Monday, October 24, 2011

Southern Europe's Lost Generation Stuck in Junk Jobs


With a masters' degree in publicity, the 24-year-old has been working for more than two years, full-time, in an internship that is starting to feel like it will never end.

Paid 300 euros a month for the same work as the salaried public relations professionals who sit next to her, she doesn't earn enough to move out of her parents' house and her bus pass and lunch expenses eat up most of her pay.

But despite feeling her multinational employer is flouting rules that limit the use of worker contracts with no benefits, she's not about to complain to the labor office since she considers herself blessed to have a job at all.

"Since I was little my parents urged me to get a university degree to find good work. But I'm lucky to have any work at all. There were 30 of us in my graduating class and I'm one of the ones who is doing the best with their career," Silvia said. She did not want her last name used in case of repercussions at work.

With Spain's youth unemployment higher than 40 percent and its overall joblessness the highest in the European Union at one in five, young professionals accept any conditions as they try to start their careers.

The story is much the same in neighboring Portugal and Italy where more and more people have so-called junk jobs: temporary contracts that used to be common in tourism, farming and construction but are now used by all kinds of companies.

With the economy sluggish and the euro zone debt crisis strangling credit, businesses are keener than ever to avoid open-ended contracts with expensive severance pay.

A quarter of Spain's workforce is on temporary contracts, as is 23 percent of Portugal's, compared with a European Union average of 14 percent.

In Spain, Portugal and Italy, a rigid dual system has emerged. Middle-aged people have stable jobs with benefits. They are expensive to fire and protected by masses of legislation. Meanwhile, younger workers are stuck in a revolving door of temporary contracts that are easy to abuse.

The two-track job market is stunting economic growth, studies show. Temporary workers get trapped for longer and longer periods without benefits, which affects output and makes southern Europe less competitive.

"You cannot just leave one segment of the labor market fully untouched and not motivate people to go to the job where they fit best... you might create employment in the short term but in the end it's a dead-end road," said Ton Wilthagen, a labor expert at Tilburg University in the Netherlands.


The curse of the mileurista -- the Spanish-language term for a temporary worker who earns a thousand euros a month without benefits -- is not new. Young professionals in southern Europe have found a permanent position elusive for some time.

But the lost generation has wandered deeper into a maze as the euro zone debt crisis intensifies. Economic growth is slowing again and public sector jobs are disappearing as governments try to bring huge public deficits under control.

"We used to talk about mileuristas like it was a bad thing. Now it's good. A 1000-euro a month temporary contract is decent," said Jose Maria Marin, labor expert and contemporary history professor at Spain's National University of Distance Education.

In Rome, 27-year-old Federico has moved from one temporary job to another since he graduated in history in 2009. A 1000-euros-a-month is starting to look like an unobtainable dream.

"I was interviewed today for a one-year job but I didn't like it because they were offering me 500 euros a month to work 10 hours a day," said Federico, who did not want his last name used since prospective employers could search for him on the Internet.

So far he has held out for a job in his chosen field of media or marketing. He wants to move out of his parents' house but he needs a permanent job contract in order to sign a rental agreement. With more than a quarter of Italians from 15-24 years old out of work he's starting to get desperate.

"Sometimes I feel frustrated, and I start to send off lots of CVs, even to companies I don't like, just so I have more chance of finding something," he said.

The phenomenon of young people living with their parents is another thing holding back economic growth, creating a vicious cycle for job creation. If they were setting up new households they would be stimulating the housing market as well as consumer spending.

Another risk for economies with high percentages of temporary workers, notes Wilthagen, is that banks are shy of lending to people without permanent employment, further holding back consumption.


Theoretically, a temporary contract is a foot in the door to prove yourself as a good hire.

But in southern Europe many supposedly temporary hires renew contracts year after year and do the same jobs as the permanent hires around them, just without the job security or benefits. This creates an enduring second-class job tier similar to the phenomenon of "permatemps" in the United States in the 1990s.

In Spain only 20 percent of temporary contracts led to permanent positions in 2008, one of the lowest rates in the European Union, according to a study by Ruud Muffels, a labor market expert at Tilburg University. His analysis of Eurostat data showed that mobility was better in Italy and Portugal.

Pedro Portugal, a labor market expert at Nova University in Lisbon, said conversion rates of temporary contracts to permanent ones have decreased in Portugal to under 20 percent from 50 percent in the late 1990s.

