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Apprenticeships go begging in Germany

A third of German businesses are unable to fill all trainee positions available. One reason is that more young Germans are going to university rather than take up apprenticeships after finishing high school. On Tuesday in Berlin, the Association of German Chambers of Commerce and Industry (DIHK) released the results of a large survey of 11,269 businesses that asked whether they had managed to fill all the trainee positions they had open last year. The survey also asked about the quality of applicants, and about the willingness of companies to hire refugees. "The situation on Germany's labor market is getting more worrying," said DIHK President Eric Schweitzer during the presentation of the survey's results. 516,200 women and men started apprenticeships in 2015. Yet that left a lot of positions unfilled. For Germany as a whole, nearly a third of businesses surveyed - 31 percent - were unable to recruit enough qualified applicants to fill all their available trainee positions. In eastern Germany, the numbers were even worse, with nearly half - 45 percent - forced to leave apprenticeship positions unfilled. There are two main reasons for the development, according to DIHK. First, there's demography. Germany's birthrate has been significantly lower than the replacement rate for many years. As a result, school populations are relentlessly shrinking. In 2016, about 5,000 fewer young people will reach trainee age than in 2015. The 2016 cohort of school-finishers will be 120,000 smaller than the cohort of 2006, a decade earlier. Second, a much larger percentage of school-leavers is going on to study at university rather than take up apprenticeships in industry or business. According to Schweitzer, "today 7 percent fewer young people apply to an apprenticeship program compared to 10 years ago - while at the same time, the number entering university studies is 40 percent larger." A pillar of German economic power Germany's "dual education system" for apprentices is justifiably renowned. Its basic set-up is simple: Young school-leavers who aren't university-bound enter a three-year apprenticeship program within a particular trade - for example, plumbing, small business administration, or wind-turbine installation and maintenance. They spend half their time getting on-the-job training under the guidance of qualified mentors in their chosen trade, and half their time studying in specialized trade schools. The system is government-subsidized: Trainees get a modest monthly salary, health insurance, and other benefits, such as reduced-fare access to public transit. Companies apply to the relevant trade or professional association to become certified providers of trainee positions with the dual education system. The advantage to companies is that they get to know their apprentices, and their apprentices get to know the procedures and tasks within the company. At the end of the three-year training period, it's common for trainees to be offered regular jobs with the company at which they did their training. Germany's apprenticeship system is one of the pillars of the country's economic strength. Arguably it's the most important pillar, alongside the no-nonsense get-the-job-done attitude that has been characteristic of German culture for centuries - which itself is transmitted to each new generation through the apprenticeship system. It's therefore a serious problem when a third of the country's businesses are unable to find a sufficient number of willing and qualified trainees to take up apprenticeships. "The missing apprentices of today are the missing professionals of tomorrow," Schweitzer warned. Refugees welcome, but not enough Three of four businesses surveyed said they're willing to offer apprenticeships to recently arrived refugees, most of whom are Muslims from the Middle East, South Asia or Africa - provided the refugees had gained adequate German language skills and had been given appropriate residency permits by the government. DIHK said that a crucial first step toward enabling companies to offer trainee positions to refugees was the "3 plus 2 rule" established under the government's new Integration Law. The rule specifies that migrants with temporary residence permits who have found trainee positions cannot be deported during the three-year apprenticeship period, nor can they be deported for two years after they've finished their training, if they've found a job. "That's very, very important for the companies," Schweitzer said, because it sets up sufficient legal certainty that they'll be able to recoup their investment of time and staff effort in training migrants. But the refugees won't be able to solve the problem of a lack of willing and qualified trainees in the short- or medium-run, he said, because "integration takes time" - the DIHK's studies show it takes five to seven years before migrants are ready for full integration into the workforce. And their numbers aren't large enough to solve the long-term problem either. Apprenticeship quality problems In the short run, companies have reacted to the dwindling number of willing applicants by relaxing their hiring standards. School leavers with poor academic records - even dropouts, whose peers in decades past might have had a hard time being accepted into one of the more demanding trade apprenticeship programs - are often given help to catch up in their math or language skills. And they're being offered better deals than apprentices of previous generations, including better salaries and permanent jobs on finishing their training. The DIHK wants the government to make greater efforts to improve the quality of new apprentices. About half the businesses surveyed complained that many trainees were poor at basic math and language skills, and many had poor discipline, a weak ability to cope with work stress, and performed inadequately on the job. The school system must address these problems, Schweitzer argued. But in the medium term, even turning to less-talented applicants won't be enough to turn around the numbers, according to DIHK's analysis. It will be necessary to entice more of the young people now flooding toward university to take up apprenticeships instead. To help with that, DIHK suggested "orientation courses" exposing students to trades and professions should be offered at grammar schools (German: "Gymnasien") - the type of high school attended by academically stronger students - in order to help students get a better appreciation of desirable alternatives to going to university after finishing high school. "A mechatronics technician can easily earn more than many an architect," said Achim Dercks, a DIHK vice-president. That suggests another possible approach to gaining recruits: Offer trade or professional apprenticeships to people after they've completed their Bachelor's degrees at university. Perhaps traditional boundaries between "Akademiker" and "Arbeiter," or college grads and tradespeople, need to be softened up.

