These are stories Report on Business is following Monday, April 8, 2013.
RBC takes a hit
Canadians took after Royal Bank of Canada on social media today after revelations of an outsourcing deal that will see some of its staff lose their jobs to foreign workers.
But in the end, the issue that sparked the interest of the federal government appears to focus on just one worker.
This all began on the weekend when CBC reported that RBC is subcontracting some of its investor services back-office work to iGate Corp., which will cost 45 RBC employees in Toronto their jobs. The iGate group, in turn, had to apply for temporary foreign worker permits, which the government said unacceptable if it turned out the rules were not followed.
RBC distanced itself from the events, saying it outsourced the function, and it's up to the supplier to stick to the rules.
As The Globe and Mail's Grant Robertson now reports, of the 21 workers iGate is using to handle the outsourcing, just one is in Canada on a temporary work visa. A further 13 are in Canada to work on a short-term basis only, and the rest have been hired locally.
Initially, there was no word as to the breakdown, or how long the workers would remain in the country.
In a message to RBC staff, chief executive officer Gordon Nixon stressed that RBC hasn’t hired any temporary foreign workers to displace Canadians.
“In keeping with standard business practices, when transitioning activities, our vendor has temporarily assigned a number of their employees on site at RBC to affect this transition with a small number remaining on a go-forward basis,” Mr. Nixon said.
“We have already identified positions for a number of affected staff and we will continue to work diligently to find suitable roles for the remaining staff.”
He added that RBC is still creating jobs, and has a “strong track record” when it comes to retraining staff and moving them elsewhere in the operation.
The news sparked a flurry of activity on social media sites such as Facebook and Twitter.
Here are just some of the many comments on RBC’s Facebook page, related to the bank’s statement, with some people complaining that their posts were removed:
“I've done all my banking with RBC for the past 25 years. Tomorrow I'll be beginning the process of closing all my accounts.” Tammy Everts
“Your crisis-management response is insulting. But hey, you need the millions of $$$ - just keep your shareholders happy & stay focused on profits above all else. I will not do business with you.” Janet King-Coates
“We are moving our car loan, RRSP’s and car and auto insurance as soon as you open your doors today. Shame on you. I hope this hits you hard.” Doris Baker
“Anytime we use ‘suppliers,' which means contracting the work out to another company be there in Canada or elsewhere it is usually done to bring in workers at reduced wages. This will never be an asset to Canada. I am not focusing on RBC because this practice is done everywhere in Canada; you have just been the first one that the media have brought to the public's eye.” Katherine Browning-Cross
“Very disappointing, this is exactly why Canada's young people can't find work or are underemployed. Regardless of spin, you're still moving paying jobs from our country to another overseas.” Beverly Ivey-Newell
“To you it may only be 50 people but the people involved, it is 100 per cent of their livelihoods ... shame on RBC and the Conservative government for allowing this to happen.” Jean Campbell Priest
“You didn’t directly hire foreigners to take Canadian jobs – iGate did – RBC just hired iGate.” Michele Engel
- Royal Bank says it will find new jobs for downsized staff
- Ottawa to probe RBC job outsourcing
- Read Mr. Nixon's message to staff
- RBC's foreign workers controversy: Canadians react
Portugal back in eye of storm
The euro zone crisis has shifted back to Portugal after a court ruling rejecting austerity measures.
Portugal, which has been bailed out by international lenders, may now be forced to find other ways to cut in order to meet its targets.
“I have ordered ministries to cut expenditure to compensate for the effects of the court decision,” Prime Minister Pedro Passos Coelho said on the weekend.
Portugal is now in an extremely tough spot given the demands of its lenders, and in the face of Germany’s tough stance on fiscal discipline.
“The court decision means that Portugal’s government needs to come up with approximately €1.3-billion in additional cost savings or revenues in order to achieve a budget deficit of 5.5 per cent this year; if the savings aren’t found, the deficit will be 6.4 per cent,” said Derek Holt and Dov Zigler of Bank of Nova Scotia.
“On the line are Portuguese efforts to renegotiate the country’s obligations to the EU such that the payback periods are lengthened,” they said in a research note.
“With EU finance ministers meeting in Ireland later this week, the situation in Portugal – and whether it has reached the legal limits of feasible domestic austerity – are sure to be up for conversation.”
- Portugal must stick to agreed budget targets to get loan extension - EU exec
- Carl Mortished in ROB Insight (for subscribers):
Companies pull back
Canadian companies aren’t exactly cracking open the vaults to pump money into new machinery and equipment, a worrying sign given slowing exports and a wary consumer.
According to the Bank of Canada’s quarterly business outlook survey, just 39 per cent of those polled said they plan to boost such investment in the next 12 months.
That’s down from 43 per cent in the fourth quarter of last year, The Globe and Mail’s Kevin Carmichael reports.
Loonie in high demand
A new poll illustrates just how attractive the Canadian dollar has become.
The poll of central bankers, published in The Financial Times, shows that the Canadian and Australian dollars, Scandinavian money and China’s yuan have become a favoured alternative to the traditional reserves.
Some four-fifths of those polled said they either had invested, or would think about doing so, in the Canadian and Aussie currencies.
The poll of 60 central bankers was done by Central Banking Publications, a trade journal, and Royal Bank of Scotland.
The Canadian dollar has been blessed by Canada's triple-A rating and a generally favourable economic outlook, though the latter has taken a hit of late.
Indeed, the International Monetary Fund now wants both the Canadian and Australian dollars included in a small group of currencies that are tracked on a quarterly basis for central bank reserves.
- Loonie poised to join elite group of global reserve currencies
- Canadian dollar now a 'de facto global currency'
Streetwise (for subscribers)
- What Canada wants in the next World Trade Organization chief
- Canadian firms hold back investing as they lick economic wounds
- Manufacturing 'clusters' policy unlikely to drive prosperity
ROB Insight (for subscribers)
- Portugal offloads debt, but still can't start economic engine
- Hi-yo silver. Unloved metal poised to bounce
- Taking stock of Thatcher's free-market revolution
- Is it time to take a bite out of Apple?
- Enbridge, EDF unit buying $600-million Alberta wind project
- Bombardier wins $440-million German rail parts order
- GE buying oilfield services provider Lufkin for $3.3-billion
- Valeant claims victory in bidding war for Obagi
- Nordstrom adds Yorkdale outlet to Canadian expansion plans
- Former rogue trader Leeson gets new job as financial adviser