Many Portuguese companies abuse a freelance contract called the "green receipt," using it to hire full-time, in-house workers, said Joao Labrincha, an organizer of marches earlier this year against state austerity measures.

He said that "green receipt" workers often have fixed schedules like any other employee, but have no right to holidays, social security, health insurance or severance pay.

Even the government misuses the contracts.

"I've worked for the state under green receipts for more than five years. The system is rather perverse. Many of my colleagues are also under these precarious conditions, some of them have been temporary workers for the last 10 years," said a middle manager at the Portuguese Institute of Museums, who asked not to be named.

It's difficult to transition into a permanent job when no such posts are being created. In Spain, 80 percent of new job contracts signed in the last decade were temporary contracts -- businesses just aren't creating permanent positions.

"Firms tend to link temporary contracts, to chain one after the other, with the effect that very few young people get transformed from temporary to permanent. This has a very negative impact on young people starting their careers," said Anita Woelfl, economist with the OECD.


In 2010, under pressure from the European Union to reform its labor market and make it easier for companies to hire and fire, Spain's Socialist government passed reforms meant to phase out temporary contracts and make permanent contracts cheaper for employers.

But less than a year later the government did a U-turn after the 2010 reform failed to put a dent into the country's unemployment rate, which continued to rise.

"We'd rather have people on a temporary job than without a job," said Labor Minister Valeriano Gomez when the government rolled back the reforms, introducing new rules that allow companies to extend some temporary contracts for up to three years.

Spain is becoming a country of people who are "apprentices until 33 and can't retire until 75," said union leader Ignacio Fernandez Toxo, criticizing the new rules, which included a new type of contract that gives companies more leeway to hire trainees for extensive periods with no benefits.

The extended trainee contract was designed to retrain jobless men now in their late twenties or early thirties who dropped out of school as teenagers during Spain's housing boom to work in well-paid construction jobs until the building sector collapsed in a pile of bad debt.

In Portugal, where the jobless rate is 12 percent, significantly lower than Spain's, the government has stuck to reforms that reduce and cap severance pay.

Juan Jose Dolado, an economist at Madrid's Universidad Carlos III, said Spain should have kept its eye on the long-term goal and moved the country toward a one-contract system with phased-in severance pay benefits.

"It was like crossing the river and being in the middle. They got scared in the middle, they didn't move forward to reach the other side, they went back," Dolado said.

The Socialists, expected to lose November 20 general elections after eight years in power, are now campaigning on pledges to crack down on abuse of temporary contracts.

The center-right opposition People's Party, or PP, poised to win the November vote, says it wants to revive the original labor reform and move Spain toward one type of job contract, such as the one Dolado envisions.

But analysts say the PP may also flinch when it comes to cracking down on temporary contracts because they worry the short-term effect will be to put people out of work at a time when joblessness is the top concern of Spanish voters.

Meanwhile, workers like Juan Francisco Seller, will continue to give their labor away, hoping a "real" job materializes. Seller is 27 and has a pharmaceutical degree. He's been working for free in a hospital in Valencia for a year, doing research with a laboratory team.

He has turned down paid work outside of his field, in order to keep his C.V. professional.

"I'm one of those who have patience and I'm really clear that other options don't appeal to me and I really like this field," he said. But "in the end it drives you crazy."

[Via Reuters]

Saturday, October 22, 2011

Rich-Poor Gap Growing

The gap between the United States’ rich and poor continued to grow last year, according to new government wage data.

With pay down and fewer jobs available, the Social Security Administration’s figures highlight one of the major issues of the Occupy Wall Street movement - widening income disparity.

The SSA said 50 percent of workers made less than $26,364 last year — and most Americans have fewer job opportunities available to them. But the wealthiest Americans are relatively unscathed, with those earning $1 million or more jumping 18 percent from 2009.

Total employment fell again last year, dropping from 150.9 million in 2009 to 150.4 million in 2010. And in 2007, at the height of the recession, there were still 5.2 million more jobs than in 2010, the AP wrote.

The average income for Americans was $39,959 last year, but the median wage was just $26,364. The SSA wrote that this shows “the distribution of workers by wage level is highly skewed,” the AP reported.

Occupy Wall Street protesters have demonstrated across the country in recent weeks against what they deem the unfair income disparity between the U.S.’s top wage earners and average Americans.

[Via Politico]

Sunday, October 9, 2011

Nearly Half of U.S. Lives in Household Receiving Government Benefit

Families were more dependent on government programs than ever last year.

