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Highlights—August 21, 2004
- ComputerWorld: IBM
plans fewer U.S. layoffs to compensate for offshoring. Excerpt: IBM,
adopting new policies to take some of the sting out of job offshoring, expects to lay off
fewer U.S. employees this year because of work being transferred overseas. IBM became a
lightning rod for critics of offshoring earlier this year after internal documents revealed
plans to send nearly 5,000 jobs to India, Brazil and other developing countries over two
years to save on labor costs. Many of the jobs were highly skilled programming positions
that pay 75% less abroad. Now, according to new internal documents made available to The
Wall Street Journal, the company has adopted new internal-transfer policies aimed at filling
more open positions at IBM with employees who would otherwise get a pink slip due to offshoring.
IBM Vice President of Learning Ted Hoff confirmed the changes and called them a major personnel
policy shift. Hoff wouldn't say how many fewer offshoring layoffs IBM expects this year
as a result of the changes. But a person familiar with IBM's plans said it now expects
that 2,000 U.S. workers will lose their jobs as a result of offshoring, down from the 3,000
the company predicted in January.
Guyer comments on IBM's hiring plans and other issues. Full excerpt: I couldn't
agree more on both of your points. On my floor at IBM we are down to a few packs
of solid blue printer
paper. Because there are people in different divisions on the floor
who share the printers, there is no one manager who will pay for
white paper. When the blue runs out, I don't know what we'll print
on (toilet paper from the rest rooms?). Supplies like pens and
staples are long gone, we have to purchase our own. And the PR about hiring is
exactly that, PR. IBM announced with fanfare last spring that they were investing
$25 million in
retraining. That is a pittance for a company like IBM. When I asked
JR McDonald about it, he replied that the program wasn't set up yet.
Has anyone heard anything about it since? Know anyone who is
eligible for it? No, I didn't think so. Another point. The "Redeployment Program" for
employees who lose
their jobs to other countries - you may ask why isn't IBM advertising
this program? Huh, why not? Because they don't want to make a big
deal out of the fact that they REALLY ARE SENDING JOBS OVERSEAS. Speculation
by those in the know about the global resourcing programs
are that things are progressing slowly now but the flood gates will
open after the November election.
- From Janet Krueger: I just uploaded a file from South Africa named Adjudication.PDF --
some of the pensioners in South Africa are very gleeful, at least
for now! (No doubt IBM will appeal this judgment, but for the time
being they have to pay about R2.3M into the pension fund within 6
weeks.) Congrats to our peers on the other side of the world!!!
- "prtdavis2", an ex-Sprint employee "re-badged" as a new IBMer, comments
on a "town hall" meeting conducted by IBM management. Excerpts: Wow
- I was starting to get concerned it was just me who wasn't buying
the IBM line. I know for a fact the PR - er HR - guy is lying. I
spoke face to face with a local IBMer who said: "Well, I work for IBM so I can't say anything bad about them, however,
you'll never get training." As well as those people who've emailed me off list
on the 'wonderful'
experiences they have had with the IBM company.
Did you miss the bar by which the HR guy said was the balance between
home and business life? He was joking (I hope): "IBM understands the need to balance
the home and work life. It isn't
like we're asking you to work 90 hours a week." Gosh, 90 hours is too much? Is
that the bar that less than 90 is
acceptable? I also noticed that the lead guy was quick to deal with the overtime
issue. I especially liked how he said: "Well, non-exempt employees would get overtime
pay, exempt employees
are excluded from that and the non-exempt typically work 40 hours a
week. (pause) (cough) exempt-work-more-than-that (cough)" The last part was said
so quick and away from the mic (I was in the
second row) that I think he didn't want people to hear it.
I like it that we've got 12 days holiday and 15 days vacation (27 days
total) from a 2080 work year (260 days), of which we have to have 2000
hours billable (250 days) leaving us with 17 days we have to make up.
This doesn't count any IBM time, training (which we won't be getting
anyway), sick time, other required time off (deaths, jury, service)
and such. While they claim the same pay, what they doesn't include is the
increased compensation for the increased time (Sprint requires 1840ish
billable hours) nor the increased medical/dental costs. Since I have
three kids, mine alone will be 85% more than I am paying now.