A third of German businesses are unable to fill all trainee positions available. One reason is that more young Germans are going to university rather than take up apprenticeships after finishing high school. On Tuesday in Berlin, the Association of German Chambers of Commerce and Industry (DIHK) released the results of a large survey of 11,269 businesses that asked whether ... Read More »

German Bund yield drops to historic low

For the first time in modern German history, the yield of the country's benchmark 10-year debt - also known as Bund - has fallen below zero percent as investors rush to safety ahead of Britain's Brexit referendum. With the prospect of Britain leaving the European Union looming ever larger ahead of a referendum in 9 days, global investors are increasingly fleeing to safe havens such as German debt and the Japanese currency. As a result, the yield on Germany's benchmark 10-year debt fell into negative territory for the first time in its history on Tuesday. Falling yields are caused by high demand for the security, leading to rising prices and dwindling returns on the investment. Apart from fears about a possible Brexit, analysts also attributed the current rush to safety to concerns about the global economy and low inflation expectations in the eurozone. "In times of increasing market uncertainty, investors are buying securities with the lowest risk of default," NordLB analyst Michael Schulz told the news agency Reuters, adding that German Bunds were definitely among them. And VTB Capital economist Neil MacKinnon told AFP that the countdown to the Brexit referendum on June 23 was dominating the market agenda. "The referendum is too close to call and is creating understandable risk aversion in the markets." Stocks slump further Risk-averse investors on Tuesday sold off European shares for the fifth straight session, driving stock markets on the continent to their lowest in three month. The pan-European FTSEurofirst 300 index dropped one percent, while the broader STOXX Europe 600 index fell 1.1 percent in early trading. As several opinion polls suggest that support for quitting the 28-member bloc was gaining momentum among British voters, Germany was preparing for increased market volatility, a top official with the German Finance Ministry said on Tuesday. Jens Spahn, parliamentary state secretary in the ministry, told German broadcaster ARD that a "Leave" vote could trigger far greater volatility. "It will be important to demonstrate stability," Spahn said, adding that it would be critical for Germany and the rest of the EU to demonstrate unity and a determination to continue as a bloc. Spahn also said the ministry was bracing for a variety of scenarios, depending on the outcome of the referendum and the extent of the market reactions. A vote to leave the EU would mean that Britain would have to renegotiate trade agreements with the rest of Europe, and it would likely have to accept less preferable terms, Spahn said. Pound slides as yen rises The British pound was also affected by market jitters, slumping to a two-month low in trading in Asia on Tuesday, notably against the Japanese yen. The yen moved toward its strongest level since October 2014 as traders pushed into a currency seen as a safe bet in times of turmoil. "Amid all of this, the yen continues to demonstrate its preeminent safe-haven characteristics," said Ray Attrill, co-head of currency strategy at National Australian Bank. However, Japan's finance minister Taro Aso repeated a warning that officials were ready to step into currency markets to tame the rise of the yen because a strong currency was hurting growth and exports. "Sudden and large changes [in forex rates] are not desirable... We will act firmly when necessary," Aso told reporters. Financial market volatility is likely to increase in the days ahead as the US Federal Reserve (US Fed) is due to open a policy meeting on Tuesday, deciding on the future of US interest rates. Buoyed by a strong performance of the US economy in recent months, the Fed is weighing another rate hike, but may be holding back on the move so shortly before the British referendum.

