Japan likely to revise proposed budget due to wage-data errors

Labor ministry officials have admitted issuing monthly wage data without meeting sampling standards for years. (AFP)
Updated 11 January 2019

Japan likely to revise proposed budget due to wage-data errors

  • The data error has caused the ministry to underestimate payments made under Japan’s employment insurance program
  • Labor ministry officials admitted issuing monthly wage data without meeting sampling standards for years

TOKYO: Japan’s government is likely to revise its budget draft for the next fiscal year to pay for a shortfall of employment insurance benefits caused by errors in the country’s wage data, Finance Minister Taro Aso said on Friday.
The likely budget revision — a rare move — would follow the revelation that the labor ministry miscalculated workers’ average wages for years.
The data error has caused the ministry to underestimate payments made under Japan’s employment insurance program, which includes unemployment benefits, and another insurance covering compensation for workplace accidents.
Labor ministry officials admitted on Wednesday that they have issued monthly wage data without meeting sampling standards for years, hurting the credibility of a key gauge of the success of Prime Minister Shinzo Abe’s economic policies.
“Economic indicators provide the basis for decision on fiscal and economic policies and they must always be accurate,” Aso told reporters after a cabinet meeting. “It’s very regrettable that the wages data will be recompiled.”
Aso said the wage data flaw has caused the labor ministry to underestimate benefits for employment insurance and workpeople’s accident insurance. As a result, it needs to pay for additional benefits to make up for past shortfalls by adding necessary funds to the budget for the fiscal year to begin April 1.
“It’s highly likely that the budget draft will be revised,” Aso said, adding that the amount of extra spending has not been fixed yet.
In compiling the monthly data, which covers some 33,000 firms with five or more full-time employees, the labor ministry is supposed to collect samples from all the companies that employ 500 or more workers.
But it turned out that the data sampling failed to cover two-thirds of some 1,400 businesses in Tokyo for an unspecified period of time, ministry officials said. Domestic media reported the sampling error extends back for 15 years.
Chief Cabinet Secretary Yoshihide Suga said on Friday the government would examine all economic indicators.
The budget draft was compiled in December and was due to be sent to the parliament later this month for approval before April 1.
Abe’s cabinet last month approved a record ¥101.5 trillion ($937.12 billion) annual budget draft, featuring spending to offset the pain of a planned sales tax hike scheduled for October.


Gulf Marine CEO quits after review sparks profit warning

Updated 22 August 2019

Gulf Marine CEO quits after review sparks profit warning

  • Tensions in the Arabian Gulf, a worrisome global growth outlook and uncertainty over oil prices have recently dampened investor confidence

DUBAI: Gulf Marine Services said on Wednesday Chief Executive Officer Duncan Anderson has resigned as the oilfield industry contractor warned a reassessment of its ships and contracts showed profit would fall this year, kicking its shares 12 percent down.

The Abu Dhabi-based offshore services specialist said a review by new finance chief Stephen Kersley of its large E-class vessels operating in Northwest Europe and the Middle East pointed to 2019 core earnings of between $45 million and $48 million, below $58 million that it reported last year.

A source familiar with the matter told Reuters that Anderson, who has served as CEO for 12 years, was asked to step down. Anderson could not be reached for comment.

The company, which in the past predominantly operated in the UAE, expanded operations and deployed large vessels in the North Sea and Saudi Arabia nine years ago and listed its shares in London in 2014.

Tensions in the Arabian Gulf, a worrisome global growth outlook and uncertainty over oil prices have recently dampened investor confidence.

The North Sea has seen a revival in production in recent years due to new fields coming on line and improved performance by operators following the 2014 oil price collapse.

Still, the basin’s production is expected to decline over the next decade, according to Britain’s Oil and Gas Authority.

“(The CFO’s) review has coincided with a pause in renewables-related self-propelled self-elevating support vessels activity in the North Sea, which will impact several of the higher day-rate E-Class vessels,” Investec wrote in a note.

Gulf Marine appointed industry veteran Kersley as chief financial officer in late May as it sought to halt a slide which has seen the company’s shares fall nearly 80 percent last year and another 23 percent so far this year.

The company said market conditions remained challenging and that it was still in talks with its financial advisors regarding a new capital structure.

“Management, the new board and the group’s advisors, have been in negotiation with the group’s banks on resetting its capital structure and progress has been made,” it said in a statement.

Last year, Gulf Marine said contracts were delayed into 2019 as the company was seen to be in breach of certain banking covenants at the end of 2018.

The company said it was still in talks with its banks and individual lenders with hopes of getting a waiver or an agreement to amend the concerned covenants.