One note of interest, I spoke to Bill Steele who was the guy who asked
if anyone at Sprint wanted to pursue opportunities outside of the
Sprint account, he said he was flooded with emails. I don't think
I'll be taking the IBM opportunity. I'd rather get severance and the
$1000 for agreeing not to sue Sprint and be on my way. I've gotten a
lot of replies from my resume when I send it to people (and two
interviews of the six jobs I've applied for, one job offer from
another - part time - and one waiting for me to leave Sprint before
they can take further action due to contracts with Sprint).
- USA Today: Gap
between haves, have-nots expands. Excerpts: Over two decades, the income gap has steadily
increased between the richest Americans, who own homes and stocks and got big tax breaks,
and those at the middle and bottom of the pay scale, whose paychecks buy less. The
growing disparity is even more pronounced in this recovering economy. Wages are stagnant
and the middle class is shouldering a larger tax burden. Prices for health care, housing,
tuition, gas and food have soared.The wealthiest 20% of households in 1973 accounted
for 44% of total U.S. income, according to the Census Bureau. Their share jumped to
50% in 2002, while everyone else's fell. For the bottom fifth, the share dropped from
4.2% to 3.5%. ...
New government data also shows that President Bush's tax cuts have
shifted the overall tax burden to the middle class from the wealthiest
... More than a million jobs have been added back to the 2.6 million lost since Bush
took office, but they pay less and offer fewer benefits, such as health insurance. The
new jobs are concentrated in health care, food services, and temporary employment firms,
all lower-paying industries. Temp agencies alone account for about a fifth of all new
jobs. Three in five pay below the national median hourly wage — $13.53, said Sung
Won Sohn, chief economist for Wells Fargo. On a weekly basis, the average wage of $525.84
is at the lowest level since October 2001. The income gap is showing up in booming
sales of luxury items. Porsche Cars North America Inc. says sales are up 17% for the year.
Strong sales at Neiman Marcus, Nordstrom and Saks Fifth Avenue overshadow lackluster
sales at stores such as Wal-Mart, Sears and Payless Shoes.
- Vault's IBM
Business Consulting Services message board is a popular hangout for IBM BCS employees,
including many employees acquired from PwC.
Career and Job Profile, submitted by a financial analyst in Raleigh, NC. Excerpt:
I was offered $62K plus bonus and 2 weeks vacation. When I was hired
the bonus was supposed to be 10%. They've now lowered that number to 6%. They say
you will get the 6% if you are a level 2 performer and the
company is 100% of target. The number is supposed to be larger if you
are a 1 performer and IBM is over target. Newsflash: IBM hasn't been above target
since I've been here, and less
than 10% of employees receive 1 ratings. But wait, you say, IBM is the
darling of the tech industry! Remember what I said about the ridiculous
internal targets? Last year, by the time you factored in our internal
performance metrics and my personal rating, that 6% bonus was less than
3%. What about raises you ask? A little better than bonuses. Ask where you
are in the pay band. If you are near the top of the band, you can
forget a raise for a while. I had a friend who came in higher than me
(around $80K) 4 years ago, and he is still waiting for his first raise.
Every year he hears "well we paid you so much when you started, and
there are so many people on the team that make less than you..."
- (Travel expense policy) "Determined
by project + firm" by "feldspar." Excerpt: Your meal per diem, etc.
is determined on a per-project basis and within the firmwide expense policies and cost
ceilings. For example, your project expense policy may dictate that your lodging expenses
not exceed $90/day, and your meals be expensed at their actual cost. Meanwhile, the
firm policy requires you to select a hotel from its preferred vendor list (ex, Hilton,
Holiday Inn, Howard Johnson, Sheraton, Westin, Ramada) and the maximum meal allowance
for your work city may be $30/day. So, your expenses for one day might be the Hilton
at $75/night + tax, and $22 for breakfast & dinner that day. There are additional
rules for airfare, train, taxi/rental car, parking/tolls, etc. so you'll need to adhere
to the guidelines set by both the firm as well as your project management, as IBM's
accounting/expense police are known for strictly upholding these rules and withholding
employee reimbursements when an infraction occurs. It may sound like a hassle, but there
are tools for travel booking and expense reporting to make things easier for you .Actually,
the mandatory Online Travel Tool is terribly restrictive and a pain to use, but the
Expense Reporting application is quite handy...
I'm unsure how this compares with the rest of the Big Four, but keep in mind that
IBM enforces extremely rigid sales & revenue targets even in BCS. This often trickles
down at consultant level in the form of aggressive project budgets (and compressed deadlines)
just for the sales win, and , it appears unlikely that the expense policies will turn
in our favor anytime soon. A partnership such as Deloitte, for instance, does not have
to answer to shareholders so I imagine it offers a bit of leeway with budgets & expenses.
