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North American Edition
7th August 2023
 
THE HOT STORY
Elon Musk's X to fund legal bills for unfairly treated employees
Elon Musk's X social media company has announced it will provide funding for the legal bills of individuals who have been treated unfairly by employers because of their posts or likes on the platform. Musk said that there will be no limits to the funding. Musk renamed Twitter as X in July, and the platform has recently experienced a surge in monthly users, reaching over 540 million. X executives have been claiming strong usage traction, despite competition from Meta Platforms' Threads. "If you were unfairly treated by your employer due to posting or liking something on this platform, we will fund your legal bill," said Musk. Bloomberg notes that Musk himself has been known to engage in spats with former employees and critics. For example, the billionaire publicly mocked senior director Halli Thorleifsson after the worker sought clarity on his employment status at Twitter. Meanwhile, former employees of Musk’s other companies, SpaceX and Tesla, have also complained that they were fired in retaliation for critical comments about him in his role as chief executive officer of both firms.
HYBRID WORKING
Zoom tells staff to be in the office more often
The company synonymous with online meetings during the pandemic has asked staff to get back to the office more often. Zoom has asked employees who live within 50 miles of a company office to spend at least two days a week working onsite. Zoom shares have fallen 39% in the past year after COVID-19 restrictions eased and businesses pushed for a return to the office; as revenue growth slowed, more than $100bn was wiped from the company’s market value. A company spokesperson told Business Insider: “We believe that a structured hybrid approach – meaning employees that live near an office need to be onsite two days a week to interact with their teams – is most effective for Zoom.”
HIRING
July employment report: U.S. added 187K jobs
The U.S. economy saw 187,000 jobs added last month, nearly matching June’s downwardly revised 185,000, the Labor Department said Friday. That gain was slower than the average monthly pace for the first half of this year, and well below the roughly 400,000 average monthly gain in 2022. The unemployment rate fell to 3.5% last month from 3.6% in June. Employers raised pay at the same rate as June, with average hourly earnings growing 4.4% in July from a year earlier. The labor force participation rate held at 62.6%, the fifth straight month at that level. The rate for those in the 25-to-64 “prime” age group edged lower to 83.4%. Health care led job creation by industry, adding 63,000 jobs for the month. Other sectors contributing included social assistance (24,000), financial activities (19,000) and wholesale trade (18,000). The other services category contributed 20,000 to the total, which included 11,000 from personal and laundry services.  “The wage data is stronger than the payroll data, suggesting that demand for labor is still robust, and that the slowing pace of hiring is more due to a lack of supply of labor," commented Thomas Simons, U.S. economist at Jefferies. "This, combined with the firmer household survey data, should keep the Fed on their toes for another rate hike as soon as next month, but the [consumer price index] data next week will have a big influence in that decision as well.”
WORKFORCE
U.S. productivity soars by most since 2020
U.S. labor productivity logged its biggest increase in nearly three years during the second quarter, helping to offset rising labor costs. The Bureau of Labor Statistics said that productivity, nonfarm business employee output per hour, rose at a 3.7% annual rate, after registering a decline in the first three months of the year. Over the past four quarters, productivity rose at a 1.3% clip, the first positive reading in more than two years. Hours worked fell at a 1.3% annual rate, largely because of cutbacks at manufacturers. Factories have scaled back production of goods because of weaker demand for big-ticket items. Thursday’s report also showed hourly compensation jumped 5.5%. Adjusted for inflation, it rose 2.7%, marking the first increase in almost a year. The rise was boosted by the first drop in hours worked since 2020, which was concentrated in manufacturing. Nonfarm business output rose 2.4%. “Strong growth in labor productivity continued to push down unit labor costs in the U.S., which should help abate concerns regarding future inflation,” said Eugenio J. Aleman, chief economist at Raymond James.
HEALTH & SAFETY
Dollar Tree fined again for breaking worker safety rules
Dollar Tree has been fined again for breaking Washington’s worker safety regulations. The company is subject to the state’s “Severe Violator Enforcement Program,” which means state inspectors can show up at any time. Dollar Tree faces $132,000 in fines after the state’s latest inspection of a store in Tacoma revealed “three repeat willful violations — issued when a business repeatedly puts their employees at risk when they knew or should have known relevant safety requirements.” Dollar Tree has appealed the citation. Violations included blocked emergency exits, debris scattered on the floor and boxes stacked over six feet high, which could topple over and injure employees, the state said.
LEGAL
Hollywood special effects firm guilty of sex discrimination
An award-winning Hollywood special effects firm, Artem, has been found guilty of sex discrimination after its CEO, Mike Kelt, made derogatory comments towards female employees. The company, which has worked in the film and television industry for almost 30 years, was sued by its former finance director, Karen Edwins, who claimed she was unfairly forced from her job in the male-dominated industry. The tribunal ruled in her favor, upholding her claims of sex and race discrimination and unfair dismissal. The panel found that Kelt's comments and actions were influenced by the gender of the person he was talking to. The company now faces compensation claims.