Nearly half, 48.5%, of the population lived in a household that received some type of government benefit in the first quarter of 2010, according to Census data. Those numbers have risen since the middle of the recession when 44.4% lived households receiving benefits in the third quarter of 2008.

The share of people relying on government benefits has reached a historic high, in large part from the deep recession and meager recovery, but also because of the expansion of government programs over the years.

Means-tested programs, designed to help the needy, accounted for the largest share of recipients last year. Some 34.2% of Americans lived in a household that received benefits such as food stamps, subsidized housing, cash welfare or Medicaid (the federal-state health care program for the poor).

Another 14.5% lived in homes where someone was on Medicare (the health care program for the elderly). Nearly 16% lived in households receiving Social Security.

High unemployment and increased reliance on government programs has also shrunk the nation’s share of taxpayers. Some 46.4% of households will pay no federal income tax this year, according to the nonpartisan Tax Policy Center. That’s up from 39.9% in 2007, the year the recession began.

Most of those households will still be hit by payroll taxes. Just 18.1% of households pay neither payroll nor federal income taxes and they are predominantly the nation’s elderly and poorest families.

The tandem rise in government-benefits recipients and fall in taxpayers has been cause for alarm among some policymakers and presidential hopefuls.

Benefits programs have come under closer scrutiny as policymakers attempt to tame the federal government’s budget deficit. President Barack Obama and members of Congress considered changes to Social Security and Medicare as part of a grand bargain (that ultimately fell apart) to raise the debt ceiling earlier this year. Cuts to such programs could emerge again from the so-called “super committee,” tasked with releasing a plan to rein in the deficit.

Republican presidential hopefuls, meanwhile, have latched onto the fact that nearly half of households pay no federal income tax, saying too many Americans aren’t paying their fair share.

[Via The Wall Street Journal]

Wednesday, October 5, 2011

Wood Gas Vehicles: Firewood in Fuel Tank

During the Second World War, almost every motorised vehicle in continental Europe was converted to use firewood.

Wood gasification is a proces whereby organic material is converted into a combustible gas under the influence of heat - the process reaches a temperature of 1,400 °C (2,550 °F). The first use of wood gasification dates back to 1870s, when it was used as a forerunner of natural gas for street lighting and cooking.

In the 1920s, German engineer Georges Imbert developed a wood gas generator for mobile use. The gases were cleaned and dried and then fed into the vehicle's combustion engine, which barely needs to be adapted. The Imbert generator was mass produced from 1931 on. At the end of the 1930s, about 9,000 wood gas vehicles were in use, almost exclusively in Europe.

The technology became commonplace in many European countries during the Second World War, as a consequence of the rationing of fossil fuels. In Germany alone, around 500,000 producer gas vehicles were in operation by the end of the war.

A network of some 3,000 "petrol stations" was set up, where drivers could stock up on firewood. Not only private cars but also trucks, buses, tractors, motorcycles, ships and trains were equipped with a wood gasification unit. Some tanks were driven on wood gas, too, but for military use the Germans preferred the production of liquid synthetic fuels (made out of wood or coal).

In 1942 (when the technology had not yet reached the height of its popularity), there were about 73,000 producer gas vehicles in Sweden, 65,000 in France, 10,000 in Denmark, 9,000 in both Austria and Norway, and almost 8,000 in Switzerland. Finland had 43,000 "woodmobiles" in 1944, of which 30,000 were buses and trucks, 7,000 private vehicles, 4,000 tractors and 600 boats.

Woodmobiles also appeared in the US, Asia and, particularly, Australia, which had 72,000 vehicles running on woodgas. Altogether, more than one million producer gas vehicles were used during World War Two.

After the war, with gasoline once again available, the technology fell into oblivion almost instantaneously. At the beginning of the 1950s, the then West-Germany only had some 20,000 woodmobiles left.

[Via Low-tech Magazine]

Saturday, October 1, 2011

To Outfox the Chicken Tax, Ford Strips Its Own Vans

Several times a month, Transit Connect vans from a Ford Motor Co. factory in Turkey roll off a ship here shiny and new, rear side windows gleaming, back seats firmly bolted to the floor.

Their first stop in America is a low-slung, brick warehouse where those same windows, never squeegeed at a gas station, and seats, never touched by human backsides, are promptly ripped out.

The fabric is shredded, the steel parts are broken down, and everything is sent off along with the glass to be recycled.

Why all the fuss and feathers? Blame the "chicken tax."

