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North American Edition
4th October 2023
 
THE HOT STORY
Labor market sees August uptick in job openings
The number of job openings unexpectedly rose in August, the Labor Department reported on Tuesday, after three consecutive months of declines. The monthly Job Openings and Labor Turnover Survey (JOLTS) found 9.61m openings, up from a revised 8.9m in July and ahead of the Refinitiv consensus estimate of 8.92m. The number of people quitting their jobs, a proxy for workers' confidence in the labor market, was unchanged at 2.3%. The number of new hires totaled 5.86m. The pickup in openings reflected a more than half-million increase at professional and business services as well as more postings in finance and insurance, education and non-durable goods manufacturing. Job openings are closely monitored by the Federal Reserve, which has tried to fight inflation over the past 19 months by increasing interest rates. “With job openings remaining well above levels recorded prior to the pandemic and moving in the wrong direction in August, these data support a higher for longer message on rates from the Fed and will likely keep the FOMC open to another rate hike this year,” Rubeela Farooqi, chief US economist at High Frequency Economics, said in a note.
REMUNERATION
Companies cut merit raises as budgets tighten
Companies are cutting their budgets for merit raises next year, with average raises expected to be lower than this year. According to surveys by Aon Plc and Mercer, merit raises will average around 3.7% and 3.5% respectively, down from 3.9% this year. The decrease in raises is attributed to companies tightening labor budgets and easing inflation. Tim Brown, a partner at Aon, stated that people are not expected to spend as much as last year, and there is more pressure on salaries due to lower inflation. The findings were echoed by workforce leaders, including Bob Toohey from Allstate Insurance Co. Despite the decrease, the projected raises are still higher than pre-pandemic levels. However, further reductions in compensation budgets are possible next year. Technology workers have been particularly affected, with aggressive hiring decreasing and projected salary increases lower than other sectors. Salary increases tied to promotions are also expected to decelerate as companies plan to promote fewer people. While raises may not be as large, companies are offering more perks and benefits to employees.
WORKFORCE
Kaiser Permanente faces largest strike in U.S. medical industry
Kaiser Permanente is facing a potential three-day strike by 75,000 healthcare workers as contract talks have stalled. The strike, planned by the Coalition of Kaiser Permanente Unions, would be the largest in the U.S. medical industry. The union is demanding improvements in pay, benefits, and staffing shortages. Kaiser has yet to offer acceptable terms, according to the union. The previous contract expired on September 30. Negotiations broke off with 17 hours remaining before the strike deadline. Kaiser's hospitals and emergency departments would remain open during the strike, staffed by non-union workers. Despite the strike, about 60% of Kaiser's workforce would continue working. Staffing levels and wages are the main points of contention. Kaiser has offered wage increases of 12.5% to 16% over four years. The company has reported profits of $3 billion in the first half of 2023. The U.S. labor market and inflation have led to increased strikes in various industries this year.
Las Vegas workers begin negotiations for new contract
Unions representing 53,000 Las Vegas workers have begun negotiations with hotel and casino operators for a new five-year contract. The workers, including those at MGM Resorts International, Caesars Entertainment, and Wynn Resorts, are seeking higher wages and benefits as tourism in Las Vegas recovers from the pandemic. The powerful Las Vegas unions cover workers in various roles, such as waiting tables, cleaning hotel rooms, and preparing food. If an agreement is not reached, a strike could occur after October 6th. The unions have proposed the largest wage increases in their history, along with reduced workloads and better safety protections. The negotiations have been ongoing since April with little progress. The casino operators have stated that they expect to reach an agreement in October. MGM estimates that a 1% wage increase would cost approximately $10 million. The unions have not yet set a strike deadline.
FLEXIBLE WORKING
Neat taps ex-Zoom CMO Pelosi for CEO role
Janine Pelosi, former chief marketing officer of Zoom, has been appointed as the CEO of Neat, a Norway-based maker of software and devices for videoconferencing. Pelosi aims to encourage employers to maintain flexible remote work policies as pressure to return to the office mounts. Neat, which has raised over $70m since its founding in 2019, counts Zoom as its largest investor. The company's products include cameras with speakers and it competes with firms such as Cisco and Poly. While the videoconferencing market has cooled after the pandemic-driven surge, there is still room for growth as less than 15% of meeting rooms are video-enabled. Pelosi argues that a return to the old office-based status quo would strip workers of the flexibility that has made them happier and more productive. Employers may rely more on productivity metrics to track remote workers' output. Pelosi's experience as Zoom's CMO and her strategic mindset have prepared her for the CEO role at Neat.
