The French government said on Thursday it would cap unfair dismissal payouts and give companies more flexibility to adapt pay and working hours to market conditions in a labor reform France’s biggest union said was disappointing.

The reform, President Emmanuel Macron’s first major policy step since his election in May, is also the first big test of his plans to reform the euro zone’s second-biggest economy.

For decades governments of the left and right have tried to reform France’s strict labor rules, but have always diluted them in the face of street protests.

The government said in a document presenting the reform that it will make it possible to adapt work time, remuneration and workplace mobility to market conditions based on agreements reached by simplified majority between employers and workers.

Workers compensation for dismissal judged in a labor court to be unfair would be set at three months of wages for two-years in the company with the amount rising progressively depending on how long a worker was with the firm, unions said.

However, normal severance pay would be increased from 20 percent of wages for each year in a company to 25 percent, Liberation reported.

The government consulted with unions for weeks as it drafted the reform, and only the hardline CGT union, the country’s second biggest, said from the start that it would hold a protest, set for Sept. 12.

France’s biggest union, the reformist CFDT, said that it would not call a strike against the reform but described the reform as a missed opportunity to improve labor relations.

“CFDT disappointed,” the union’s leader Laurent Berger told reporters after a meeting with the government, but he added: “Taking to the streets is not the only mode of action for unions.”
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In the coming weeks, as Houston turns its attention to rebuilding areas devastated by Tropical Storm Harvey, people like Jay De Leon are likely to play an outsized role — if they stay around.

De Leon, 47, owns a small construction business in Houston, and he and his 10 employees do exactly the kind of demolition and refurbishing the city will need. But like a large number of construction workers in Texas, De Leon and most of his workers live in the United States illegally, and that could make things complicated.

The Pew Research Center estimated last year that 28 percent of Texas’s construction workforce is undocumented, while other studies have put the number as high as 50 percent. Construction employed 23 percent of working undocumented adults in Texas at the end of 2014, higher than any other sector, according to the Migration Policy Institute.

Undocumented immigrants nervous

However, undocumented immigrants are growing increasingly nervous in Texas because of an immigration crackdown by the Trump administration that has cast a wide net.

In addition, a new Texas law that would have taken effect later this week bars cities from embracing so-called sanctuary policies, where they offer safe harbor to illegal immigrants, and allows local police to inquire about a person’s immigration status. A federal judge Wednesday temporarily blocked most of the law from taking effect.

De Leon, who has lived in the country for 20 years and has two citizen children, says the changes have spooked the city’s migrant workforce. In recent weeks, he said, one of his employees left the state and another returned to Mexico. Both feared that if they stayed they risked arrest.

Departing workers, he says, pose a problem for Houston in the wake of Harvey, which has caused flood damage to commercial buildings, houses, roads and bridges expected to run into tens of billions of dollars.

“The situation that Houston is going through now with the hurricane is going to be the trial by fire for the Republicans and the governor that approved these radical laws,” De Leon said. “They will need our migrant labor to rebuild the city. I believe that without us it will be impossible.”

Undocumented workers perform a wide range of construction jobs, from framing and dry-walling to plumbing and wiring.

Shortage of U.S. trained workers

Stan Marek, chief executive of Marek Construction in Texas, said his company doesn’t hire undocumented immigrants and has long had difficulty finding enough trained U.S. workers.

“It’s a crisis,” Marek said. “We are looking at several thousand homes that have flood damage. There is no way the existing (legal) workforce can make a dent in it.”

Marek would like to see the federal government grant emergency work authorization for undocumented workers in the rebuilding effort, he said. Otherwise, those immigrants are likely to be hired by firms that do not pay payroll taxes or provide benefits like workers’ compensation and legally mandated overtime.

It isn’t yet possible to estimate how many construction jobs will be added in Texas as it rebuilds, but in the 12 months after Hurricane Katrina hit in 2005, Louisiana added 14,800 jobs in the sector, U.S. government data shows.

About 25 percent of the construction workers involved in the cleanup of New Orleans were undocumented, according to a study by researchers at Tulane and UC Berkeley universities. Those without papers were “especially at risk of exploitation,” the study found.

Worker exodus

The labor shortages are likely to grow worse, many builders warn. Earlier this year, a group of Hispanic contractors sent a letter to Texas Governor Greg Abbott warning that the pending ban on sanctuary city policies would make it “difficult to find and retain experienced workers.”

Javier Arrias, chairman of the Hispanic Contractors Association de Tejas and one of the letter’s signers, told Reuters that “many construction workers are already moving to other states.”

