Economist 5/14/15

  1. Firms looking to put their managers through development programmes are increasingly creating their own, rather than relying on business schools.General Electric is considered to have opened the first corporate university, in 1956. Perhaps the most famous is McDonald’s “Hamburger University”.A survey by the Boston Consulting Group (BCG) found that the number of formal corporate universities in America doubled between 1997 and 2007, to around 2,000.The numbers are vague because the definition of what qualifies as a corporate university is slippery.Corporate universities have two distinguishing features: the first is a dedicated facility, whether built of bricks or housed online; the second is a curriculum tailored to the company’s overarching strategy.Corporate universities can be particularly useful when a firm is attempting to overhaul its culture.Apple has gone further, poaching Yale business school’s dean, Joel Podolny, to run its corporate university.Although there are many good reasons for firms to invest in corporate universities, they have their limitations. One is the danger of building an echo chamber. Managers who go to a university business school are exposed to ideas from peers in other companies.Even more troubling is that, for all the millions spent on them, it seems all but impossible to measure the effect a corporate university has on the bottom line.
  2. Companies have been known to use the offer of education at a prestigious business school, whether an “Executive MBA” (EMBA) degree or a shorter leadership course, as a way to keep their rising stars happy.Unfortunately, it often had the opposite effect, providing a firm’s brightest and best with a highly marketable qualification that made them more prone to being poached by rivals. Certificates from corporate universities, being more focused on the sponsoring firm’s needs, are less attractive to competitors.Many firms have now stopped paying to send managers to external business schools altogether.Yet the overall demand for EMBAs does not seem to have fallen. Students on the EMBA programme offered by IE in Spain earned significantly more after completing the programme.. Some 82% say they were promoted soon after graduation. Of course, they may have been destined for higher things regardless of their sojourn in academia, but most who took our survey believe that their EMBAs played a part in their rise.
  3. THE world is addicted to debt. The borrowings of governments, households, companies and financial firms have risen in almost every big country around the world since the year 2000, relative to their GDP. Others have economies that are driven by debt-fueled investment, or which are stagnant. China has similar debt levels to America, despite being only 20% as rich as it per person. Portugal has similar leverage to Sweden, which is almost twice as wealthy as it. Troubled Greece’s debt-to-GDP is on a par with that of prosperous Norway’s. Countries with disproportionately high debts are more prone to crises. But working out how to shrink-debt to GDP without causing a slump is tough – as China is discovering.
  4. FOR decades people-traffickers have plied a lucrative trade on South-East Asian waters.Roughly half of South-East Asia’s boat people are economic migrants from Bangladesh. The other half are Rohingyas, a long-persecuted Muslim minority, originally from Bangladesh but whose home is now in coastal Rakhine state in north-western Myanmar.Migrants pay up to $2,000 for a passage to smuggler camps in southern Thailand, from where they hope to sneak across the border into Malaysia, one of South-East Asia’s richest countries (and Muslim to boot). It is a long and dangerous journey. Some succumb to disease or abuse in Thai camps.For years the trade has carried on under Thai officials’ noses.Yet the generals who have run Thailand since a coup a year ago have stepped up their efforts to combat the problem. On May 1st the authorities found 26 bodies at an abandoned trafficking camp in the southern province of Songkhla. They have vowed to close the rest. European countries have threatened to ban imports of seafood unless Thailand stamps out slavery.
  5. Around the world, legal and financial support for new parents is better than it has ever been. According to the International Labour Organisation (ILO), 85% of countries now provide at least 12 weeks’ maternity leave. In all but two of the 185 countries it surveys mothers are entitled to some leave paid for by the state, employers or some combination of the two. (The hold-outs are Papua New Guinea and America, although a few states offer basic support.) Though only a third of countries meet the ILO’s recommended minimum of at least 14 weeks off for new mothers, paid at two-thirds their salary and funded publicly.But how many countries meet the ILO’s guidelines on paternity leave? None, because no such guidelines exist. Though it publishes detailed advice on such matters as breastfeeding breaks for female employees, the organisation has drawn up no formal recommendations on fathers’ rights and duties. It turns out that even shorter maternity breaks have unintended consequences. Time away from the labour market reduces women’s earning power, as their skills degrade and they miss chances to gain experience and win promotion.The effect is magnified when lengthy maternity leave is combined with policies to encourage part-time work, which tempt more women back into the labour force but help keep them in junior positions.Rather than simply cutting maternity leave in response to such findings, a growing number of governments are trying to spread the child-rearing burden (or joy, depending on how one looks at it). Last month Britain became the latest country to combine maternity and paternity leave into a single chunk of parental leave, to be split between mother and father however they see fit. Several European countries, as well as Australia and New Zealand, already have such a system.The problem is that dads tend not to take up the offer. In Austria, the Czech Republic and Poland, where all parental leave is transferable, only about 3% of dads make use of it.One reason for low take-up by fathers is financial: even pre-childbirth, women are paid less than men, meaning that their salaries are easier to forgo during a period of unpaid or low-paid leave. But cultural pressures also weigh heavily.
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