Aurelia Butler

MADRID (Reuters) – The Spanish city of Malaga and its Costa del Sol surroundings are seeing a surge in people moving in from the rest of Europe as lifestyle and working habits change after the COVID-19 pandemic, according to two of Spain’s largest homebuilders.Aedas Homes said its sales to foreigners in Costa del Sol doubled last year, from 124 units sold in 2021 to 248 in 2022, while Neinor Homes SA said about 40% of young people taking on long-term rents in the city since they launched a rental division in 2020 were foreign. That compares with almost no international customers elsewhere in Spain.Property purchases by foreigners increased by 62% from a year earlier in the region of Andalusia, which includes Malaga, in the first half of 2022, according to the Centre for Statistical Information of Notaries.Malaga’s town council said a platform launched in February 2021 to help so-called digital nomads, www.malagaworkbay.com, had received more than 160,000 visits by the end of 2022.Millions of workers were forced to work from home during lockdowns aimed at stalling the spread of COVID-19 in 2020 and many companies have allowed the shift to become permanent – with employees discovering they can now work from anywhere.Aedas CEO David Martinez said the homebuilder had seen a spike in sales to people from Poland and the Czech Republic, countries feeling the proximity to the Ukraine war, as well as Belgians, French and Nordics.”I don’t think it’s just the war,” Martinez told Reuters. “I think it’s that lots of people have had a rethink about their lives post-COVID.”TECH HUBMalaga has been working to position itself as a tech hub that can attract foreign talent rather than just a gateway to the beaches and golf courses further south. The local government last year eliminated a wealth tax that obliges residents and non-residents to pay income tax on money held abroad. The policy is bearing fruit. Google-owner Alphabet (NASDAQ:GOOGL) Inc. chose the city as the location for a European cybersecurity hub because of the number of tech start-ups already based there, according to the Spanish government. Citigroup (NYSE:C) announced in March 2022 plans to open a hub for junior investment bankers in the city, offering what it said was “a better equilibrium between work and private life to attract young talent”.The pull of southern Europe for northern Europeans was amplified by the pandemic, Neinor Homes CEO Borja Garcia-Egotexeaga told Reuters, as companies struggling to hold on to their best employees are giving them the freedom to work from sunnier climes. “Companies in Europe could consider measures such as lowering the salary or paying less to those who seek to work remotely from other countries, because the employee will be happy because they have some freedom,” he said. More

Brazil and Argentina will this week announce that they are starting preparatory work on a common currency, in a move which could eventually create the world’s second-largest currency bloc. South America’s two biggest economies will discuss the plan at a summit in Buenos Aires this week and will invite other Latin American nations to join.The initial focus will be on how a new currency, which Brazil suggests calling the “sur” (south), could boost regional trade and reduce reliance on the US dollar, officials told the Financial Times. It would at first run in parallel with the Brazilian real and Argentine peso.“There will be . . . a decision to start studying the parameters needed for a common currency, which includes everything from fiscal issues to the size of the economy and the role of central banks,” Argentina’s economy minister Sergio Massa told the Financial Times. “It would be a study of mechanisms for trade integration,” he added. “I don’t want to create any false expectations . . . it’s the first step on a long road which Latin America must travel.”Initially a bilateral project, the initiative would be offered to other nations in Latin America. “It is Argentina and Brazil inviting the rest of the region,” the Argentine minister said. A currency union that covered all of Latin America would represent about 5 per cent of global GDP, the FT estimates. The world’s largest currency union, the euro, encompasses about 14 per cent of global GDP when measured in dollar terms.Other currency blocs include the CFA franc which is used by some African countries and pegged to the euro, and the East Caribbean dollar. However these encompass a much smaller slice of global economic output.The project is likely to take many years to come to fruition; Massa noted that it took Europe 35 years to create the euro.An official announcement is expected during Brazilian president Luiz Inácio Lula da Silva’s visit to Argentina that starts on Sunday night, the veteran leftist’s first foreign trip since taking power on January 1.Brazil and Argentina have discussed a common currency in the past few years but talks foundered on the opposition of Brazil’s central bank to the idea, one official close to the discussions said. Now that the two countries are both governed by leftwing leaders, there is greater political