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European Edition
1st December 2023
 
THE HOT STORY
Half of German companies struggle to fill vacancies due to labour shortages
Half of German companies are facing difficulties in filling vacancies due to labour shortages, according to the DIHK Chamber of Commerce and Industry. Despite the stagnation of the euro zone's largest economy, Germany is experiencing deep labour shortages, particularly in skilled high-growth sectors. The proportion of companies struggling to hire has slightly decreased from the previous survey, but still stands at 50%. Achim Dercks, DIHK's Deputy Chief Executive, stated that the skilled labour situation remains critical. The German economy currently has 1.8 million unfilled jobs, resulting in a loss of over €90bn in added value. The survey also revealed that eight out of ten companies expect negative consequences from labour shortages. To address this issue, the German government has passed new legislation to facilitate the establishment of foreign workers in the country. More than half of the companies consider recruiting foreign labour and skilled workers as a viable option to secure skilled labour.
RETENTION
Goldman Sachs loses over 100 AI staffers to rivals
Goldman Sachs has lost over 100 AI staffers to rivals such as Morgan Stanley and Citigroup in the past year, making it the bank with the highest net outflow of AI talent among its biggest competitors. The data compiled by consultancy Evident shines a light on the fiercely competitive landscape for AI talent, with employees in these roles being among the highest paid at any company. While the departures represent a small fraction of the thousands of AI staff employed at banks, it highlights the challenge of attracting and retaining top talent. The report also states that Goldman Sachs has been making investments and hiring to attract AI talent, but the net outflow continues. Other banks, such as JPMorgan Chase and Citigroup, have also experienced both gains and losses in AI talent. The research emphasizes the importance of nurturing and retaining AI-talented individuals in addition to hiring them.
WORKFORCE
Dutch employers increase wages and benefits to attract and retain workers
Employers in the Netherlands are planning to increase wages and improve secondary employment conditions to attract and retain workers, according to a study by recruitment agency Robert Half. Three-quarters of employers plan to implement salary increases next year, with many offering benefits such as higher travel allowances, work-from-home allowances, and contributions to health insurance and pet insurance. Mental health support and a company car are also becoming more popular. Ricardo van Popering, Regional Director at Robert Half, stated that employees consider the overall package when choosing an employer, including flexibility, career opportunities, and benefits. The study highlights the importance of wages in attracting talent, with employers expecting robust wage negotiations in the coming year. The efforts to enhance benefits reflect the increasing competition for skilled workers in the Dutch job market.
TECHNOLOGY
PwC launches AI chatbot
PwC has launched an AI chatbot to aid deal-making. The new technology will analyse client documents and provide guidance to deal-makers. PwC's chatbot, developed in collaboration with AI start-up Harvey, aims to reduce deal failure and provide a competitive advantage. The company plans to license the platform to clients, including private equity firms and banks, and has already implemented Harvey's AI tools in other departments. Lucy Stapleton, UK deals leader at PwC, said its new AI chatbot will help staff develop new skills and boost productivity by allowing more time for analysis. The Telegraph notes that the launch of the chatbot comes just weeks after PwC announced up to 600 job cuts across its advisory team in a voluntary redundancy scheme, with weaker demand for advisory services leaving the Big Four firm overstaffed.
Rapid AI adoption boosts jobs for young and skilled workers, but could reduce wages, research suggests
The rapid adoption of artificial intelligence (AI) is creating jobs, particularly for young and highly-skilled workers, according to research by the European Central Bank (ECB). The study found that the employment share of sectors exposed to AI increased in a sample of 16 European countries, with low and medium-skill jobs largely unaffected and highly-skilled positions receiving the biggest boost. However, the research also highlighted potential negative impacts on earnings. The ECB cautioned that the full impact of AI on employment, wages, growth, and equality is yet to be seen. The findings contrast with previous technology waves, which resulted in a decrease in the employment share of medium-skilled workers.
TAX
Portugal extends tax breaks for foreign residents
Portugal's parliament has extended tax breaks for foreign residents until the end of next year, despite criticism that the scheme has led to unaffordable housing prices. The extension requires applicants to show proof of their move to Portugal in 2023, either through employment or a housing contract. The scheme, known as Non-Habitual Resident, was introduced in 2009 to attract investors and professionals during the financial crisis. It offers a special 20% tax rate on Portuguese-sourced income derived from high value-added activities, as well as tax exemptions on foreign income and a 10% flat tax rate on pensions from a foreign source. Prime Minister Antonio Costa initially planned to close the scheme by the end of this year but his ruling Socialist Party backtracked, and the decision to extend was approved in the final vote on the budget bill. Over 74,000 people have benefited from the scheme, costing the state budget over €1.5bn annually.
ECONOMY
Eurozone inflation falls to 2.4%
Data from EU statistics body Eurostat shows that annual inflation in the eurozone has fallen more sharply than expected, dipping from 2.9% in October to 2.4% in November. Economists had forecast that the inflation rate would fall to 2.7%. Experts say the slowdown could prompt the European Central Bank (ECB) to start cutting interest rates in June 2024, having previously forecast that rates would start to come down next September. Andrew Kenningham, chief Europe economist at Capital Economics, said it is becoming "increasingly untenable for policymakers to claim that they are not even thinking about rate cuts.”
