Jobs and pensions cloud the financial skyline

February 3rd, 2009 by admin | Filed under Daily News, Employment, Recession, Retail, UK Bank Accounts, UK Small Business.

Drugs giant GlaxoSmithKline is set to announce more than six thousand job cuts in the face of increasing competition from generic drug makers, according to recent reports.

Glaxo have been considering reconstruction for some time and no doubt the current financial crisis in the UK is causing them to decide to cut a considerable percentage of their work force, numbering one hundred thousand worldwide, with around 18,000 in the UK.

Meanwhile the possibility of government intervention seems a distinct possibility in the industrial crisis sparked by striking workers at Lindsey Oil Refinery in Lincolnshire. The dispute was sparked of by a decision by French oil giant Total awarded a £200m contract to Italian firm IREM who

The likely government intervention was strengthened by fears of escalation with workers striking in sympathy strikes at around twenty sites across the United Kingdom.

Prime Minister Gordon Brown ordered the Advisory, Conciliation and Arbitration Service (Acas) to investigate union claims that British workers are being barred from working on the contract. The Prime Minister said he recognised people were “worried” about jobs being taken by workers from other countries, but stressed that the UK was part of a “single European market”.

When asked what his message would be to those thinking of staging sympathy strikes, the Prime Minister replied. “That that’s not the right thing to do and it’s not defensible,” “What we’ve set up as a process to deal with the questions that people have been asking about what has happened in this particular instance.” he continued.

He went on: “When I talked about British jobs, I was taking about giving people in Britain the skills, so that they have the ability to get jobs which were at present going to people from abroad and actually encouraging people to take up the courses and the and learning that is necessary for British workers to be far more skilled for the future.”

On the pensions front, reports that more and more companies are finding it difficult to prop up their already shaky employee pension schemes, has been worrying UK financial analysts. Word is out that pension fund deficits in the UK as well as in Europe may run into more than hundred billion pounds in 2009, as much of the pension fund investment’s are held in assets that have been classified as “toxic”

London base International Financial Service group announced on Monday that global pension assets fell to 17.6 trillion pounds ($25 trillion) in 2008 from $30.4 trillion a year earlier. This 18 percent fall was the largest decline in pension value recorder for several years, the company pointed out.

The seriousness of the matter was emphasized by the recent collapse of Canadian telecom equipment maker Nortel. Their pension shortfall was seen as a major factor behind their recent entry into a bankruptcy protection program. Another North American industry giant, defence contractor Lockheed Martin was forced to significantly reduce their profit forecasts due to their high pension costs.

European markets dropped sharply on Monday’s trading, with financial and energy stocks leading the way down, as investors prepared for another week of poor earnings reports and gloomy economic data.

The FTSE 250 index dropped 3.0% or 198.38 points to 6052.38 while the FTSE 100 finished the session down 1.73 per cent, or 71.86 points at 4,077.78

Sterling was stable against the leading currencies on Monday closing as follows:

Pound/US dollar 1.422

Pound/Euro 1.1084

Pound/Japanese Yen 127.18

Pound/Swiss Franc 1.6517

Asian markets closed mostly lower; there was little appetite to buy in Europe, where faith in a rapid turnaround in the economy has been fading. The German DAX dropped 2.7 percent at 4,223.17. France’s CAC 40 shed 3.0 percent at 2,883.62.

Wall Street shares had a fair day on Monday’s trading with the Dow Jones Industrial Average down 64.11 points, to close at 7936.75. NASDAQ did better rising 18.01 points to 1494.43