The seats and windows are but dressing to help Ford navigate the wreckage of a 46-year-old trade spat. In the early 1960s, Europe put high tariffs on imported chicken, taking aim at rising U.S. sales to West Germany. President Johnson retaliated in 1963, in part by targeting German-made Volkswagens with a tax on imports of foreign-made trucks and commercial vans.

The 1960s went the way of love beads and sitar records, but the chicken tax never died. Europe still has a tariff on imports of U.S. chicken, and the U.S. still hits delivery vans imported from overseas with a 25% tariff. American companies have to pay, too, which puts Ford in the weird position of circumventing U.S. trade rules that for years have protected U.S. auto makers' market for trucks.

The company's wiggle room comes from the process of defining a delivery van. Customs officials check a bunch of features to determine whether a vehicle's primary purpose might be to move people instead. Since cargo doesn't need seats with seat belts or to look out the window, those items are on the list. So Ford ships all its Transit Connects with both, calls them "wagons" instead of "commercial vans." Installing and removing unneeded seats and windows costs the company hundreds of dollars per van, but the import tax falls dramatically, to 2.5 percent, saving thousands.

Customs officials won't discuss individual company's strategies, but Stephen Biegun, Ford's vice president for international governmental affairs, says the practice complies with the letter of the law. "We are free-traders, full stop," he says.

Foreign auto makers have long crossed swords with the chicken tax. Toyota Motor Corp., Nissan Motor Co. and Honda Motor Co. took the straightforward route and built plants in the U.S.

Subaru, owned by Fuji Heavy Industries Ltd. of Japan, imported a small pickup in the 1980s called the Bi-drive Recreational All-terrain Transporter, or BRAT. But it wasn't a taxable truck, because it had two lawn-chair-like seats bolted to the open bed. (President Reagan owned a red one, according to Subaru.)

With the globalization of the auto industry, American companies have joined the game. Until recently, Chrysler Group LLC imported Dodge Sprinter vans made in Düsseldorf, Germany, by former owner Daimler AG. The engine, transmission, axles and wheels were removed, allowing the truck bodies to cross the border as auto components, which aren't subject to the tax. Daimler then reassembled the vehicles at a factory in Ladson, S.C.

Ford launched the Transit Connect in 2002. The compact commercial van with a distinctive raised roof was designed to haul goods through urban areas with tight streets. Since then, more than 600,000 of the vehicles have been sold.

When gas prices spiked, Ford saw a market among small-business owners in the U.S. Prices start at $20,780, much lower than would have been possible if Ford had to cover the chicken tax. Sales are off to a fast start. In August, Ford sold more than 2,200 in the U.S.

"It's great for city driving," said Duff Goldman, owner of Charm City Cakes in Baltimore and star of Ace of Cakes on the Food Network. "It's shorter, smaller and has really good fuel economy." He bought a black Transit Connect last month. Since he doesn't carry passengers, his van has no windows or seats in the back.

The vans leave Turkey on cargo ships owned by Wallenius Wilhelmsen Logistics. Once they arrive in Baltimore, they are driven into a warehouse, where 65 workers from the shipping company's WWL Vehicle Services Americas Inc. convert them into commercial vehicles amid the blare of rock music and the whirring of industrial fans.

On a recent afternoon, a handful of vans passed through the warehouse unmolested as passenger wagons. But the vast majority were lined up to have windows pulled out, and they all had their rear seats removed.

In one lane, supervisor Robert Dowdy watched as two workers removed the rear side windows. They cut out the rubber seal with a special knife and popped out the glass using suction cups. The space is plugged with a metal panel that cures for 15 minutes before being tested outside for waterproofing.

At the start of that same lane, Mayso Lawrence unhooked a rear seat belt as easily as he would pop the top off a soda bottle. Using a drill, he quickly unscrewed six bolts to free the seats. Workers at the other end dump the seats into cardboard boxes, which are hoisted onto an open tractor-trailer and shipped to Ohio. Ford says the shredded seat fabric and foam become landfill cover, while the steel is processed for other uses.

"I never thought about why we take out the seats, but if that's what the customer wants, that's what we'll give them," Mr. Lawrence said.

With the seat removed, Mr. Lawrence puts in a new floor panel to cover the holes, toots the horn to signal he's finished, then gets to work on another van. The whole process takes him less than five minutes.

Rob Stevens, chief engineer for Ford's commercial vehicles, says the auto maker decided against shipping the seats back to Turkey for use in the next wave of vans for the U.S.

"We thought going through the recycling process was best," he said. "The steel is valuable."

[Via The Wall Street Journal]