Wage Protests, QE and China
While the cost of living has become a problem for some in the US (courtesy of the Fed’s inflationary policies) it’s become a real nightmare for many in the emerging markets where as much as 50% of income is spent by consumers on food.
As a result, we’re beginning to see more and more workers demanding pay raises.
Farmworkers demanding higher wages in South Africa’s biggest table grape-growing region resumed protests today in the absence of new talks between the government, labor unions and the main farmers organization.
About 150 people protested peacefully near a shanty town outside Worcester in the Western Cape province, demanding that the minimum wage be increased to 150 rand a day ($16.92) from 70 rand. In Stofland, on the outskirts of De Doorns, about 50 people marched through the streets of the settlement singing songs and carrying banners of the United Democratic Front, a civil rights group.
Spreading protests and escalating demands from Indonesia's labor groups could delay or even derail spending on the country's overburdened infrastructure, industry leaders warned.
Jakarta's governor agreed to increase the minimum wage in the capital by 44% this week. As other regions are expected to follow suit, the populist move could trigger higher wages and inflation and discourage investment in Southeast Asia's largest economy, say some analysts and executives. Unions say workers deserve higher wages, better benefits and better job protection as the country's economy blossoms.
Nearly half of the bus drivers from China who were involved in a dispute over salaries on Monday did not show up for work on Tuesday morning.
SMRT said 88 of the 171 drivers who refused to work on Monday did not report for work again on Tuesday.
SMRT said it takes a serious view of the bus service delays that were brought about by the irresponsible behavior of the bus drivers who did not report for work as scheduled.
It said SMRT's priority is to ensure that bus services are restored to normal as soon as possible.
There is no indication this trend will be ending. Once wages begin to rise aggressively is when inflation really begins to take hold in the system. This process has begun and will accelerate in the coming months.
With food prices already high, the Chinese Government is desperate to channel the country’s frustrations towards an external problem rather than face rampant civil unrest.
Thus far the focus of this has been Japan (the long-?standing dispute over who actually owns the Senkaku islands). But with the Fed now announcing QE 3 and QE 4 (which will push food prices even higher), we will see a resurgence in the US/ China conflict: more accusations of currency manipulation, trade wars, and other political issues.
In plain terms, the Fed has handed China another problem (even higher food prices). Don’t expect China to ignore this. Indeed, with higher food costs on hard, China won’t be able to engage in another massive round of stimulus, no matter what the “experts” suggest.
Indeed, in late December at the Central Economic Work Conference the new party leader Xi Jinping literally stated that China would not be pursuing growth rates through stimulus.
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