Former partners at Accenture & BearingPoint have probably been spending the last few
years trying to discipline themselves to meet their quarterly sales targets. The same
may or may not apply to CG, as I believe their leadership is in Europe. Nonetheless, the
expense policies for my last few projects are listed below. They're all mediocre at best:
- Midwest (don't want to give this one away): $24/day for meals; stayed at corporate
apartments - no lodging per diem; actuals for rental car/taxi
- New York metro area: $30/day per diem for meals; $99/night for hotel; book airfare
four weeks in advance nonrefundable; actuals for train/taxi
- Dallas area: $25/day per diem for meals; $55/night for hotel (everyone was required
to stay at the same hotel because of ridesharing); book refundable air travel
(due to frequent last minute weekend stayovers); share rental car.
limits" by "feldspar". Full excerpt: You are correct. The NYC limits
for the project were quite a bit below policy - I believe the firm limit is somewhere around
$36-$42/day for Manhattan. I know the amount has been updated recently but am unsure if
it was raised or lowered. But to answer your question, yes, the meal policy was levied
by project management. But then again, it was probably not their fault for selling a tightly
budgeted fixed-bid engagement in the first place. Thankfully, the client was sympathetic
to our cause and would sometimes foot the bill for pizza dinners, take-out, etc. while
we were in the office working late nights.
not be a profit center" by "Dose of reality". Full excerpt: For most BCS client-reimbursed
projects, the travel allowances are set at the project level. There are general corporate
guidelines, but still a great deal of discretion, depending on the negotiations of the
selling partner. Fixed per diem reimbursements, where you can take a draw regardless of
actual spend are unusual, but not forbidden. I have sold two such projects, since it is
a drawing card for resources, and generates some rare goodwill. These work out particularly
well where long-term apartment type lodging is in the mix. Again, these are the exception,
since most partners use expense policy as a bargaining chip, to the detriment of team
morale. As another poster said, the emphasis on closing revenue gaps is so high, and the
need to keep billing rates up so intense, that when push comes to shove between lowering
hours/fees or lowering expenses to close a deal, expenses lose virtually every time. Remember,
fees generate profits, and expenses are pass through. Of course, if you can’t get
anyone to work on your project, fees are zero, but most of my colleagues don’t think
about this when they are in the sales cycle, think they can use coercion or charm to mitigate
it, or are so hamstrung by unachievable targets that they surrender on expense policy.
As far as the general travel/lodging policies, they are decidedly uncompetitive vis a
vis the industry. The standardization of processes across all of IBM is never a question
of whether to do it or not, it is a question of where to set the standards. The answer
is always to set them at the lowest common denominator. Travel is no exception. The problem
with this approach is that the economics of client reimbursed expenses are entirely different
than the economics of expenses that are incurred internally, but the policies, rules,
vendors, and limitations are virtually the same. For a permanent traveler (e.g. BCS),
for whom expenses are reimbursed, it makes no sense to institute Draconian expense policies.
The incremental cost to the client of allowing consultants to have convenient flights,
decent food, and quality accommodations nearby the site are less than 5% of the total cost
of an average consultant (fees + expenses). The increase in productivity, and lowered turnover
would more than compensate for any revenue lost due to being uncompetitive as a result
of this difference. The industry travel standard for consultants is above average to excellent,
so in terms of competitive pricing strategy we are subsidizing higher fees by having
a relatively lower T&L cost vis a vis the competition. In addition, consultants are
usually traveling 70 – 80% or more.
Contrast this with the occasional traveler who incurs expenses that are subsidized
directly by IBM. The “discomfort factor” is much lower with less frequent travel,
and the cost savings to IBM is 100%, yet the policies are the same. We are so legalistic
in our HR policies, and so focused on revenue generation that the idea of differentiating
these policies based on different business models, employee needs, and cost drivers
would never even be considered. We have a short list of airlines and preferred hotel
vendors which you would not choose if you had the choice due to convenience and quality
considerations, and IBM gets rebates back from these vendors which it doesn’t pass
back to the client. You are treated the same as the internal staff accountant that has
to travel one week a year to another facility to help with a physical inventory. Also,
the expense report Nazis are designed to wear you down so you just give up on the small
stuff. It is not uncommon for expenses to be collected and not reimbursed – a
tidy little profit center for the business. Bottom line, with rare exception, our
travel policy is another reason not to work here.