For the first time in modern German history, the yield of the country’s benchmark 10-year debt – also known as Bund – has fallen below zero percent as investors rush to safety ahead of Britain’s Brexit referendum. With the prospect of Britain leaving the European Union looming ever larger ahead of a referendum in 9 days, global investors are increasingly ... Read More »

Microsoft to buy LinkedIn

Software giant Microsoft is set to take over professional networking site LinkedIn for $26.2 billion (23.3 billion euros) in a deal expected to be completed this year, the two companies have announced. "Just as we have changed the way the world connects to opportunity, this relationship with Microsoft, and the combination of their cloud and LinkedIn’s network, now gives us a chance to also change the way the world works," LinkedIn CEO Jeff Weiner said in a statement Monday. LinkedIn, primarily used by jobseekers and those wanting to build professional contacts, has more than 433 million registered users, according to the company's corporate website. It also has 105 million unique visiting members per month. The companies were quick to state that LinkedIn wasn’t facing radical change, saying in the statement that the website "will retain its distinct brand, culture and independence," with Weiner remaining CEO. Waiting for regulatory approval The transaction is expected to be completed by this year, but is still pending the approval of LinkedIn’s shareholders, and regulatory approval. Reid Hoffman, LinkedIn’s board chairman and controlling shareholder, called the acquisition a "refounding moment" for the website. The move comes as Microsoft seeks to expand from being a purely software-producing firm, and as LinkedIn seeks new growth opportunities.

Software giant Microsoft is set to take over professional networking site LinkedIn for $26.2 billion (23.3 billion euros) in a deal expected to be completed this year, the two companies have announced. “Just as we have changed the way the world connects to opportunity, this relationship with Microsoft, and the combination of their cloud and LinkedIn’s network, now gives us ... Read More »

Bayer confirms merger talks with Monsanto

A merger of the world's biggest producers of seeds and pesticides may soon be in the making. Missouri-based Monsanto confirmed reports that it received a bid from Germany's biggest drugs and chemicals firm Bayer. US seed and pesticide giant Monsanto said Wednesday it had received a proposal from Bayer which was "unsolicited, non-binding," but nevertheless reviewed by the company for "due diligence, regulatory approvals and other conditions." While the US company was assessing the offer, it said there was "no assurance" that any transaction would be "entered into or consummated." Bayer released its own statement on Thursday, briefly confirming that its executives had met with counterparts in their acquisition target to "privately discuss" a merger. Neither statement specified a price tag for the deal. But a bid to acquire Monsanto, which has a market capitalization of $42 billion (37.4 billion euros), is likely to be worth more than ChemChina's February deal to take over Swiss agrichemicals giant Syngenta for $43 billion. Monsanto itself tried to buy Syngenta last year. The scale of a Bayer-Monsanto merger could face resistance from antitrust regulators. Agricultural suppliers like Monsanto have been hit by low commodity prices, causing farmers to cut down on supply orders. The end of the first quarter saw Monsanto cut its earnings forecast for 2016.

A merger of the world’s biggest producers of seeds and pesticides may soon be in the making. Missouri-based Monsanto confirmed reports that it received a bid from Germany’s biggest drugs and chemicals firm Bayer. US seed and pesticide giant Monsanto said Wednesday it had received a proposal from Bayer which was “unsolicited, non-binding,” but nevertheless reviewed by the company for ... Read More »