LEGAL
Chipotle sued after Kansas manager accused of ripping off employee's hijab
The Equal Employment Opportunity Commission (EEOC) is suing Chipotle on behalf of a Muslim teenager who says her assistant manager ripped off her hijab at one of the chain's Kansas locations. Areej Saifan's supervisor asked her to show him her hair more than a dozen times during the summer of 2021 in Lenexa, Kansas, sometimes in front of co-workers, according to the lawsuit. Ms. Saifan, who was 19 at the time, refused to remove her hijab; the situation culminated when the supervisor grabbed Ms. Saifan's hijab and partially removed it, and Chipotle retaliated by not scheduling her to work afterward, according to the lawsuit. The EEOC said the alleged behavior was a violation of the Civil Rights Act of 1964, which prohibits discrimination and harassment based on several protected classes including religion. "Individuals should not have to choose between their sincerely held religious beliefs and their jobs. Federal law protects the rights of all workers to observe their religious practices free from harassment and retaliation," David Davis, director of the EEOC's St. Louis District Office, said in a statement.
DIVERSITY, EQUITY & INCLUSION
Advocacy group urges court to revive lawsuit against Pfizer's diversity program
An advocacy group called Do No Harm is urging a federal appeals court to revive its lawsuit against Pfizer's fellowship program, claiming it discriminates against white and Asian-American applicants. The group argues that Pfizer's program excludes students based on their race. However, Pfizer has stated that starting from 2023, anyone of any race can apply as long as they meet the non-race based criteria. The lawsuit raises questions about the standing of organizations opposing affirmative action in challenging diversity programs. The case was filed in September 2022 and is being heard by the 2nd U.S. Circuit Court of Appeals. The outcome of this case could have implications for similar programs in the private sector. The lawsuit alleges that Pfizer's program violates federal laws, including the Civil Rights Act of 1866 and the Civil Rights Act of 1964. The case is being argued by Cameron Norris of Consovoy McCarthy for Do No Harm and Samantha Chaifetz of DLA Piper for Pfizer.
TECHNOLOGY
AI's 'moneyball' approach to beating human stock pickers
A growing number of funds, including Voleon Group, are using AI to create the ultimate money machine that can teach itself to beat the market. However, AI has struggled to crack the business of investing due to noisy markets and lack of data. While AI has underperformed in comparison to human stock pickers, it can still provide a slight edge. The hope lies in machine learning, where computers are trained on massive amounts of data to perform tasks. This Bloomberg article explores the potential of AI in the finance industry and whether it can live up to the hype. "In finance you can be very successful by just being a little bit better than 50%," observes Michael Kharitonov, a veteran of the CERN nuclear research lab. “Finance has its own unique challenges, but over time they can be overcome.”
Hacking gang Scattered Spider tricks workers in cyberattacks
The hacking group known as Scattered Spider has been targeting casinos and other companies by using social engineering techniques to trick IT help desk workers. The group has been successful in breaching networks by posing as customers with password issues and convincing employees to reset their passwords. Scattered Spider, also referred to as UNC3944, has been responsible for at least 52 cyberattacks since 2022. The group's members, believed to be in the US and UK, are young and articulate. They spend significant time searching for ways to escalate privileges and remain within the victim's network once they gain access. Companies can protect themselves by limiting the authority to reset passwords and implementing additional authentication measures. Stress-testing systems and training employees to be vigilant about security are also recommended. The rise of social engineering attacks highlights the need for companies to stay on guard against evolving cyber threats. As one expert noted: "If you think you can't be fooled by a well-executed social engineering campaign - you are kidding yourself."
Blockchain data company Chainalysis implements layoffs
Blockchain data company Chainalysis has implemented another round of layoffs, cutting 15% of its staff. The decision was made to reduce expenses due to market conditions. The crypto sector has already suffered numerous job losses following last year's decline in token prices. Chainalysis, known for tracking digital-asset transactions, had about 900 employees after previous layoffs. The company says it remains committed to its mission and is well positioned for long-term success.
SUPPLY CHAIN
NBA urged to cut ties with Chinese sportswear companies linked to forced labor
A U.S. commission is urging the NBA and its players to sever ties with Chinese sportswear companies allegedly linked to forced labor in Xinjiang. The Congressional-Executive Commission on China accused the companies of publicly embracing supply chains connected to forced labor in the region. The commission also accused the National Basketball Players Association of potential complicity. The U.S. State Department has declared that China is committing genocide in Xinjiang, while China's foreign ministry has dismissed the allegations as "vicious lies". The commission has called on NBA Commissioner Adam Silver to ban the use and sale of league-branded gear made with forced labor or by companies that endorse materials from Xinjiang. The commission also asked the players' union to bar players from wearing or endorsing gear tied to forced labor. Anta, Li-Ning, and Peak are among the sportswear sellers highlighted by the commission. Anta recently named Kyrie Irving as its basketball unit's chief creative officer.
 


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