CORPORATE
European tech startups face funding decline
Total capital invested into European tech startups is projected to fall to $45bn this year, down 55% from 2021, according to a report from venture capital firm Atomico. The decline is attributed to later-stage companies delaying fundraising and a slower pace of deployment by investors. Tom Wehmeier, a partner at Atomico, expects more startups to see their valuations drop below the billion-dollar mark next year. Despite the decline, Europe's funding rounds will still be 18% higher compared to 2020. In contrast, the US, China, and other countries are on track to land flat or below 2020 figures. Atomico predicts that European early-stage startups will grow to over 66,000 in the next five years, and growth-stage startups to double to 8,000 in the same period.
HEALTH & WELLBEING
Employment lawyer calls for flexible approach to period pain in the workplace
Glasgow-based employment lawyer Jemma Forrest has urged a flexible approach to dealing with period pain in the workplace, following a resolution by the Scottish parliament calling for paid leave to be offered. Forrest argues that women should be allowed to work shorter hours or stay at home on "bad period days" if they experience severe menstrual pain. Forrest believes that offering specific menstrual leave could be divisive and stigmatise menstruation. Instead, she suggests that employers should take extra steps to make life easier for menstruating staff members, such as providing pain relief or heat packs. Last year, Scotland became the first country to make period products free for all. However, employment law is reserved to Westminster, preventing Holyrood from making changes.
INTERNATIONAL
US watchdog fines PwC $7m over exam cheating
PwC affiliates in Hong Kong and China have been fined $7m by the Public Company Accounting Oversight Board (PCAOB). The US accounting watchdog found that more than 1,000 audit staff cheated on internal training exams between 2018 and 2020. Without admitting the allegations, PwC’s Hong Kong firm has agreed to pay a $4m settlement, while PwC China is to pay $3m. PwC said it was “highly regrettable” that staff had shared test answers. The PCAOB has ordered the firm to strengthen its policies to ensure staff act with integrity in internal training.
Coal mining accidents in China's top producing region claim 100 lives
The death toll from coal mining accidents in China's top coal producing region, Shanxi province, has risen to 100 people this year, marking a 53% increase compared to last year. The accidents have exposed issues of inadequate coordination, failure of safety responsibilities, and weak mine safety foundations. To address the problems, a team from the State Council's Security Committee will be stationed in the province until May 2024. The announcement of intensified safety checks caused a more than 5% jump in China's coking coal futures contract prices. Despite efforts to enforce safety standards, China's coal mining sector has experienced several accidents this year. Miners aim to increase production to ensure sufficient coal supply for domestic energy security. Shanxi province, which accounts for 23% of China's coal reserves, plans to raise coal output by 4.6% this year. Nationwide coal production reached 3.83 billion tons in the first 10 months of 2023, a 3.1% increase from the previous year. "Safety checks have been quite stringent following a few mining accidents since November, and this has tightened domestic supply of the steelmaking raw material," said analyst Pei Hao.
Soaring attrition in India's financial sector expected to persist due to demand-supply mismatch
Soaring attrition rates in India's financial sector are expected to continue due to a demand-supply mismatch, according to a senior executive at Bengaluru-headquartered recruitment company TeamLease. HDFC Bank, Axis Bank, Kotak Mahindra Bank, and Yes Bank have all experienced significant increases in employee turnover rates. The demand for salespeople in the banking sector is high, with even a small salary increase enough to prompt job switches. The CEO of TeamLease predicts that attrition rates of 30%-40% will persist in the banking, financial services, and insurance sector. The recent measures by the Reserve Bank of India to tighten lending norms are not expected to impact employment needs. While the general staffing business is growing, tech staffing is experiencing a different cycle. The hiring boom in the tech sector during the pandemic has now moderated, but recovery is expected in the next two quarters.
Lula defies calls to appoint first Black woman to Brazil's top court
President Luiz Inacio Lula da Silva has nominated Justice Minister Flavio Dino for a seat on Brazil's Supreme Court, instead of appointing the first Black woman in the court's history. The decision has disappointed social movements that campaigned for a Black woman to be chosen. Dino's nomination will add another ally to the bench, but it highlights the struggles the Brazilian left faces in achieving diversity goals. The seat became a focal point for grassroots groups seeking to diversify the judiciary, as Black women hold just 8% of judgeships despite making up over a quarter of the population. While Lula has made efforts to promote diversity, recent cabinet re-organisations have resulted in the ouster of female ministers. The decision is unlikely to generate major blowback, but it raises questions about the left's difficulty in creating frameworks for ethnic and racial diversity.
OTHER
Majority of Britons support rejoining EU single market, poll shows
A majority of Britons support rejoining the European Union's single market even though that would mean the restoration of the free movement of workers from the bloc, according to a poll. Curbing immigration was a key reason Britons voted to leave the European Union in 2016. The YouGov polling showed that 57% of Britons would now support joining the single market even if that meant the resumption of the free movement of people, a policy which led to millions of families and workers moving to Britain during the country's membership. One in five people opposed it. Support for joining the single market, which also guarantees the free movement of goods and services, was divided along political lines. For those respondents who voted to leave the EU and who would back the opposition Labour Party in an election tomorrow, 53% support single market membership, with 31% opposed. For those who voted for Brexit and intend to vote for the governing Conservatives, only 29% would support a return to the single market, with 54% opposed. In general, the poll shows that 72% of Britons want the country to have closer ties with the European Union, including a majority of both Remain and Leave voters.
 


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