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Recession Lowers Career Arcs - UN

FILE: Workers at the Target Technology Innovation Center office in San Francisco. Taken Sept. 19, 2013

A global economic slowdown will force more workers into accepting lower quality, poorly paid jobs in 2023, while inflation gobbles up real term wages, the United Nations warned Monday.

Global employment grew by 2.3 percent last year, but is expected to expand by just one percent this year, to nearly 3.4 billion people with work.

The projected rise is down on the 1.5 percent the International Labor Organization had previously predicted, adding to the gloomy outlook.

"The slowdown in global employment growth means that we don't expect the losses incurred during the Covid-19 crisis to be recovered before 2025," the ILO's research chief Richard Samans said in a statement.

Global unemployment is projected to reach 208 million people this year, an unemployment rate of 5.8 percent.

The projection is up from 205 million in 2022, with the ILO saying most of the shock of the economic slowdown has been absorbed by "rapidly falling real wages" due to accelerating inflation, rather than job losses.

Global unemployment was at 192 million in 2019 before surging to 235 million in 2020 as the Covid pandemic kicked in.

Meanwhile the global jobs gap stood at 473 million in 2022.

The ILO said deficits in decent work had been worsened by multiple, overlapping crises, including Russia's war in Ukraine, emerging geopolitical tensions, an uneven recovery from the Covid-19 pandemic and continuing supply chain bottlenecks.

"Together, these have created the conditions for stagflation -- simultaneously high inflation and low growth -- for the first time since the 1970s," the agency said in its annual World Employment and Social Outlook report.

ILO director general Gilbert Houngbo said the recovery from the Covid-19 pandemic was particularly patchy in low- and middle-income countries, and was further hampered by climate change and humanitarian challenges.

"Projections of a slowdown in economic and employment growth in 2023 imply that most countries will fall short of a full recovery to pre-pandemic levels in the foreseeable future," the former prime minister of Togo said in the report.

"Worse still, progress in labor markets is likely to be far too slow to reduce the enormous decent work deficits that existed prior to, and were exacerbated by, the pandemic."

This number comprises unemployment plus those who want work but are not seeking a job, either due to being discouraged by previous failed attempts or having other obligations such as care responsibilities.

The 2022 global jobs gap was around 33 million above the 2019 level, with a rate of 15 percent for women and 10.5 percent for men.

"The current slowdown means that many workers will have to accept lower quality jobs, often at very low pay, sometimes with insufficient hours," the ILO said.

The report said people aged 15 to 24 were facing "severe difficulties" in finding and keeping decent employment.

The ILO called for an investment surge in education and training, saying two-thirds of the global youth labor force was "without a basic set of skills", which limited their job prospects and pushed them into lower-quality work.

Around two billion workers worldwide were in informal employment last year.

"Given the substantial rise in uncertainty regarding the future course of the global economy, employment expansion is fastest among informal workers," the ILO said, with the informal sector driving most of the Covid-19 employment recovery.

In 2022, an estimated 214 million workers, or 6.4 percent of all those employed, were in extreme poverty, earning less than the equivalent of $1.90 a day.

The report said the long-term slowdown in productivity growth in advanced countries had spread to major emerging economies - "a matter of much concern" since growth in productivity could combat the concurrent crises in purchasing power, well-being and ecological sustainability.

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S. Africa Power Cuts Hit the Dead

FILE: Friends and family members prepares to pray as they stand next to coffin carrying the body of Ahmed Kathrada, during the funeral service at West Park Cemetery in Johannesburg, South Africa. Taken Wed. March 29, 2017

The power crisis that has struck South Africa can leave citizens and businesses deprived of electricity for hours at a time -- but few victims are more vulnerable than undertakers.

Mortuary directors are urging the bereaved to carry out fast-track funerals to avoid decay and ease pressure on morgue refrigerators.

"The industry is seeing a large number of putrefied bodies," the South African Funeral Practitioners Association (SAFPA) declared bluntly this past week.

Burial within four days "is cost-effective and prevents families from seeing their departed ones in a poor state of decomposition," it said.

That could require uncomfortable change in a country where most funerals take place one or two weeks after the death -- and mourners file past an open coffin, with the deceased on view, on the day of the funeral.

Undertakers ease dependence on the state power monopoly Eskom by using diesel generators to keep their morgues cold. But they are being hit with soaring energy bills.

"Smaller parlors are battling to make ends meet because now the majority of their funds are going towards dealing with" the outages, said Dududu Magano, spokesman for the National Funeral Directors' Association.

Scheduled blackouts, known as load shedding, have burdened South Africa for over a decade, as Eskom's creaking coal-fired plants struggle to meet demand.

But the outages have reached new extremes over the past year, with power sometimes switched off up to four times a day, for periods of up to four and a half hours.

Grace Matila, a Johannesburg undertaker of 10 years, blamed the outages for recently causing her refrigerator's compressor to fail.

