Bershidsky on Europe: Alcatel Lucent Cuts Jobs
Here's today's look at some of the top stories on markets and politics in Europe:
Alcatel Lucentto cut 10,000 jobs
Alcatel-Lucent, the French producer of telecommunications equipment, has announced plans to cut 15,000 jobs out of its existing 72,000, while adding 5,000 in more promising areas such as IP routing and high-speed broadband equipment. The group is closing two of its French production sites and will lay off 900 workers in France. Alcatel Lucent has not been profitable since the French Alcatel merged with the U.S.-based Lucent in 2006, and chief executive Michael Combs, appointed in April, 2013, is determined to turn the company around no matter who might object to his cost cuts. Alcatel Lucent's Finnish rival Nokia did the same two years ago, eliminating 17,000 jobs and making its network equipment business profitable. After Alcatel cleans up its act, a tie-up with Nokia, much discussed in recent months, will become more of a possibility. The Finnish company is considering new strategies after losing its mobile phone division, and allying with a streamlined Alcatel could make the company a stronger contender for leadership in the network equipment business.
New Norwegian government announces modernization plan
The right-wing coalition that came to power in Norway in September has announced its first plans. They include the creation of a $16 billion infrastructure fund that will finance the improvement of roads, railroads and broadband cable network. The government will also cut taxes, using up to 4 percent of the country's $780 billion oil fund per year to finance deficits, and remove unnecessary and sometimes downright silly restrictions. The coalition proposes to lift bans on Segways, water scooters, professional boxing and poker championships and to raise the speed limit on some roads from 100 to 130 kilometers per hour. After eight years of Socialist government, Norway, the country with the highest percentage of public sector workers in Europe, is overdue for some modernization and at least a modest revival of private initiative.
Serbia "on the verge ofbankruptcy"
According to Serbia's Deputy Prime Minister Aleksandar Vucic, the country is "almost bankrupt, in the true sense of the word." The only way to save Serbia's economy, according to Vucic, is to cut salaries in the public sector. The cuts will affect up to 500,000 government sector workers in the country of 7.2 million. Serbia does need to cut its budget deficit of about 5 percent, and its debt has grown from 40 percent to 60 percent gross domestic product in the last four years. The International Monetary Fund refused to lend Serbia $1 billion because it has failed to make promised spending cuts. The situation, however, is not as dire as Vucic would make it look. The United Arab Emirates have agreed to provide the $1 billion on relatively easy terms, and the IMF will reopen talks if the government commits to more responsible spending. Vucic's alarmist rhetoric is meant to make the inevitable salary cuts more palatable.
Santander to buySpain's biggest consumer credit operation
The Santander banking group is acquiring the credit arm of El Corte Ingles, Spain's only remaining department store chain, for $190 million. Financiera El Corte Ingles is the country's biggest consumer credit operation. Last year, it lent almost $9 billion to its 10.5 million cardholders. The department store company, however, needs to sell that business as it tries to restructure $6.8 billion of debt. El Corte Ingles is still profitable on an operational basis, yet sales dropped 8 percent last year despite the absence of direct competitors on the Spanish market. The department store model is suffering around the world as consumers seek cheaper alternatives such as online shopping and outlets. Owning a high-end store that is a household name is no longer much fun: Germany's Karstadt chain, for example, was recently forced to sell its flagship KaDeWe department store in Berlin as part of a restructuring drive.
Discrimination against immigrant job seekersmeasured in France
The French research group Cepremap published a paper showing that job seekers with foreign-sounding names have 40 percent less chance of being invited to the first interview. The group mailed out six fake resumes in response to ads for secretarial and accounting positions: two with traditional French names, Pascal Leclerc and Sandrine Rousset, two with North African ones, Rachid Benbalit and Samira Benounis, and two of uncertain origin: Jatrix Aledgi and Allissa Havad. The French "applicants" were invited for an interview in 17.3 percent of the cases, compared to 9.9 percent for the North Africans and 10.1% for the other "immigrant couple." Indicating a high level of French proficiency on the resume - for example, saying the applicant had experience as a French tutor - did not help much, increasing response by less than two points. Entrenched, instinctive xenophobia is behind the rise of nationalist parties across Europe, and economic problems only exacerbate it.
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Leonid Bershidsky at email@example.com