Business News Weekly Roundup, June 19 2015

McKinsey report vouches for power of online job portals

Getting the most out of higher education in today’s globalized world increasingly comes down to individuals being able to make informed decisions about their study plans and how a particular degree and institution will benefit them in their future lives. That’s the whole purpose of TopMBA.com and, if you’re reading this, then you’re almost certainly interested in the kind of postgraduate education that can enrich your career.

As such, a report released by the McKinsey Global Institute earlier this month makes for interesting reading. At undergraduate level, it finds that an estimated US$89 billion of annual spending on higher education across seven selected countries (the US, the UK, Germany, Japan, India, Brazil, and China) does not lead to successful labor market outcomes.

In the US, the study found that, “[M]ore than one-quarter of workers holding bachelor’s or advanced degrees earn less than the median annual wage for two-year associate degree holders (those who leave college without majoring, namely after two years of the four years it would take to receive a full bachelor’s level qualification).” Leaving aside questions around the purpose of education, this is a striking finding.

McKinsey’s report, ‘A labor market that works: Connecting talent with opportunity in the digital age’, focuses on how online talent platforms (or online job portals), such as QS Global-Workplace, can help in narrowing the margins of this, as McKinsey labels it, ‘misallocation’.

Online job portals, according to the report, allow for a greater level of transparency when it comes to the skills that employers are really looking for. This, in turn, can help prospective students make better decisions about where and what to study.

But, that’s not the only advantage of online job portals, says McKinsey. As they grow and evolve, the report posits, they can inject momentum into international labor markets and help people more effectively connect to opportunities. It estimates that online job portals could benefit 540 million people and be worth as much as US$2.7 trillion to global GDP (2% of total worldwide GDP) by 2025.

Within this figure, US$340 billon will come from providing better matches for employers and jobseekers that subsequently increase productivity. However, the largest proportion, US$1.27 trillion, is predicted to come simply from generating greater labor force participation – among those currently defined as ‘inactive’ and those looking to increase their hours from part-time positions.

Monte dei Pashci completes repayment of bailout loan

The world’s oldest surviving bank - Italy’s Banca Monte dei Paschi di Siena - said this week that it had paid the Italian government €1.12 billion ($1.26 billion) to complete repayment of a €4.1 billion bailout loan taken out in 2013 to keep it afloat. The loan was one of the so-called ‘Monti Bonds’ that were named after Mario Monti, Italy’s former prime minister.

However, Monte dei Paschi is still “gasping under a pile of bad loans and has effectively put itself up for sale,” according to a report in The New York Times.  

Last week, the sale of shares valued at €3 billion was completed and it is thought that €5 billion worth of new shares were sold last year to allow it to pay back three-quarters of the government loan. The bank recorded a net loss of €5.34 billion last year, something attributed mostly to “huge write-downs on bad loans”, according to the Wall Street Journal.

The New York Times report explores how the city of Siena has been looking to move on from the near collapse of a bank that was its largest private sector employer. The foundation which owned Monte dei Paschi also contributed millions towards social services and cultural activities in the Tuscan city.

Monte dei Paschi was established in 1472 – the same year in which a 20-year old Leonardo da Vinci is shown, by a receipt of payment, to be a qualified master in the artists’ guild of Florence. 

FDI to Latin America and the Caribbean

The decline in foreign direct investment (FDI) to Latin America was considerably larger, at 16%, than the overall global decline of 7% in 2014, according to a recent report by the UN Economic Commission for Latin America and the Caribbean (ECLAC). The report also predicted a second year of decline in 2015, something that would definitively mark the end of a decade-long upward trend of FDI growth in the region.

However, a country-by-country analysis reveals that not everywhere had a bad year. Of the region’s seven largest economies, Chile saw a rise in FDI of 14% and was also comfortably the region’s biggest provider of foreign investment, or FDI outflow. Elsewhere, FDI into Paraguay soared by 230% (from a far smaller base, presumably) and Central America’s biggest rise, of 53%, came courtesy of El Salvador. This information is all beautifully depicted in a series of infographics released this week by the Americas Society / Council of the Americas.