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Labor unions in Britain and Japan are calling for wage rises as high inflation continues to squeeze salaries. And check out today’s ESG Spotlight on Spain’s efforts to revamp its electric vehicle production.

Junior doctors in Britain began a four-day strike over pay on Tuesday that is likely to cause unprecedented disruption to the state-funded National Health Service (NHS), prompting the government to warn of a risk to patient safety.

Tens of thousands of junior doctors — qualified physicians who make up nearly half of the medical workforce — are striking for pay rises better aligned with inflation, in a walkout that follows a three-day doctors’ strike last month.

The strike is the latest to involve NHS staff, following walkouts by nurses, paramedics and others demanding rises that better reflect annual inflation running at more than 10%. Britain’s consumer price inflation ran at 10.4% in February, the most recent official data shows.

Junior doctors hold placards during a strike, amid a dispute with over pay, outside St Thomas’ Hospital, in London, Britain April 11, 2023. REUTERS/Maja Smiejkowska

The doctors have joined hundreds of thousands of other public sector workers who have gone on strike in Britain recently, including railway staff, teachers and civil servants.

Meanwhile, members of the National Association of Schoolmasters Union of Women Teachers (NASUWT) union in England are to be balloted on industrial action after becoming the latest teachers’ group to reject a government pay offer, the union said.

It said in a statement that 87% of members voted against acceptance of the pay deal. A separate consultative survey showed 77% said they were willing to vote for strike action to achieve a fair pay award. The government has offered teachers in England a one-off payment this year of 1,000 pounds ($1,241.30) and an average pay rise of 4.5% in the next financial year.

British consumers have been under pressure for more than a year due to high inflation which has outstripped pay growth for almost all workers.

Last month government forecasters estimated households were in the midst of the biggest two-year squeeze in living standards since comparable records started in the 1950s.

But it’s not just workers in Britain feeling the inflation squeeze on salaries as the head of Japan’s largest trade union confederation on Tuesday called for further wage rises beyond next year, arguing that this year’s wage hikes were inadequate if they prove a one-off.

The trade unions will demand further wage hikes next year and the year after next to sustain wage growth, Rengo President Tomoko Yoshino told reporters. “We don’t believe that one-off wage hikes for this current season would be adequate,” she said. “Wages must go up, up and up to break the status quo.”

Japanese labor unions have typically attached greater importance to job security rather than aggressive wage hikes following a series of financial crises since the late 1990s, which has been a drag on wage growth, Yoshino said.

Japan’s major companies wrapped up their annual labor talks with average wage hikes of 3.8% for this fiscal year, the largest rise in about three decades, Rengo’s preliminary data showed.

Residents look at buildings being burnt down by wildfire in Gangneung, South Korea, April 11, 2023. Yonhap/via REUTERS

Olivier d’Assier, head of applied research at German financial intelligence company Qontigo, shares his thoughts on inflation and recession concerns in the market:

“Investors’ aversion to inflation and its uptight cousin, a hawkish monetary policy, stems from the belief that neither affliction is consequence-free.

“The most anticipated recession in history is now also the most postponed in history and seems to be always six months away. Macro data isn’t helping clarify things either, inflation has not been falling as fast as predicted, but nor has the economy.

“Each data release seems to be designed to give investors just enough information to rule some things out, but not enough to rule out all the things they are worried about.

“For the bears, good news is bad news that simply delays the inevitable recession they foresee coming. Economists call this ‘reaching the point of diminishing marginal utility,’ which stands for the moment when more of what used to make investors happy no longer does.

“For the bulls, afflicted as they are with a fondness for the bright side, good news is just a sign that the economy is achieving a soft landing.

“As of now, investors feel each thesis is equally viable, although looking back a few weeks from now, they may discover that this equality stemmed only from the fact that both were written using the same font type. Hint: they are mutually exclusive, unless you want to call a mild recession a soft landing.”

The Black unemployment rate hit a record low in March, a milestone for a U.S. labor market that most policymakers and economists expect to begin cooling in the face of higher interest rates, jeopardizing those historic gains.

The 0.7 percentage point decline in the African American unemployment rate was the largest since November 2021 and was led by Black women, for whom joblessness dropped to a record low 4.2%. The rate for Black men ticked up to 5.2% from February’s record-low-matching 5.1%.

An electric vehicle is plugged into a charging station in Bilbao, Spain, February 15, 2023. REUTERS/Vincent West/File Photo

Today’s ESG Spotlight focuses on a revamped Spanish government scheme aimed at encouraging electric vehicle (EV) production in the country. Keeping with Spain, Swiss multinational commodity company Glencore partners with a waste management firm to provide lithium-ion battery recycling services in the country.

Madrid will launch a new, more flexible version of the PERTE scheme around July, worth 2 billion euros ($2.2 billion) after last year’s initial funding round flopped, with only 27% of an earmarked 2.9 billion euros allocated.

Jose Maria Lopez, who is now in charge of the program, said he was confident the scheme’s remaining 2 billion euros will be disbursed across twin tenders, for EV and battery production, to be launched around July.

The revamped PERTE will include a specific line of financing for battery manufacturing. “The sector is looking favorably on the redesign,” said PERTE commissioner Lopez.

The logo of commodities trader Glencore is pictured in front of the company’s headquarters in Baar, Switzerland, July 18, 2017. REUTERS/Arnd Wiegmann/File Photo

Glencore said it would partner with waste management services provider FCC Ámbito and Spanish energy firm Iberdrola to provide lithium-ion battery recycling services at scale in Spain and Portugal.

The companies intend to establish a facility to offer recycling and second-life solutions for lithium-ion batteries, both from gigafactory production scrap and end-of-life batteries, Glencore said in a statement.

“The economic storm is not over, and interest rates will likely have to increase further given existing inflation pressure. In our view, as higher exposures encounter shrinking risk appetite, momentum for rising prices, higher retentions and tighter insurance terms and conditions will likely continue.”

Jérôme Jean Haegeli, group chief economist at insurance firm Swiss Re

Global Investor

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