percentage of GDP 3.0 1.8 1.8 1.7 Balance of payment, SEK billion 195.5 198.0 201.6 209.2 - in percentage of GDP 4.7 4.6 4.5 4.5 General government balance, SEK billion -4.2-26.1-31.4-20.9 - in percentage of GDP -0.1-0.6-0.7-0.5 Public debt - in percentage of GDP* 43.4 42.0 41.8 40.7 Unemployment, in percentage of the workforce 7.4 7.0 7.2 7.1 Hourly wages, annual growth percentage 3.0 2.5 2.8 3.0 Consumer prices, percentage year on year 0.0 1.0 1.3 1.4 House prices, percentage year on year 10.8 4.0 0.0 0.0 * Maastricht definition Note: The national figures show the actual growth rates (not adjusted to calendar or number of working days) Source: Statistics Sweden, Danske Bank
Page 9 of 11 pages Appendix 6: The low wage earners are the winners of globalisation, Børsen, 5 January 2017 The low wage earners are the winners of globalisation By Christian Bjørnskov, Professor, Aarhus University In political debates the issues are often about the impact on the distribution of jobs, wages and which groups win and lose. This autumn's remarkable debate about the alleged losers of globalisation illustrated the situation as the focus was on which groups could lose their jobs and who could get less in pay. The debate thus illustrated a common but serious problem in many political debates. Almost everyone forgot that while some of us are wage earners, and some of our jobs are in competition with those abroad, we are all consumers. Our role as consumers is forgotten. The globalisation discussion was a good example of that. Here, several people, including one of Børsen s writers, argued that low-wage groups were affected negatively by free trade. The claim was that the wages of unskilled people and other low-income groups had not kept up with those of other groups due to competition from imports from China, Eastern Europe or other countries. An argument that is politically highly popular in the USA and France, among others, is that these groups should therefore be compensated for their loss by either setting up barriers to trade or creating specific public programs for them. If, for a moment, we ignore the question of whether the basic assertion is correct - which in no way is certain - the commentators are overlooking the most important fact: while most people are employees five days a week, we are all consumers every day. To assess the welfare effects of globalization or any other economic development, one must therefore know both the impact on people's incomes and the prices of what they buy - on their roles as both employees and consumers. Most commentators and politicians look only at the first aspect. The importance of the prices people pay as consumers is underlined in new research, which is being published in the prestigious Quarterly Journal of Economics. In the article, Pablo Fajgelbaum and Amit Khandelwal expect that the 10 per cent poorest people in most countries have at least twice as much gain from free trade as the 10 per cent richest people. The reason is that the least wealthy spend a much greater share of their income on relatively basic goods - food, clothes and refrigerators - all of which are traded internationally. If you are wealthy, a greater portion of your income goes to consumption of services that do not cross borders. Globalisation affects not only wages but also the structure of the prices people pay. If you claim that low-wage groups do not benefit much from globalisation because their wages do not increase much, you are wrong. They may get lower wage increases, but they are the biggest winners on the consumer side. The same problem applies to a wide range of areas where policy or development does not affect all groups in the same way. Any regulation affects what things cost for ordinary people and price effects must be taken seriously. The low-income groups may possibly have lower wage increases due to globalisation, but they are the biggest winners on the consumer side
Page 10 of 11 pages Appendix 7: Trump can make the Chinese dragon breathe fire, Berlingske Business, 10 November 2016 Trump can make the Chinese dragon breathe fire By Frederik M. Juel The newly elected Donald Trump has launched a battle against free trade in the course of his campaign. The most dangerous thing he has said is that he will introduce an import duty on Chinese goods. This could spark a global trade war. Donald Trump as President of the United States can make the Chinese dragon breathe fire. Still, it is uncertain what Trump wants and can achieve through his economic policy, but in the election campaign, he has threatened to impose a 45 percent penalty duty on goods from China. The threat is part of the battle against free trade, which Trump has launched in the election campaign. It has happened in the belief that it can protect American jobs. More American and less global, the slogan from Trump appears to be. But a customs duty on goods from China, the Chinese will not accept, and a counter reaction from Beijing is most likely. Such is the assessment of Peter Thagesen, Deputy Director of the Confederation of Danish Industry, DI, and Jens Ladefoged Mortensen, Associate Professor at the University of Copenhagen and expert on US trade policy. Peter Thagesen points out that it is naturally very uncertain what Trump actually wants and can do in relation to what he has said in the election campaign. But the most dangerous thing is if he is serious about a customs wall against the Chinese. There has really been China-bashing on the part of Trump. He has stated directly that the Chinese manipulate their currency to take advantage of it. Therefore he has A Chinese harbor worker checks that the infinite rows of aluminum ready to be exported from the port of Qingdao are properly packed. Business executives around the world are awaiting a move from Donald Trump, who has stated that he wants to put an end to free trade. Photo: Scanpix/Reuters
Page 11 of 11 pages talked about a penalty duty on Chinese goods, says Peter Thagesen. It would be contrary to international law to do this, but before such a case is settled, it may have evolved into an international trade war and that would be terrible. Not only for Denmark, but for the whole world, says Peter Thagesen. Trump can act on his own There is a total of four giant free trade agreements that are at stake with Trump's victory. The big one is the World Trade Organization, WTO, which sets out a number of general rules for global trade. In addition, there is NAFTA, which is the single market for North America. In addition, two major agreements, one of which has been negotiated, but not approved by the US Congress, while the other has not yet been negotiated. The first agreement, TTP, has been concluded between the US and Canada as well as a number of Pacific countries. The other agreement, TTIP, is negotiated between the EU and the US. With the exception of a possible agreement between the EU and the United States, Trump has made a strong commitment against all other agreements. And he has a good reason to do so on the basis of fear of global free trade in the American population. A survey from the New York Times this summer shows that 57 per cent of Americans believe that trade costs US jobs. Only 22 per cent believe that trade has created American jobs. Peter Thagesen stresses that after 20 January next year, Donald Trump may well start taking action against free trade without first having Congressional approval. In the area of trade policy, the President has considerable powers to temporarily raise tariffs and suspend trade agreements. Congress can subsequently try to roll back the actions, but it will take time, and by then, major damage may have happened to international trade. WTO agreement is an insurance policy Jens Ladefoged Mortensen completely Americans fear global trade Question: What overall effect has American trade with other countries had on American jobs? Trade has no effect on jobs 14 Don t know 7 Trade has created jobs 22 57 Trade has cut jobs Note: The survey was carried out among 1,600 representative Americans from 8 July until 12 July this year. Berlingske Grafik: Hans Færch Source: DI Insight, which has acquired the survey from New York Times/CBS News Poll. agrees. He, like DI, emphasizes that it is very uncertain what will actually happen with Trump's policy. Trump is a mixed character, and we now need to figure out what he really stands for. He seems to have replaced globalisation with Americanization. He is extremely liberal in some respects, while in other respects he is very protectionist, says the Associate Professor. He emphasizes that it will be the absolutely fundamental rules of the global economy that are being challenged if Trump's policy commences a trade war. The WTO is like an insurance against global trade developing into a situation where all countries are fighting each other. Trump is very focused on the US having a major trade deficit. This is money that Trump believes Americans have given to other countries, and he thinks that is unfair, says Jens Ladefoged Mortensen, pointing out that Trump's logic does not make sense. Cheap imports are good. Also for American consumers, he states.
EGYM 172-14B E