1 This question has been answered many times" by "Dose of reality".
Excerpt: There was a rather lively thread back in June, "Best way to get laid off" -
currently #85 in the queue, where I answered this question repeatedly to a rather
querulous and dense apologist. I finally had to post a "Dr Seuss" version
of the rationale. That post is currently available to non-subscribers, while the
other more thorough and compelling posts have over-60 day subscriber only status.
Some of my foil's posts were deleted due to profanity, so the flow is a bit awkward.
The basic argument is as follows: The key stakeholders of the company are the employees,
the customers, and the stockholders. Upon looking at the organizational dynamics and
performance over the past few years, any first year Harvard business school student
would correctly discern that the leadership level of the employee class is the weak
link in this group. The litany of their mistakes includes:
I could go on, but this short list leaves no doubt that there are structural problems with
our long-term viability and clearly demonstrates an absence of management competence. Behind
it all is a hyper political culture of a few "haves" who manage to usurp more
than they create in value and a vast underclass of "have-nots" who give more
than they get.
- Reactionary compensation squeezes to close profit gaps, with no regard to the long
term effects on resources.
- A budgeting process comprised of plug and play, bean counter-driven assumptions
that have no grounding in economic reality, and multiple layers of sandbagging
and cushions which lead to unachievable targets on the front lines.
- These lead to the setting of unsustainable utilization targets that leave no room
for sales/proposal work or training, and kill the growth engine of the company.
- Pie in the sky long term projections on outsourcing which fail to consider the contracting
value proposition to the market and inevitable decline in our competitive position.
- Failure to institute real profit sharing structures across service lines to take
advantage of the natural synergies. You can't have a loss leader strategy without
this, and we have a mature portfolio of "products", which can't generate
above market returns in silos.
- Accounting gimmicks and pension plan grabs which are at best questionable as to
legality. Similar less spectacular resource grabs with travel policy.
- Blatant disregard for employee morale and customer service.
- "Echo" by "ThinkKim". Full excerpt: I'll pipe in here in hopes that someone at IBM
might be listening: If you bothered with real exit interviews, you would find that
consultants who have worked elsewhere mark the travel policy as yet another reason
to leave. Crappy treatment of the consultants in the form of 3-4 to a rental car,
a $55/night hotel, etc are just ways that the sales staff can sell a deal. They don't
care about the client, so why would they care about the consultants? Ask around at
IBM - I bet that without exception the projects with the best travel policies are
legacy PwCC projects.
said....but" by "ancientblueconsultant". Full excerpt: You forgot
that the expenses are not entirely pass-through. There's a 2% uplift for "administrative
costs" added to the customer bill. If there was no need for "expense control
Nazis" because good expense
management was "mass customized" to individual client situations then customers
would begin to question why pay an extra 2% for our "world class" billing
system? The other VERY dirty little secret you alluded to is the kickbacks from
hotel and airline "partners" would also probably put at risk a decades
old huge inflow of "clean" revenue into the blue pig. The new trend of
TCS (Total Cost of Service) measurement to compare consulting and services offerings
is beginning to bite us and it will be a major issue shortly. This isn't TCV,
my friend, but the T the client pays.
- American Medical Association (AMA) News: Extreme
payoff: What CEOs get when they leave is a real eye-opener.
Regulators and physicians are paying more attention to managed care executives who receive "golden
parachutes" after mergers. Excerpts: Golden parachutes can be over the top. When his
firm was bought out by Aetna in 1996, U.S. HealthCare Chair Leonard Abramson, according
to Securities and Exchange Commission filings, stayed on as business and public relations
adviser for $2 million a year plus benefits, so long as he could work "during normal
business hours." Aetna supplemented that with an immediate $10 million merger bonus,
an extra $1 million a year to sign a noncompete agreement, and an IOU for another $10 million
when he left the company completely. In addition, he got a gift of a $25 million airplane
and was paid up to $2 million a year to operate it. ... To some, the numbers were startling.
According to data released by the California Dept. of Managed Healthcare on the consumer
group's request, Anthem planned to pay 293 WellPoint executives between $147 million and
$356 million in severance and retention bonuses, or between $502,000 and $1.2 million per
executive, on average. The $600 million figure quoted by Garamendi includes other stock
options and bonuses.
