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With Large-Scale Temporary Employment, Is Poland the Next Spain? — Part 1

Piotr Lewandowski's picture

Car production line, Tychy, Poland. Photo credit: iStock ©Tramino

The political and economic transition of post-communist Central and Eastern European (CEE) countries brought substantial improvements in GDP per capita, productivity, incomes and standard of living. But certain worrying phenomena emerged on the labour markets. One of these was a rise in temporary employment, which has created a “dual labor market” – that is, a segmented market with workers in one segment more privileged than those in the other. For the CEE economies – especially Poland – the onset was in the 2000s. A variety of possible solutions exist, but so far the Polish government has done little to improve the situation.

Mind the (funding) gap, next stop: Making some extra money

Daniel Pulido's picture
Follow the authors on Twitter: @danpulido and @IrenePortabales
 

A branded metro station in Madrid
Most metro systems around the world are unable to cover their operating costs with fare box revenues, let alone fund capital expenditures. According to data from international benchmarking programs CoMET and Nova, tariff revenues cover an average 75% of operating costs, while other commercial revenues provide about 15%, resulting in an operating deficit of 10%. Similarly, a back of the envelope exercise that we conducted for Latin American metro companies showed that these had an average operating deficit of 10% in 2012. When including capital expenditures, this deficit grew to 30%. There are of course examples of metro systems that do recoup their operating costs, such as Santiago de Chile and Hong Kong, but others like the Mexico City Metro only cover half of their operating expenses with fare revenues. We should all mind this funding gap as it is a significant impediment to maintaining service quality and addressing growing urban mobility needs.

Unfortunately, the underfunding of transit systems can become chronic as public budgets are under growing pressure and the most direct solutions for increasing revenues are hard to implement: increasing fares, for instance, has proved to be politically difficult and disproportionately affects the poor, who use public transport the most; and charging a price that fully covers the social cost of private vehicle usage (i.e., congestion charges) as a way to fund transit is also politically sensitive.

In that context, transit operators are increasingly looking at new ways to tap additional sources of commercial revenue and make up for funding shortfalls, often through agreements with the private sector. Although most examples are concentrated in developed countries, some metro systems in Latin America and the developing world are looking at ways to increase non-tariff revenues:

Opening the Green Bond Market in Mexico

Mauricio González Lara's picture

“Growing a Green Bond Market in Mexico: Issuers and Investor Summit” was held Oct. 27 in Mexico City, organized by the International Finance Corporation (IFC), the Asociación de Bancos de México, HSBC, and Crédit Agricole. The timing could not have been better. Although the first green bonds were issued in the last decade, their popularity has exploded in recent years. According to estimates, the market will be a $40 billion one this year, a figure that represents a fourfold increase relative to last year.

A green bond is a financial market debt instrument. Its uniqueness lies in the commitment of the issuer to channel the funds raised exclusively toward green projects, that is, projects that have a positive impact on climate change and involve both renewable energy and energy efficiency.

Replacing Europe’s Dual Labor Markets with a Single Contract

Tito Boeri's picture

In recent decades, many European countries have tried to instill greater labor market flexibility through increased use of fixed-term, temporary work contracts, as opposed to open-ended or permanent ones. The result has been dual labor markets, with temporary workers having fewer rights and job security than those on permanent contracts. One expert on the topic – Tito Boeri, Professor of Economics and Dean for Research at Bocconi University, Milan – stresses that temporary workers were especially hard hit during the Great Recession.

The Fight Against Ebola Is a Fight Against Inequality

Jim Yong Kim's picture
A woman walks by an Ebola awareness sign in Freetown, Liberia. © Tanya Bindra/UNICEF
A woman walks by an Ebola awareness sign in Freetown, Liberia. ​© Tanya Bindra/UNICEF


As the spread of the Ebola virus in West Africa shows, the importance of reducing inequality could not be more clear. The battle against the virus is a fight on many fronts — human lives and health foremost among them.

But the fight against Ebola is also a fight against inequality. The knowledge and infrastructure to treat the sick and contain the virus exists in high- and middle-income counties. However, over many years, we have failed to make these things accessible to low-income people in Guinea, Liberia, and Sierra Leone. So now thousands of people in these countries are dying because, in the lottery of birth, they were born in the wrong place.

If we do not stop Ebola now, the infection will continue to spread to other countries and even continents, as we have seen with the first Ebola case in the United States this past week. This pandemic shows the deadly cost of unequal access to basic services and the consequences of our failure to fix this problem.
The virus is spreading out of control in Guinea, Liberia, and Sierra Leone. As a consequence, our ability to boost shared prosperity in West Africa — and potentially the entire continent — may be quickly disappearing.

Youth as Change Agents to Curb Corruption in Latin America

Ledda Macera's picture
In the development world, children are often seen as the powerless victims of poverty, hunger, and social inequality, but research suggests that young people can often be powerful forces for change. From disease prevention and improved hygienic habits, information presented to children in school and through social and other media is often then passed on to parents, households, and even communities, thus encouraging positive change from the ground up. And fortunately, it appears that development experts are catching on!
 
 © Curt Carnemark / World Bank

Green Bonds Market Tops $20 Billion, Expands to New Issuers, Currencies & Structures

Heike Reichelt's picture

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Annual Green Bonds Issuances


In January, World Bank Group President Jim Yong Kim urged the audience at the World Economic Forum in Davos to look closely at a young, promising form of finance for climate-smart development: green bonds. The green bond market had surpassed US$10 billion in new bonds during 2013. President Kim called for doubling that number by the UN Secretary-General's Climate Summit in September.

Just a few days ago—well ahead of the September summit—the market blew past the US$20 billion mark when the German development bank KfW issued a 1.5 billion Euro green bond to support its renewable energy program.

Should the World Bank Become A Remittance Center?

Dilip Ratha's picture

Last week the New York Times featured an editorial suggesting that the World Bank should become a remittance center. Remittances are the "largest and arguably most effective antipoverty effort in the world.....financed by the poor themselves...,” it stated. “But the cost to transfer those billions is likely to rise soon...[as] big banks are leaving the money-transfer business, including Bank of America, Citigroup and JPMorgan Chase."  

"If banks can’t profitably transmit remittances — and won’t do so as a low-margin courtesy — then other secure, low-cost options must be found. One solution would be for the World Bank to become a remittance center.” 

Why should Governments Spend on Sanitation?

Shanta Devarajan's picture

A puzzle:  Sanitation is one of the most productive investments a government can make.  There is now rigorous empirical evidence that improved sanitation systems reduce the incidence of diarrhea among children.  Diarrhea, in turn, harms children’s nutritional status  (by affecting their ability to retain nutrients).  And inadequate nutrition (stunting, etc.) affects children’s cognitive skills, lifetime health and earnings.  In short, the benefits of sanitation investment are huge.  Cost-benefit analyses show rates of return of 17-55 percent, or benefit/cost ratios between 2 and 8.

But if the benefits are so high (relative to costs), why aren’t we seeing massive investments in sanitation?  Why are there 470 million people in East Asia, 600 million in Africa and a billion people in South Asia lacking access to sanitation?  Why are there more cellphones than toilets in Africa?


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