Another year of cheap oil, IEA says

The International Energy Agency (IEA) says overcapacity means another year of cheap oil. But it warns low oil prices are leading to underinvestment in developing new capacity, which may cause a spike in prices by 2021. IEA released its "Medium-Term Oil Outlook Report" in Paris, France, and Houston, Texas on Monday, looking ahead at the next five years of oil demand, production and prices. It projected that oil prices would remain low until at least sometime in 2017, given that large stocks of oil will be feeding into an already saturated market. "Today's oil market conditions do not suggest that prices can recover sharply in the immediate future - unless, of course, there is a major geopolitical event," IEA said. "Only in 2017 will we finally see oil supply and demand aligned, but the enormous stocks being accumulated will act as a dampener on the pace of recovery in oil prices when the market, having balanced, then starts to draw down those stocks." In other words, while oil prices should gradually start rising once demand catches up to current production capacity, the availability of resources that can be easily and quickly tapped - like the oil stored in massive strategic reserve bunkers in the US - will slow the price rise. A few years further on, however, prices may begin to rise much more rapidly, because the current period of very low prices is discouraging investment in the development of new oil supplies. As a result, once demand begins to outstrip supply after a few years, a scramble for available reserves may result, driving a spike in prices. Only Saudi Arabia and Iran had spare production capacity available now; other countries weren't investing enough even to keep current production levels going medium-term, let alone meet demand growth, the report said. "The risk of a sharp oil price rise towards the later part of our forecast - around 2021 - arising from insufficient investment is as potentially destabilising as the sharp oil price fall has proved to be," IEA warned. Oil supply continues to grow, but less quickly The report projects that four million barrels a day (mbd) will be added to global oil supply between 2015 and 2021, an increment less than half as large as the total output growth of 11 mbd over the period 2009-2015, a result of upstream investment drying up in response to the supply glut that has driven down prices over the past two years. Global oil exploration and production capital expenditures ("capex") are expected to fall 17 percent in 2016 compared to 2015, following a drop of 24 percent in 2015 compared to 2014. It would be the first time since 1986 that upstream investment has fallen for two consecutive years. US production is expected to reach an all-time high of 14.2 mbd by the end of the forecast period, though it will fall slightly in the short term. On the demand side, IEA expects demand growth averaging 1.2 mbd through 2021, reaching 101.6 mbd by that year. India's consumption is expected to rise rapidly as more motor-cars hit the roads with rising prosperity on the subcontinent. Growth in Chinese demand, conversely, is expected to cool somewhat. On the whole, Asia's share of total global oil demand will continue to increase.

The International Energy Agency (IEA) says overcapacity means another year of cheap oil. But it warns low oil prices are leading to underinvestment in developing new capacity, which may cause a spike in prices by 2021. IEA released its “Medium-Term Oil Outlook Report” in Paris, France, and Houston, Texas on Monday, looking ahead at the next five years of oil ... Read More »

Tesla posts 11th straight loss, revenue up

Despite rising sales, Tesla Motors has posted its 11th consecutive quarterly loss. The electric carmaker announced it would release a lower-priced Model 3 sedan in late 2017. The Palo Alto-based electric car manufacturer reported a fourth quarter loss of $320 million (283.6 million euros) as revenue rose 27 percent to $1.2 billion, bringing yearly revenue to $4 billion with a loss of $889 million last year. Tesla's stock, which has been battered by 40 percent this year, rose 9 percent in after-hours trading to $157 despite the poor earnings. The boost came from the announcement that its lower-priced Model 3 sedan would be unveiled in March and have a scheduled production start at the end of 2017. The $35,000 sedan is about half the price of the Model S, a luxury vehicle, that has seen sales rise 76 percent in the fourth quarter to 17,272. Last year the company delivered 50,000 of the Model S, a jump of 60 percent from 2014. Tesla's shares had fallen in recent days as investors voiced concern over delays of the Model S. A shareholder letter said the company is seeing "growing worldwide demand for Tesla vehicles, supported by record production" and expects to deliver 80,000 to 90,000 Model S and Model X vehicles this year. Tesla's new Model X SUV suffered difficulties ramping up production, but the company said it would deliver 1,000 SUVs per week by the second quarter. The price tag is $130,000. The company is also making investments in battery technology and vehicle production. "Achieving these results in 2016 should leave us well positioned for 2017, when we plan to launch Model 3 and take another significant step towards our mission of accelerating the world's transition to sustainable transportation," the company said in a letter.