backing.A Brazilian finance ministry spokesman said he did not have information about a working group on a common currency. He noted that finance minister Fernando Haddad had co-authored an article last year, before he took his current job, proposing a south American digital common currency.Trade is flourishing between Brazil and Argentina, reaching $26.4bn in the first 11 months of last year, up nearly 21 per cent on the same period in 2021. The two nations are the driving force behind the Mercosur regional trade bloc, which includes Paraguay and Uruguay. The attractions of a new common currency are most obvious for Argentina, where annual inflation is approaching 100 per cent as the central bank prints money to fund spending. During President Alberto Fernández’s first three years in office, the amount of money in public circulation has quadrupled, according to central bank data, and the largest denomination peso bill is worth less than $3 on the widely used parallel exchange rate.However, there will be concern in Brazil about the idea of hitching Latin America’s biggest economy to that of its perennially volatile neighbour. Argentina has been largely cut off from international debt markets since its 2020 default and still owes more than $40bn to the IMF from a 2018 bailout.Lula will stay in Argentina for a summit on Tuesday of the 33-nation Community of Latin American and Caribbean States (CELAC), which will bring together the region’s new crop of leftwing leaders for the first time since a wave of elections last year reversed a rightwing trend. Colombia’s president Gustavo Petro was likely to attend, officials said, along with Chile’s Gabriel Boric and other more controversial figures such as Venezuela’s revolutionary socialist president Nicolás Maduro and Cuban leader Miguel Díaz-Canel. Mexico’s president Andrés Manuel López Obrador generally shuns overseas travel and is not scheduled to participate. Protests against Maduro’s attendance are expected in Buenos Aires on Sunday.

Argentina’s foreign minister Santiago Cafiero said the summit would also make commitments on greater regional integration, the defence of democracy and the fight against climate change.Above all, he told the Financial Times, the region needed to discuss what sort of economic development it wanted at a time when the world was hungry for Latin America’s food, oil and minerals. “Is the region going to supply this in a way which turns its economy [solely] into a raw material producer or is it going to supply it in a way which creates social justice [by adding value]?,” he said.Alfredo Serrano, a Spanish economist who runs the Celag regional political think-tank in Buenos Aires, said the summit would discuss how to strengthen regional value chains to take advantage of regional opportunities, as well as making progress on a currency union.“The monetary and foreign exchange mechanisms are crucial,” he said. “There are possibilities today in Latin America, given its strong economies, to find instruments which substitute dependence on the dollar. That will be a very important step forward.” Manuel Canelas, a political scientist and former Bolivian government minister, said that CELAC, founded in 2010 to help Latin American and Caribbean governments co-ordinate policy without the US or Canada, was the only such pan-regional integration body which had survived over the past decade as others fell by the wayside.However, Latin America’s leftist presidents now face more difficult global economic conditions, trickier domestic politics with many coalition governments, and less enthusiasm from citizens for regional integration.“Because of this, all the steps towards integration will certainly be more cautious . . . and will have to be focused directly on delivering results and showing why they are useful”, he cautioned.Additional reporting by Bryan Harris in São Paulo More

A day after the owner of Uniqlo clothing brand stunned the nation with a plan to raise wages in Japan by up to 40 per cent, its chief financial officer told investors the pay hike was not a one off. “We want workers to work hard under this new system and if sales and profits rise, there will be room to raise our remuneration to a much higher level,” Fast Retailing’s finance chief Takeshi Okazaki said this month. In a country where companies have resisted raising pay and the workforce has refrained from aggressive salary demands for most of the past three decades, Fast Retailing’s move is a watershed for the government and the Bank of Japan’s battle to lift the economy out of deflation.If other companies follow suit and the wage hikes continue, analysts say the ramifications could be far-reaching. The creation of a virtuous cycle of rising wages, consumption and prices would allow Japan to finally move away from the negative interest rates and ultra-loose monetary policies that have defined its struggle with low inflation and low growth.Haruhiko Kuroda, the BoJ’s longest-serving governor who will step down in April, last week defied market pressure and kept the key pillars of his monetary easing programme unchanged, stressing that wage growth was not sufficient despite the global inflation shock.