- Physicians for a National Health Program (PNHP): Health
Care Cost Containment or Consumer Rip-Off? Excerpts: Do PBMs Profit at Expense of
Their Clients and Consumers?
Recent state investigations and several lawsuits have begun to raise the question of
who benefits the most from PBMs. Do PBMs keep the savings they negotiate for their
own profits rather than passing them on to consumers? Do they pad their profits by
steering consumers to more costly drugs instead of the highest quality drugs at the
lowest cost? Although 60 PBMs administer drug plans nationwide, three companies (Caremark,
Express Scripts, and Medco) control close to half of the business. According to financial
data submitted by these three companies, they enjoyed billion dollar earnings in
2003. Caremark had revenues of $9.1 billion managing more than 114 million prescriptions.
... A pilot study conducted for the Journal of the American Pharmacists Association
found wide gaps between what a PBM pays a pharmacy for a drug and what it bills the
end user. While the study concluded that PBMs average a $5 to $10 markup on generic
and brand name drug transactions, it also found some much larger gaps, including one
case in which a PBM billed an employer $215 for a generic stomach medicine, Ranitidine,
but only paid the pharmacy $15 for the drug. In addition, PBMs may be using financial
incentives to choose which drugs they offer. One study found that drug companies pay
rebates to PBMs for placing their products on special usage lists called formularies.
PBMs typically retain up to 30% of the manufacturers’ rebates,
so they have an incentive to swap for drugs that pay higher rebates even if the drug
costs the end user more.
- Newsday: Drug
savings in NY just a click away. Excerpts: A new state Web site will help
consumers faced with high prescription costs to compare prices and save up to $100 on
a drug purchase while driving down the market price. State Attorney General Eliot Spitzer
launched the site yesterday. The Web site allows consumers to shop online for a prescription,
giving comparisons by store, address and price throughout the state. A telephone help
line is also provided. ... Although not comprehensive, Spitzer said, the information
covers 170 pharmacies including major chains in 25 counties, including all but Suffolk
County in the New York area. It will be updated at least monthly.
- New York Times: Rising
Cost of Health Benefits Cited as Factor in Slump of Jobs. Excerpts:
A relentless rise in the cost of employee health insurance has become a significant factor
in the employment slump, as the labor market adds only a trickle of new jobs each month
despite nearly three years of uninterrupted economic growth. Government data, industry
surveys and interviews with employers big and small indicate that many businesses remain
reluctant to hire full-time employees because health insurance, which now costs the nation's
employers an average of about $3,000 a year for each worker, has become one of the fastest-growing
costs for companies. Health premiums are sapping corporate balance sheets even more than
the rising cost of energy. ... Other businesses are resorting to tactics of dubious legality
to avoid the health care burden. Phyllis Burlage, an accountant in Millersville, Md.,
whose clients include several small businesses, said rising health insurance costs were
driving some employers to skirt age-discrimination law by hiring only younger workers
as a way to reduce premiums. "It's the deep dark
secret of small businesses," Ms. Burlage said. ... The Big Three automakers spent
$8.5 billion last year on health care. General Motors estimates that providing health
coverage for its workers and retirees adds about $1,400 to the price of each of its vehicles
built in the United States.
- BusinessWeek: A
Wal-Mart with a Union Label? Employees in a Canadian store have won the right to organize. It's one more headache
for the giant retailer. Excerpt: Labor unions scored a significant but largely symbolic
victory Aug. 3, when a Wal-Mart (WMT ) store in Canada became the first in North America
to win the right to unionize. Company founder Sam Walton likely wouldn't have been pleased.
Then again, he may not have known that his original discount store in Rogers, Ark., would
grow into a 4,800-store global behemoth that sets an entire industry's standards for
wages and worker treatment. What happened in Canada "shows that when workers' rights
are protected, Wal-Mart workers will exercise those rights for a voice at work," says
Joseph Hansen, president of United Food & Commercial Workers International (UFCW),
which secured the right to represent Wal-Mart workers at the store.
- Bloomberg News, courtesy of The Arizona Republic: CEOs
strongly support Bush in survey on issues. Excerpts: U.S. chief executive officers
support President Bush over Democratic rival John Kerry on issues including the economy,
taxes and job creation, according to a survey by Chief Executive magazine. When asked
which candidate most effectively would handle nine different issues, the 358 CEOs surveyed
favored Bush over Kerry in every area. Of the executives surveyed, 83 percent supported
Bush on terrorism and homeland security; 81 percent gave Bush the edge on "tort
75 percent favored Bush on the economy; and 70 percent were more confident Bush would
create jobs. CEOs also gave Bush higher ratings on trade, taxation, global labor sourcing,
energy and health care. Still, the executives are more concerned about the outlook
for the economy and business conditions than they were a month ago, said William J. Holstein,
editor in chief of the magazine.