Abbott’s office did not respond to a request for comment about the role undocumented workers might play in the recovery.

Elizabeth Theiss, president of Houston-based anti-immigration group Stop the Magnet, sees another option besides looking to workers in the country illegally. She says the rebuilding effort should be used to help train U.S. veterans and other citizens who need jobs.

Theiss acknowledged that reconstruction might proceed more slowly, at least initially, if immigrants without work documents are not part of the effort, but she noted that rebuilding would be slow under any scenario.

Personal hardships

Whatever role undocumented people play in rebuilding Houston, they could face hardships rebuilding their own lives.

While the Federal Emergency Management Agency provides emergency food, water and medicine to anyone, regardless of immigration status, cash assistance and other longer term aid is only available to citizens and immigrants in households where at least one family member has legal status.

Immigrant advocates are launching private fundraising drives to help fill the void.

“It is deeply tragic and un-American that so many of those working men and women who will be rebuilding Houston and the rest of the state will be doing so while facing tragedy in their own lives,” said Jose Garza, executive director of the Workers Defense Project.

De Leon said his family was lucky and did not suffer flood damage. He is now busy rounding up supplies for immigrant families stuck at shelters who are afraid to seek out more help from authorities.

In the end, he says, President Donald Trump has to know “it’s going to be impossible to rebuild Houston without the labor force of immigrants. It is illogical, what he says with his words and what really has to happen.”
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Michigan is likely to be the state most hurt by changes to the NAFTA trade agreement, according to a Fitch Ratings report released Wednesday, as U.S. President Donald Trump renewed threats to scrap the deal.

Trump has threatened three times in the past week to abandon the North American Free Trade Agreement, revisiting his view that the United States would probably have to start the process of exiting the accord to reach a fair deal for his country.

A second round of talks starts Friday in Mexico City to renegotiate the 1994 accord binding the United States, Mexico and Canada.

Business groups have largely praised NAFTA and hope to persuade all three governments to make minimal changes to the pact. U.S.-Canada-Mexico trade has quadrupled since NAFTA took effect in 1994, surpassing $1 trillion in 2015.

Michigan’s auto sector

While several other states export a significant amount of products to Canada and Mexico, Michigan is an outlier in Fitch’s analysis because of the state’s global role in the automotive sector and proximity to Canada, the report said.

Sixty-five percent of the Michigan’s exports went to Canada and Mexico in 2016, totaling 7.4 percent of its gross state product, it said.

“Any state that is particularly export dependent or exposed to trade, if there’s a falloff in trade it’s going to hit income and sales taxes and that’s going to weaken state revenues,” said Michael D’Arcy, a director of U.S. public finance at Fitch. “Cuts would have to be made.”

Anna Heaton, a spokeswoman for Republican Michigan Governor Rick Snyder, said in a statement to Reuters that Canada, Michigan’s No.1 trading partner, has been important to the state’s economic recovery but he understands that sometimes policies need to change.

11 states trade heavily with Canada

According to the report, 11 U.S. states send at least 30 percent of their exports to Canada. By merchandise value, 82 percent of North Dakota’s exports went to Canada in 2016. Forty-three percent of New Mexico’s exports were sent to Mexico.

Several states also import a substantial amount of Canadian goods.

“A unilateral U.S. withdrawal from NAFTA would sharply increase import tariffs overnight, entailing potentially substantial costs for U.S. importers and consumers,” the report said.

Major metropolitan areas could also be affected by U.S. trade policy changes, with Texas’s El Paso MSA, or metropolitan statistical area, left vulnerable to NAFTA changes, the report said. Exports to Canada and Mexico accounted for 91 percent of the MSA’s exports.
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The U.S. economy rebounded sharply in the spring, growing at the fastest pace in more than two years amid brisk consumer spending on autos and other goods.

 

The gross domestic product, the broadest measure of economic health, grew at an annual rate of 3 percent in the April-June quarter, the Commerce Department reported Wednesday. It was the best showing since a 3.2 percent gain in the first quarter of 2015.

 

The result is a healthy upward revision from the government’s initial estimate of 2.6 percent growth in the second quarter. The growth rate in the January-March quarter was a lackluster 1.2 percent.

 

Improvements in consumer spending, particularly on autos, and business investment powered second-quarter growth. Those revisions offset a bigger drag from spending by state and local governments.

This was the second of three estimates the government will provide for second quarter growth. Even with the upward revision, the weak start to the year means that growth over the past six months has averaged 2.1 percent, the same modest pace seen for the recovery that began in mid-2009.