Despite rising sales, Tesla Motors has posted its 11th consecutive quarterly loss. The electric carmaker announced it would release a lower-priced Model 3 sedan in late 2017. The Palo Alto-based electric car manufacturer reported a fourth quarter loss of $320 million (283.6 million euros) as revenue rose 27 percent to $1.2 billion, bringing yearly revenue to $4 billion with a ... Read More »

Anglo American to cut staff by nearly two-thirds

One of the world's leading miners has said it will cut tens of thousands of jobs as part of a radical overhaul. The announcement comes as the industry is struggling with weak demand and painfully low commodity prices. Shares in the British mining giant took a beating on Tuesday after the company announced it would cut its workforce by nearly two-thirds, affecting some 85,000 out of its 135,000-strong staff, as part of a desperate attempt to cope with tumbling commodity prices. "We will be radically restructuring our portfolio, so the net result is expected to be a reduction to around 50,000 employees," a spokesperson told the AFP news agency. Anglo has already cut several thousand jobs in recent year, with its staff standing at 162,000 in 2013. Weak demand, in particular from the world's second biggest economy, China , has already sapped Anglo's stock price by 70 percent so far this year. Tuesday's announcement shaved off another 12 percent, pushing shares down to a new record low, with investors worrying that the restructuring plan might stop the bleeding temporarily but won't heal the wound in the long run. Pledging to take "bolder action," CEO Mark Cutifani also said he would whittle down the firm's portfolio from some 55 mines and smelters to around 20, focusing mainly on its diamond, platinum and copper businesses, which offer better long-term potential. Going forward, the company will consist of just three division: De Beers for diamonds, Industrial Metal for platinum and base metals, and Bulk Commodities for coal and iron ore. "Assets in nickel, coal and iron ore will have to compete and demonstrate their ability to drive down the cost curve, with the ability to deliver cash through the cycle. If not, they won't be in the portfolio, it's as simple as that," Cutifani told investors in the British capital. 'Outlook remains dim' The comment came on the same day as spot iron ore fell to a decade low of less than $40 (36.7 euros) a ton, while futures prices suggested more weakness for the steelmaking commodity already down by nearly half this year. "With few exceptions, the commodity price outlook remains dim, forcing miners to keep up their guard," consultants PwC said in a report on Tuesday. "As the old saying goes, survival will be of the fittest, and for miners also the leanest." To that end, the miner said it planned to sell several coal assets in Australia and South Africa, adding that it had secured more than $2 billion in sales so far. In addition, it would further slash investments through 2016 by about $1 billion. In a blow to shareholders, Anglo said it would suspend dividend payments until the end of next year in order to save money. The London-based miner, which is currently the world's fifth-biggest by market value, has been hit harder by the ongoing commodity crisis than many of its rivals, with higher-cost iron ore operations weighing heavier on its bottom line. By selling off the most costly, it hopes to not only save money, but also to save some of its parting employees' jobs in the process. Commenting on the layoffs, Anglo's spokesperson stressed that because many of the mines will be sold and not closed, "the 85,000 jobs don't (all) disappear as many will be employed by new owners." According to a company graph, the miner plans to shrink its workforce to 99,000 next year and 92,000 in 2017 followed by another sharp reduction.

One of the world’s leading miners has said it will cut tens of thousands of jobs as part of a radical overhaul. The announcement comes as the industry is struggling with weak demand and painfully low commodity prices. Shares in the British mining giant took a beating on Tuesday after the company announced it would cut its workforce by nearly ... Read More »