STRATEGY
Amazon to invest $7.2bn in Israel
Amazon expects to invest $7.2bn from 2023 through 2037 in Israel as it launches its cloud-based regional data center project. Amazon Web Services, the company’s cloud provider, announced the launch of the AWS Israel region to provide cloud-based services to government ministries and other public entities, and to enable developers, startups, entrepreneurs and enterprises to run applications and store data in data centers in Israel. The construction and operation of the cloud infrastructure region is forecast to create about 7,700 jobs annually at local businesses from 2023 through 2037, according to an economic impact study by Amazon.
UBS to lay off Credit Suisse employees in New York
UBS is laying off employees from Credit Suisse's investment bank in New York. The scale of the layoffs and the specific businesses affected have not been specified. In addition to the layoffs, UBS has decided to close Credit Suisse's office in Houston. The office in Houston used to lead business with the oil industry, which will now be covered by New York. The job cuts come after UBS closed a government-backed deal to buy Credit Suisse in June. Since the announcement of the deal, UBS has made clear it will reduce the risk of Credit Suisse's investment bank. 
CORPORATE
Trucking group Yellow files for Chapter 11 bankruptcy
Trucking firm Yellow, a specialist in moving relatively small loads, filed for Chapter 11 bankruptcy protection on Sunday, after being in business for 99 years. The filing, in the U.S. Bankruptcy Court for the district of Delaware, comes more than a week after the company halted operations, putting 30,000 people out of work. Yellow warned in a lawsuit last month it was at risk of running out of the money it needed to continue to operate. As of the end of March, Yellow’s outstanding debt was $1.5bn, including about $730m that it owes to the federal government. Yellow has paid approximately $66m in interest on the 2020 pandemic relief loan, but it has repaid just $230 of the principal owed on the loan, which comes due next year.
TAX
IRS officially pledges paperless tax processing by 2025
The IRS has officially announced that it plans to allow taxpayers to digitally submit all agency correspondence by 2024, and achieve paperless processing capabilities by the 2025 filing season. By 2025, the IRS will also digitize the estimated 1bn historical documents in its catalog, which cost around $40m per year to store. The initiative is voluntary: Taxpayers who prefer to submit paper returns and correspondence may continue to do so. The IRS says that by 2025, all paper documents will be digitized upon arrival. The Paperless Processing Initiative “marks a significant step in our efforts to digitize IRS operations,” Treasury Secretary Janet Yellen said during a visit to an IRS facility in McLean, Virginia. “I urge Congress to provide stable and sufficient annual appropriations for the IRS in order to sustain and build on this progress,” she added.
INTERNATIONAL
Australia launches crackdown on tax adviser misconduct
Penalties for promoting tax avoidance schemes in Australia will be increased tenfold, and financial regulators will receive stronger powers, as the government addresses the "severe shortcomings" exposed by the PwC scandal. The crackdown, described as the largest in Australian history, will impose fines of up to A$780m on advisers and firms promoting tax exploitation schemes. The Treasury department will also conduct a two-year whole-of-government response to the issues raised by the scandal. Ministers stated that the current tax promoter penalty laws have remained largely untouched since the 2000s and will be expanded to make it easier for the Australian Tax Office to bring cases. Tax secrecy laws will be reshaped to remove limitations, and the powers of the Tax Practitioners Board will be strengthened. The government is also conducting internal processes to remove some PwC staff from contract work and is allowing departments to terminate contracts in certain circumstances.
Lufthansa offers pay hikes to cockpit crew to avoid strikes
German airline Lufthansa is offering cockpit crew base pay hikes of at least 18% over the next three years to prevent industrial action during the busy summer travel season. The pay hikes, which include lump sums and inflation bonuses, would mean an increase of at least 25% for captains and between 33% and over 50% for co-pilots. Lufthansa's roughly 5,200 pilots are set to vote on the wage offer by August 10. Lufthansa's Chief Operations Officer Karl Brandes stated that the pay hikes would result in notable cost burdens and reduced operational flexibility, but he considered the offer justifiable. The pilots' union Vereinigung Cockpit (VC) has not yet commented on the wage offer. If an agreement is reached, it would mean no pilot strikes for three years.
OTHER
Nature-friendly schoolyards are blooming
Nature-friendly schoolyards are gaining popularity as communities across the United States rethink traditional playground designs in the face of climate change. Instead of asphalt and rubber, schools are opting for trees, greenery, boulders, and natural materials like wood and rope. The benefits of nature-based play spaces include lower stress levels, improved attention and memory, and reduced risk of psychiatric disorders. However, many public schoolyards in the states still lack green spaces. Efforts are underway to increase tree cover on school properties, with a goal of covering at least 30% of the areas used by children during the day. California is leading the way with a $117m state grant program to improve nature-based infrastructure at schools. Federal legislation, such as the Living Schoolyards Act, could provide additional resources for schools nationwide. The hope is that these innovative schoolyard designs will inspire other schools to transform their outdoor spaces and promote nature-based learning and physical activity.
 


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