"The constant on-and-off caused it to stop working, but luckily I had a back-up compressor. Can you imagine what would have happened if I didn't?" she told AFP, saying she would have to pass on the higher electricity costs to clients.

- 'Ripple effect' -

Industry regulations require funeral parlors and mortuaries to have back-up generators, but not all comply.

"Generators don't come cheap," said Mike Nqakula, who owns a funeral home in the small town of Uitenhage, around 1,000 kilometers south of Johannesburg, adding that many others in his town operate without them.

"I know a guy whose parlor had to shut down because the municipality discovered a decomposed body," the 61-year-old told AFP.

And undertakers' woes don't end with trying to preserve bodies.

The blackouts are also hindering attempts to obtain the administrative documents needed to carry out burials or cremations, since Home Affairs Ministry offices go offline when the power is shut off, said Magano.

The blackouts have caused a "ripple effect" across the sector, he added.

Telephone calls are hit-or-miss when phone batteries are dead and cannot be charged, or network signals are weak because cellphone towers are down.

As a result, people sometimes struggle to contact paramedics so that they can certify a person is dead, or to request body removal when a death occurs at home.










Musk Plans Tesla Belt-Tightening

FILE: Tesla Inc CEO Elon Musk walks next to a screen showing an image of Tesla Model 3 car during an opening ceremony for Tesla China-made Model Y program in Shanghai. Taken Jan. 7, 2020

Elon Musk has a playbook for Tesla headed into what he believes will be a "serious" recession: cut costs on everything from parts to logistics, while keeping the pressure on competitors with discounted sticker prices.

In a conference call to discuss Tesla's fourth-quarter results, Musk and other executives outlined plans to reshape the electric vehicle (EV) maker's cost base, a move some analysts see as the first shot in a price war.

Tesla slashed prices by as much as 20% earlier this month, a move that broadened the range of its line-up that qualifies for tax credits of $7,500 per vehicle in the United States.

Tesla made an average profit of almost $9,100 per vehicle sold in the fourth quarter, down 6% from a quarter earlier but still far more than established competitors. Tesla's third-quarter profit per car sold was more than seven times higher than Toyota Motor Corp. for example.

The company's average cost per vehicle, including all categories of its spending, was almost $44,000 in the fourth quarter.

"Price really matters. I think there's just a vast number of people that want to buy a Tesla but can't afford it," Musk said.

But analysts have focused on how well Tesla can sustain a core measure of profitability, the gross margin on auto sales, excluding credits.

Chief Financial Officer Zachary Kirkhorn said Tesla expected to see that metric above 20% for 2023 with the average price of its vehicles above $47,000 even after discounts. By comparison, the average price of a new vehicle was just over $49,500 in the U.S. market in December, according to Kelley Blue Book.

Part of the plan is expanding production at Tesla's newest plants in Berlin and Austin, Texas and increasing the company’s in-house production of batteries, since scale yields savings, executives said.

But Chief Financial Officer Zachary Kirkhorn said the company would also be "attacking every other area of cost and unwinding cost increases created for multiple years of COVID-related instability."

That would mean running Tesla factories leaner with fewer materials in inventory, cutting shipping and logistics costs and negotiating lower prices for components, he said - putting Tesla's suppliers on notice.

Tesla is also cutting costs by redesigning elements of battery and electric motor systems, removing features that owners are not using, based on data collected from Model 3 sedans and Model Y SUVs on the road, the company said.

Bill Russo, founder of China-based consultancy Automobility, said Tesla had already made gains on cost competitiveness by driving simplified hardware designs for its electric vehicles, taking a page from consumer electronics manufacturers.

"You can offset some of the margin hit from pricing with massive scale and simpler electronic architecture," Russo said. "This is how they are trying to win the game."

Tesla made an average profit of almost $9,100 per vehicle sold in the fourth quarter, down 6% from a quarter earlier but still far more than established competitors. Tesla's third-quarter profit per car sold was more than seven times higher than Toyota Motor Corp. for example.

The company's average cost per vehicle, including all categories of its spending, was almost $44,000 in the fourth quarter.

"Price really matters. I think there's just a vast number of people that want to buy a Tesla but can't afford it," Musk said.

But analysts have focused on how well Tesla can sustain a core measure of profitability, the gross margin on auto sales, excluding credits.

Chief Financial Officer Zachary Kirkhorn said Tesla expected to see that metric above 20% for 2023 with the average price of its vehicles above $47,000 even after discounts. By comparison, the average price of a new vehicle was just over $49,500 in the U.S. market in December, according to Kelley Blue Book.

Meanwhile the cost of lithium in EV batteries – the single most expensive component – will be higher in 2023 than last year, Kirkhorn said, a pressure that will hit Tesla's rivals that are still losing money on EVs harder.

"My guess is if the recession is a serious one, and I think it probably will be but I hope it isn't, that would lead to meaningful decrease in almost all of our input costs," Musk said. "So we expect to see deflation in our input costs, which would likely then lead to, yes, better margin."