- Washington Post: Rules
for Overtime Pay to Take Effect. Employers, Workers Confused by Regulations on Eligibility,
Other than the higher threshold for automatic eligibility, every change in the new
regulations means less overtime protection for workers, said a report released last
month by John Fraser, Monica Gallagher and Gail Coleman -- three of the highest-ranking
Labor officials under Presidents Ronald Reagan, George H.W. Bush and Bill Clinton. "More
classes of workers, and a greater proportion of the workforce overall, will be exempt
than we believe the Congress could have originally intended," they wrote. But the
Department of Labor argues otherwise. "Millions of workers in America
will benefit from the Department of Labor's new, stronger overtime protections," Steven
J. Law, deputy secretary, said in a conference call Wednesday. The rules have been
the source of political contention for months. The Senate voted to block the rules
in May, in an effort pushed by Sen. Tom Harkin (D-Iowa). Sen. John F. Kerry (Mass.),
the Democratic presidential nominee, has said he will repeal them if elected. ...
Business groups have been proponents of the new regulations. "These reforms provide
clearer guidance to both employers and workers on their rights and responsibilities
under wage and labor laws," Randel K. Johnson, U.S.
Chamber of Commerce vice president for labor, immigration and employee benefits,
said in a statement when the final rules were announced. "They also address many
of the fundamental problems in the previous, outdated regulations that led to numerous
compliance questions and needless lawsuits." "We figure if they can find
a way to take our overtime away from us, they will," said
John Garrity, a naval electronics technician. Garrity, who earns about $5,000 in
overtime a year that he uses to help support his wife and three children, believes
the new rules would allow his employer to count him as a professional.
- San Jose Mercury News: Shifting
obligations of pensions an outrage, by Dan Gillmor.
Excerpts: In the 1980s, some sharp but ethically challenged financial types realized
they could enrich themselves in the savings-and-loan industry. Under the cover
of inadequate laws and almost non-existent regulation, they made risky loans and
collected big fees. And when their institutions went broke, the federal government's
deposit insurance fund was left holding the bag. They did it pretty much in plain
sight, and a few watchdogs did bark. But by the time most regulators, politicians
and the public caught on, federal taxpayers found themselves on the hook for hundreds
of billions of dollars. History doesn't repeat itself precisely. But whenever people
spot a way to stick taxpayers with their own obligations, they will try -- and
they're succeeding again. Corporations are trying to shift pension and health obligations
to the people to whom they've made extravagant promises, or if that won't work,
onto governments. Home-mortgage lenders are making incredibly risky loans and selling
the paper to giant financial institutions that may need mega-bailouts of their
own one of these days. ... Meanwhile, consider last year's Medicare drug legislation,
which was mostly a giveaway to big drug companies under the guise of helping seniors
with escalating drug costs. The law provides a subsidy that supposedly encourages
companies to maintain drug benefits for retired employees, but the government recently
estimated that at least a third of major corporations will drop coverage and let
the taxpayers take care of it. Shifting health care and other burdens to taxpayers
is a time-honored tactic, especially by businesses that rely on low-cost labor. One
notorious example is Wal-Mart Stores, the mega-retailer. A recent study by the Labor
Center at the University of California-Berkeley, which Wal-Mart naturally disputed,
showed that California taxpayers subsidized the company on health care and other public
programs to the tune of some $86 million in 2001.
- USA Today: Companies
fail workers. Excerpt: United's actions follow an irresponsible
routine that has become all too common in the corporate world. Companies contribute
too little to their pension plans in good times and then run to the Pension Benefit
Guaranty Corporation (PBGC) and bankruptcy court in bad times to wiggle out of their
obligations. The losers are the employees, who normally get only a fraction of what
they were promised in the event of a takeover by the PBGC. It collects premiums from
companies to pay benefits when plans collapse. Also on the hook are U.S. taxpayers.