“Many of the current working population are very sceptical about prices and wages rising since they have never experienced it,” said Hiroyuki Ueno, chief strategist at Sumitomo Mitsui Trust Asset Management. “Even if you look back at the past 20 years, we’ve never seen this much pressure for company management to raise wages to address a rise in prices. This could be the turning point.”Fast Retailing CFO Takeshi Okazaki sees room for greater wage increases © Kiyoshi Ota/BloombergSo far, the signs are encouraging. Before Fast Retailing’s announcement, Canon, the camera and printer maker, revealed it would raise the monthly pay of its 26,000 employees by an average 3.8 per cent. Suntory Holdings, the drinks group behind Jim Beam and Yamazaki, aims to raise wages in Japan by 6 per cent. Eye drops-maker Rohto will revise the seniority-based component of its pay structure for the first time in 22 years, resulting in an average 7 per cent hike for employees in 2022.The moves follow calls from Prime Minister Fumio Kishida for companies to raise wages. Such government-led efforts are not new: the late former prime minister Shinzo Abe spent eight years trying to convince them they could not continue offering some of the lowest average increases in the OECD. Yamazaki brand owner Suntory Holdings aims to raise wages in Japan by 6 per cent © Noriko Hayashi/BloombergBut while Abenomics led to a short-term rise in wages, Kishida’s “new capitalism” programme aims to result in more organic growth in salaries that would allow the BoJ to sustainably meet its 2 per cent inflation target. Japan’s core inflation, which does not include volatile fresh food prices, hit 4 per cent in December, its fastest pace in 41 years. In a sign of changing times, the Japanese Trade Union Confederation is seeking a 3 per cent year-on-year increase in base pay in the shunto spring wage negotiations, its highest demand since 1995. On Tuesday, Keidanren, Japan’s largest business lobby, called on companies to proactively raise pay as “corporate social responsibility”.Goldman Sachs expects a raise in overall annual wages of about 2.5 per cent from the spring negotiations — but that would fall short of the overall 3 per cent wage growth the BoJ has said is needed for its inflation target. And the shunto negotiations involve only the largest corporations. Company executives warn that the hurdles to salary increases are especially high for the small and medium sized enterprises that employ at least 70 per cent of Japanese workers. While companies such as Fast Retailing have managed to increase their prices to reflect the rising cost of materials, smaller businesses have struggled to sufficiently pass on higher costs. “We can’t possibly think about raising our base pay. Our priority is to maintain our business,” said Kimihiko Yamashita, who runs industrial parts maker Araie Manufacturing in Ishikawa prefecture. Araie recently managed to convince customers to accept a 3 per cent price rise, but this would only cover its losses from surging energy and materials costs, Yamashita said. Adjusted for consumer inflation, Japanese real wages were actually down 3.8 per cent year-on-year in November.A structural issue hindering higher salaries is the lack of workforce mobility because of the country’s longstanding system of lifetime employment. “Unless there is more liquidity in Japan’s job market, the wage increases will be one-off and unsustainable,” said Ken Shibusawa, chair of Commons Asset Management and a core member of a panel drafting Kishida’s economic policy. © Noriko Hayashi/BloombergJapanese labour laws make it difficult for companies to lay off full-time employees. In return for workers being given jobs for life, unions often have a collaborative relationship with company management, making it difficult for them to issue tough salary demands. That makes it less likely for Japan to develop the kind of inflationary wage spiral currently being fuelled by widespread strikes in the UK.Government officials have now realised that tax breaks already introduced for companies that hike wages are not enough, with Kishida also promising investment in retraining Japanese workers to help them shift to new industries that are expanding.“We are not sure whether Japan will become as liquid as the US market, but Japan will gradually become more liquid in the mid to long term through globalisation, changes in industry structures, and shrinking workforce population,” said Soichiro Minami, chief executive of Visional, which operates an online job site.Many Japanese companies operating globally are already shifting away from seniority-based pay in order to recruit international talent, and hiring competition in a tight labour market should also bolster salary levels.“If we’re going to ask employees in Japan to do global quality work, then we need to bring Japanese remuneration to international standards,” Fast Retailing’s Okazaki said. “Even with this latest revision to our pay system, it’s not yet at a global level.”Additional reporting by Leo Lewis in Tokyo More