German manufacturing weakened by lackluster China

Foreign orders at German manufacturers dropped in September, as demand from China continues to be tepid. Manufacturing in Asia's powerhouse also dropped for a third straight month. Orders from abroad fell by 18 percent in September, compared to the same time the year before, according to Germany's VDMA manufacturing association. "During the course of the year, business in the mechanical engineering and machine tools sector has once again deteriorated," VDMA Chief Economist Ralph Wiechers said. The weakness in the Chinese economy was impacting on other markets, Wiechers said. The weaker orders from abroad were partially offset by orders at home and elsewhere in Europe and the US. It meant that, overall, orders in the first nine months of the year only fell by 1 percent. "That's down to hard work and shows how competitive our manufacturers are," VDMA economist Olaf Wortmann said. Meanwhile, China's manufacturing sector contracted in October for a third straight month, an official survey showed on Sunday, while a private factory survey on Monday also showed activity fell for an eighth consecutive month in October. Despite China's lackluster performance, the Asian powerhouse remains the No. 1 market for Germany's manufacturers and will continue to do so for the forseeable future, according to the VDMA.

Foreign orders at German manufacturers dropped in September, as demand from China continues to be tepid. Manufacturing in Asia’s powerhouse also dropped for a third straight month. Orders from abroad fell by 18 percent in September, compared to the same time the year before, according to Germany’s VDMA manufacturing association. “During the course of the year, business in the mechanical ... Read More »

Majority of VW’s rigged cars in Europe

German carmaker Volkswagen has said the overwhelming majority of its roughly 11 million cars with built-in defeat devices were sold across Europe. The company again apologized for the "wrongdoing of individuals." A Volkswagen spokesman on Monday reported that 8 million of the company's vehicles running in the EU were fitted with software capable of thwarting diesel-engine emission tests. In a letter co-signed by the current VW chief lobbyist Thomas Steg and cited by the German business daily "Handelsblatt," the carmaker said 1.2, 1.6 and 2.0-liter engines were affected. The authors of the letter addressed to national parliamentarians once again apologized for the behavior of "some individuals" and promised to fully clear up the scandal. No time to waste VW has been under mounting pressure to get to grips with the biggest business crisis in its 78-year history as revelations about its large-scale emissions cheating scandal have wiped out a third of the firm's stock price and rocked the auto industry as a whole. Up until now, VW had said it would have to refit up to 11 million diesel cars globally, including 2.8 million in Germany . Newly appointed Chief Executive Matthias Müller is to address employees at a staff meeting in Wolfsburg Tuesday. One day later, he's scheduled to brief the supervisory board on what measures have been taken so far to find the culprits and win back the trust of customers.

German carmaker Volkswagen has said the overwhelming majority of its roughly 11 million cars with built-in defeat devices were sold across Europe. The company again apologized for the “wrongdoing of individuals.” A Volkswagen spokesman on Monday reported that 8 million of the company’s vehicles running in the EU were fitted with software capable of thwarting diesel-engine emission tests. In a ... Read More »

BP to pay record fine over oil spill

British energy giant BP will pay a record fine to settle claims for damages stemming from the 2010 Gulf of Mexico oil spill. The agreement was reached with the Department of Justice and five US states. The deal announced Monday foresees BP paying a record $20.8 billion (18.6 billion euros) in fines arising from the 2010 Deepwater Horizon oil spill, which followed an explosion on an offshore rig in the Gulf of Mexico killing 11 workers. Beaches were blackened and the region's fishing and tourism industries were crippled in a tragedy that rocked the whole nation. The final settlement with the US Department of Justice and some US states was significantly higher than a previously announced deal in which BP was set to pay $18.7 billion to resolve claims from government entities. Costly affair Negotiators made it clear that Monday's deal resolved all civil claims against BP, ending five years of legal fighting over the nearly 134-million-gallon (500-million-liter) spill. Among other requirements, the British company will be forced to pay $5.5 billion in Clean Water Act penalties and nearly 45 billion to five US Gulf states - Alabama, Florida, Louisiana, Mississippi and Texas. BP had earlier already settled with people and businesses harmed by the 2010 disaster. That alone cost the firm close on $6 billion in payouts.

British energy giant BP will pay a record fine to settle claims for damages stemming from the 2010 Gulf of Mexico oil spill. The agreement was reached with the Department of Justice and five US states. The deal announced Monday foresees BP paying a record $20.8 billion (18.6 billion euros) in fines arising from the 2010 Deepwater Horizon oil spill, ... Read More »

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