Nigeria: From Cash to Cards

FILE: Nigerian President Muhammadu Buhari, center, and Central Bank governor Godwin Emefiele, right, launch a digital currency in Abuja, Oct. 25, 2021.

Nigeria's central bank has launched a domestic card scheme to rival foreign cards like Mastercard and Visa, hoping to enhance its drive to make Africa's biggest economy a cashless society and save the country foreign transaction fees.

Central Bank of Nigeria (CBN) governor Godwin Emefiele told a virtual launch of the "AfriGo" card scheme that although penetration of card payments in Nigeria had grown over the years, many citizens remained excluded.

"The challenges that have limited the inclusion of Nigerians include the high cost of card services as a result of foreign exchange requirements of international card schemes and the fact that existing card products do not address local peculiarities of the Nigerian market," said Emefiele.

The announcement follows the bank's decision last year to phase out old higher denomination bank notes.

AfriGo is owned by CBN and Nigerian banks and Emefiele said that Nigeria was joining China, Russia, India and Turkey in launching a domestic card scheme.

International card service providers like Mastercard and Visa would not be stopped in Nigeria, he added.

"Rather, it (AFRIGO) is aimed at providing more options for domestic consumers while also promoting the delivery of services in a more innovative, cost effective and competitive manner," he said.

Africa's most populous nation Nigeria, has more than 200 million people and the majority still use cash because they live in rural areas where there are not banks.

Ivorians Boost Cocoa Production

FILE: A worker holds cocoa beans at SAF CACAO, a export firm in San-Pedro, Ivory Coast January 29, 2016.

Ivory Coast will increase the amount of cocoa it processes domestically to 49% of production starting from October with the addition of several new plants, the head of the sector regulator said on Friday.

Ivory Coast is the world's top cocoa producer with annual production of about 2.2 million tons. Currently about 35-40% is processed in country and the rest exported, but the government has a goal of increasing that to at least 50%.

The West African country has signed an agreement with the United Arab Emirates for the construction of a new plant in San Pedro with a grinding capacity of 120,000 tons, said Yves Brahima Kone, director general of the Coffee and Cocoa Council (CCC), who was in Abu Dhabi this month to open a new CCC office.

"This permanent representation (in Abu Dhabi) is the fruit of our new vision for Ivorian cocoa that we want to export all over the world. This office will allow us to explore markets in Asia, the Middle East and North Africa," he told Reuters.

Ivory Coast also expects two new factories financed by China to enter into production in October, with a production capacity of 50,000 tons each, Kone said.

The new plants will allow the country to process more than 1 million tons of cocoa annually, making it the world's leading cocoa grinder, he said. Currently it vies with the Netherlands for top spot.

The state has implemented an aggressive policy in recent years to make local processing attractive, including offering tax cuts and other incentives to Ivorian companies.

US Inflation Slows in December

FILE: The price of bread is seen on a store shelf in New York. Taken April 7, 2011.

A key indicator of US inflation, the personal consumption expenditures (PCE) price index, eased in December as spending dipped, according to government data released Friday, opening the door to smaller interest rate hikes as efforts to cool the economy ripple through sectors.

The central bank focuses on the PCE price index as it reflects actual consumer spending, including shifts to less expensive items, unlike the more well-known consumer price index.

The indicator ticked up 0.1 percent from November to December, as prices for goods decreased 0.7 percent and energy costs dropped 5.1 percent, said the report.

But services prices rose from the preceding month.

The Federal Reserve has hiked the benchmark lending rate seven times last year, with an aim to ease demand as inflation surged, while trying to avoid tipping the world's biggest economy into a recession.

And the tightening measures are showing effect, with the Fed's preferred inflation gauge, the personal consumption expenditures (PCE) price index rising 5.0 percent last month from a year ago, down from 5.5 percent in November, Commerce Department data showed on Friday.

This extends a downward trend since mid-2022, when American households found themselves increasingly squeezed by rising costs.

"The Fed views the job market as the primary battleground in its fight against inflation," said economist Bernard Yaros Jr of Moody's Analytics.

"As long as wage gains in labor-intensive services are robust, the Fed will be loath to declare victory," he added.

Household spending also dipped further 0.2 percent between November and December, the report said, adding that personal incomes rose 0.2 percent.

Analysts believe spending is set to slow further in the coming months.

"The latest data offer among the first tangible signs that the economy's main engine is slowing," said Oren Klachkin of Oxford Economics.

"Looking ahead, a cooling labor market, a depleted savings cushion, and less willingness to rely on credit cards in a high inflation environment will lead consumers to pull back," he added.

For now, consumer sentiment remains low from a historical perspective, according to a University of Michigan survey of consumers also released Friday.

Stripping out the volatile food and energy components, the PCE price index was up 4.4 percent from December 2021, signaling that there remains some way to go before the Fed pauses its aggressive battle to rein in inflation.

While the Fed's preferred inflation measures are moving in the right direction, they "remain well above target," said Economist Rubeela Farooqi of High Frequency Economics.

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