#Point of view
Are interest rates tightening?
What’s great about this column is that it can be read in just over 60 seconds and then change our lives in the following six months. Not the column itself, obviously – let’s be modest – but what it attempts to serve up each week in the way of news, be it surprising, brightening, encouraging, worrying or motivating. Because let’s face it: things are moving very quickly.
One week, the business daily Les Echos is reporting on its front page that Donald Trump has scuttled the G7 summit; the following week, Le Point runs the headline: “Thanks, Trump!”, arguing that the president’s recent decisions will ultimately prove helpful to Europe. For now, the real estate market is on a roll. Borrowing rates will remain below 2% in 2018, business real estate is booming, and fast-moving cities like Bordeaux can barely keep up with demand.
French people are changing the way they handle their everyday affairs. The marketing manager of a major pharmaceutical company admitted recently: “Having bought a house near Lille, I now go back and forth to Paris daily. It’s much more comfortable than using the capital’s mass transit system (notwithstanding the ongoing national rail strike.) Yet, as everyone knows, the European Central Bank is bound to adjust its monetary policy, and interest rates will likely tighten gradually as inflation picks up.
That raises the question of what will happen to real-estate-based collective investment schemes, such as SCPIs and OPCIs, now that the headwinds seem to have suddenly turned. But the week’s hot news story – apart from the prowess of the French football team – is a survey published in the Thursday edition of Le Figaro, which ran under the headline: “Skilled workers will be earning 78 billion euros more by 2030”. Here’s why: “To cope with a growing shortage of highly skilled labour, i.e. high school graduates with at least two years of higher education, companies will almost certainly have to offer more attractive salary packages in the coming years. And to a substantial degree!
“According to a survey by the management consultancy Korn Ferry, the salary hike could cost companies in Europe, the Middle East and Africa an additional 511 billion euros by 2030”. Which means that, going forward, education, training and upskilling will be an issue of growing importance. The same will apply to professional training. The Le Figaro article continues: “German firms will face the biggest bill, with an overall wage increase estimated at around 152 billion euros for highly skilled personnel.
“France will not buck the trend. According to Korn Ferry, the salary bump will amount to 78.5 billion euros by 2030. On average, the annual pay packet in France will be 6,833 euros higher for every employee with at least two years’ higher education”. Obviously, if interest rates tighten, investment in human capital will become a crucial issue. We are moving into the era of high value-added apprenticeships, where uberisation will make way for a wealth of competencies. So here’s some advice for readers (and our footballers): play to your skills!