Since the start of the global economic crisis in 2008, financial education has been under increased scrutiny from those dissecting what went wrong. Who, after all, had trained the perpetrators of the crisis? Were the “masters of the universe” ever taught about ethics? And if not, why not?
Training in Islamic finance, which was already gaining in popularity pre-crisis, has grown from strength to strength, as it has developed a reputation as a haven of common sense and relative security in uncertain times.
At least two of the causes of the crisis – gharar (risk) and gambling – are banned by sharia (Islamic law).
“Several of the ethical lapses which occurred in the financial sector are prohibited in Islam,” says Omneya Abdelsalam, the director of the El Shaarani Research Centre for Islamic Business and Finance and the director of the MSc in Islamic Finance at Aston Business School. “[The crisis] highlighted the resilience of Islamic banks.”
She says that religious beliefs, not limited to Islam, can help leaders be more responsible in business.
“The belief in God, and that absolute ownership of everything is solely His, brings with it an acute level of responsibility and accountability based on the notion of stewardship, which is equally placed on each individual, given that all mankind is believed to be equal before God.
“Such beliefs have a direct and powerful impact on the way business is conducted.”
This “notion of stewardship” or khalifa, common to all Abrahamic faiths but particularly central to Islam, overlaps considerably with corporate social responsibility and transparency, two areas that have enjoyed a post-crisis boom.
Dr Abdelsalam says khalifa manifests itself in Islamic businesses “through fulfilling social responsibility of the business to the best of its capabilities, including fair treatment of employees, care for the environment and customers, and fulfilling the obligation towards shareholders and other stakeholders, through wise use of financial resources”.
At Aston, the Masters in Islamic finance encourages students to think about ethics in every module, be it accounting, contract law, or conventional finance modules.
Cedomir Nestorovic, a professor of Islamic business and management at the Singapore campus of Essec, a French business school, agrees that Islamic finance courses need to address these issues.
He says: “A course about Islamic finance should not be teaching financial techniques alone. There must be a part dealing with religious and ethical issues, explaining the rationale behind the industry.”
Prof Nestorovic adds that elements such as marketing and management must also become more integral parts of Islamic courses, so that they increase their breadth.
One criticism aimed at Islamic finance instruments and banks, or Islamic finance divisions within conventional banks, is they do not embrace the spirit of sharia, but try to find ways round it, in an emulation of conventional finance.
“There is a trend to consider Islamic finance as a ‘cosmetic’ industry where products and services are conventional ones with an Islamic veneer, the only purpose to obtain clearance from thesharia board,” says Prof Nestorovic.
The danger is that Islamic finance, in trying to become more popular, loses its firm roots in religion and ethics.
Some Islamic scholars, adds Prof Nestorovic, “consider that Islam finance does not exist because riba (interest, banned under sharia) is embedded in contracts, even if it is not labelled as such”.
“There is also a certain disagreement between Islamic countries about the definition of a tangible asset and some accounting principles.
“All in all, there is a gap between what is taught and realities for a certain number of observers,” says Prof Nestorovic.
Business groups warn Welsh government on 'living wage' - BBC News
Business leaders have warned the Welsh government not to push for private sector pay rises as ministers investigate public sector wage levels.
Labour has a manifesto commitment to find ways of making sure all Welsh workers are paid a "living wage".
Business groups say it may stop firms taking on staff or even mean layoffs.
The Welsh government says it is beginning to examine how devolved public sector employers can be encouraged to pay a living wage.
A policy group of interested parties is expected to meet over the summer.
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End Quote Robert Lloyd Griffiths Institute of DirectorsI'm afraid it just isn't realistic in the environment we live in”
Academics at Loughborough University have estimated a living wage is at least £7.20 an hour. The current statutory minimum wage is £6.08 an hour for workers aged 21 and over.
Welsh NHS workers and Welsh government civil servants are already paid at least the living wage.
A number of big private sector employers, including Barclays Bank and accountants KPMG, are also signed up to paying it.
But business organisations warned Welsh ministers not to try to force them to raise wages, for example by inserting living wage clauses in government contracts.
Robert Lloyd Griffiths of the Institute of Directors said he was concerned the living wage would effectively become the new minimum wage.
"Businesses would like to take on more staff and lots of companies that I talk to would love to be in a position to be able to take on more employees," he said.
'Very difficult'"It's very difficult out there and anything that now will hinder them from doing that, which they'd like to do, is going to cause problems.
"I'm afraid it just isn't realistic in the environment we live in."
Anna Milewski, of the Federation of Small Businesses, said: "We have to look at it from the employers' perspective, we've surveyed them.
"They say that an increase can, at best, deter them from taking on staff at worst actually result in them laying off staff, which would not be a positive outcome, of course."
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End Quote Julie James Labour AMIf we're the trailblazers we hope the private sector won't be so frightened of it”
The Welsh government said: "Unlike the minimum wage, the living wage is not statutory.
"However, any employer in the UK is free to sign up to the Living Wage Foundation's campaign. The Welsh government is starting to look at how devolved public sector organisations have been engaging with the idea and what it would take to encourage those organisations to become living wage employers.
"This is a key reason the Minister for Local Government and Communities [Carl Sargeant] has decided to set up a policy group, so that consideration of the benefits, in much the same way as they were in London, can be given collaboratively. That group has yet to be brought together, but it is anticipated that this will happen over the summer."
Labour AM Julie James said: "If we're the trailblazers we hope the private sector won't be so frightened of it and will actually see the benefit of a workforce which when they're happy and healthy work harder, stay longer, are more and actually do better work. So it's a win win, really."
Young campaigners, working with Save the Children, recently petitioned the assembly for a living wage above the minimum wage.
Iram Shahzad, a 13-year-old pupil at Fitzalan High School in Cardiff, told BBC Wales Sunday Politics that people in her community were working long hours but not earning enough money to cover their everyday essentials.
"It's not fair that they don't get to live a happy life," she said.
James Pritchard, head of Save the Children in Wales, said a living wage would be a "direct way of starting to tackle child poverty".
Sunday Politics is on BBC One Wales at 12:00 BST.
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