They could be called on to bail out an overwhelmed PBGC, much as they wound up paying
$200 billion in cleanup costs when federal deposit insurance proved inadequate to
cover the collapse of the savings and loan industry in the 1980s. The risk of another
taxpayer bailout stems from loopholes in federal bankruptcy and pension laws that
provide companies too many outs for not doing right by employees.
|Coverage on H1-B and L1 Visa and Off-Shoring
- New York Times: Financial
Firms Hasten Their Move to Outsourcing. Excerpts: From 2003 to 2004, Deloitte
Research found in a survey of 43 financial institutions in 7 countries, including
13 of the top 25 by market capitalization, financial institutions in North America
and Europe increased jobs offshore to an average of 1,500 each from an average
of 300. The Deloitte study said that about 80 percent of this went to India.
Deloitte said the unexpectedly rapid growth rate for offshore outsourcing showed
no signs of abating, despite negative publicity about job losses. Although information
technology remains the dominant service, financial firms are expanding into other
areas like insurance claims processing, mortgage applications, equity research
and accounting. ... In a recent report "Offshoring, A Detour Along the Automation
Highway," Mr. Haney estimated that potentially 2.3 million American jobs in the
banking and securities industries could be lost to outsourcing abroad. ... Deloitte
forecasts that by the year 2010, the 100 largest global financial institutions
will move $400 billion of their work offshore for $150 billion in annual savings.
Its survey forecasts that more than 20 percent of the financial industry's global
cost base will have gone offshore in that period. With competence levels rising,
Indian companies are tackling more complex tasks. DSL Software, a joint venture of
Deutsche Bank and HCL Technologies, a software company, is handling intricate jobs
for the securities processing industry. "Indian
firms are taking offshoring to the next level; in the banking industry for
instance, they are getting into wholesale banking, trade finance and larger loan processing
type tasks," said Mr. Haney, the analyst from Celent.
on the Alliance@IBM Site:
- ThinkTwice for August/September 2004 [PDF].
Articles this month include:
- Organizing IBM — Rev it up!
- The Employee Free Choice Act
- Take Action! Help us Strengthen Workers’ Right to Form Unions!
- New IBM Program to Help Employees
Whose Jobs are Offshored
- The Value of a Union Contract
- Offshore Contractors Target
State Government Work
- San Francisco Chronicle: Unions
protest new overtime regulations at Labor Department.
Excerpt: Several hundred union members marched outside the Labor Department
to protest new overtime pay regulations taking effect Monday, with two senators
pledging to try to roll them back when Congress returns from recess. Protesters,
many wearing union T-shirts, carried signs such as "President
Bush: Hands off my overtime pay," and chanted, "Come on all you billionaires,
give us wages that are fair." "The fight is not over yet," said
Republican Sen. Arlen Specter of Pennsylvania, an opponent of the changes
who is facing a tough re-election bid in November.
- Detroit Free Press commentary by Ross Eisenbrey: Law
steals overtime pay from Americans. Excerpts: On Monday, the Bush administration will take away the
right to receive overtime pay from millions of employees in a broad range
of occupations, from office workers in financial services to embalmers, nursery
school teachers and restaurant chefs and assistant managers. Despite four
disapproving votes in Congress, the Bush administration is using its power
and authority to accomplish the biggest rollback in employee rights in more
than half a century. The administration denies it is weakening overtime rights
and claims to be taking overtime pay from workers earning $100,000 a year
or more. But the new regulations have their biggest impact on employees earning
far less. Salaried employees earning as little as $24,000 a year are subject
to the new rules, which make it far easier for employers to deny overtime
pay. It might shock people to think the government would lie to them, but
there is no nice way to describe the administration's campaign of disinformation
around the new overtime regulations. ... This is a corruption of the Fair
Labor Standards Act and its exemptions, by which Congress intended to ensure
that all but a narrow class of well-paid top officials and professional employees
would get time-and-a-half pay when they work long hours. The Bush administration
has sided with employer groups, who oppose regulation and resent having to
pay extra for overtime work. They want the flexibility to work employees 50
or 60 hours a week without paying any more than they would for 40. One restaurant
chain worked low-paid assistant managers 85 or 90 hours a week without any
additional pay. The new rules will make that kind of abuse legal. As we approach
Labor Day, founded as part of the original campaign for an 8-hour workday and a
40-hour work week, it is critical to speak out against these new regulations. Unless
Congress can block these regulations this fall, millions will lose overtime pay
and find themselves working longer hours. It took 100 years of struggle to pass
the Fair Labor Standards Act and create a 40-hour work week. It has taken the Bush
administration less than four years to turn back the clock.