 

During last year’s presidential campaign, Donald Trump attacked the Obama administration’s economic record, pledging to double GDP growth to 4 percent or better. His first budget, sent to Congress earlier this year, projects growth rates will climb to a sustained annual rate of 3 percent, a goal that many private economists believe is still too optimistic.

 The nonpartisan Congressional Budget Office sees growth averaging 1.9 percent over the next decade, a forecast much closer to estimates made by private economists.

 

Many economists had been forecasting growth in the current July-September quarter would be around 3 percent. Some are now saying that the devastation from Hurricane Harvey could shave about a half-percentage point off growth this quarter. However, analysts believe the pace of growth will bounce back once the rebuilding begins and oil refineries get back to full production, bringing down prices.

For the entire year, Mark Zandi, chief economist at Moody’s Analytics, is forecasting growth of 2.1 percent. That would mark an improvement over last year when the economy grew a meager 1.5 percent, the poorest showing since 2009 when GDP shrank by 2.9 percent.

Zandi is forecasting that growth in 2018 will be an even stronger 2.8 percent. But he said 0.4 percentage point of that forecast reflects an assumption that the Trump administration will win a tax cut package that will take effect in early 2018. The economy will also be boosted by higher spending on the military and infrastructure projects, he said.

 

“For the first time since the Great Recession ended in mid-2009, the economy is not facing any significant headwinds,” Zandi said.

 

 
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U.S. sanctions on the finance boss of Venezuela’s oil company PDVSA have led to some exports to the United States being blocked as banks and investment funds refuse to provide letters of credit to potential buyers, three financial sources said.

U.S. businesses are barred from dealing with a sanctioned person or company and one of the sources said the sanctions on PDVSA’s Finance Vice President Simon Zerpa were deterring some businesses from investments with the company as so many of its transactions are linked to the finance department he leads.

A Venezuelan oil shipment to the United States was blocked this month as lenders refused to provide letters of credit to PDVSA customers, the sources said.

Letters of credit, issued by banks, guarantee to a seller that a buyer will pay a specified amount on time when a shipment is accepted. Without a letter of credit, shipments cannot be delivered and the shipper does not get paid. Blocking letters of credit for PDVSA oil chokes off cash that is desperately needed in the OPEC nation.

Petróleos de Venezuela, S.A., commonly known as PDVSA, is the financial motor of President Nicolas Maduro’s leftist government, and it is operating within one of the deepest economic recessions Venezuela has ever experienced and widespread political unrest.

In one instance, U.S. refiner PBF Energy was unable to get a letter of credit for a Venezuelan crude cargo to be received at a U.S. port.

The Suezmax tanker Karvounis has been anchored in the U.S. Gulf for more than a month. It partially discharged its cargo on Aug. 23 in New Orleans, according to Thomson Reuters vessel tracking data. A trader close to the deal said PBF Energy ultimately agreed to a prepayment, removing the need for a credit letter. It was unclear what would happen with the rest of the cargo.

Some U.S. customers can import without a letter of credit if they pay up front.

In July, the United States imposed sanctions on 13 senior Venezuelan officials, including the head of Venezuela’s army, the national police chief, the director of elections, and Zerpa.

At the time, a U.S. official warned that the administration of U.S. President Donald Trump was readying tougher measures that could be part of a “steady drumbeat” of responses to the Venezuelan crisis.

The most serious potential future step would be financial sanctions that would halt dollar payments for the country’ oil, starving the government of hard currency, or a total ban on oil imports to the United States, Venezuela’s biggest customer.

This month the United States imposed its first economic sanctions on Venezuela, banning debt trades for government-issued bonds and bonds issued by PDVSA. 

The problem could spread to more cargoes if banks refuse to extend credit to companies that have a commercial relationship with PDVSA, the sources said.

The sources said foreign oil companies funding projects in Venezuela and financial entities negotiating with PDVSA were avoiding signing agreements that could involve Zerpa.

Major oil company China National Petroleum Corporation (CNPC) has pulled back from funding some operations at its joint venture in Venezuela, a source at PDVSA said.

Neither PDVSA nor the Information Ministry responded to requests for comment. Zerpa was not immediately available to comment.

“PDVSA will face additional trouble just by keeping a sanctioned individual as CFO,” said Jorge Piedrahita, chief executive of broker-dealer Gear Capital Partners, who has been involved with Venezuelan debt for many years.

“Even the Russians and China’s Development Bank should be worried about signing something with him as they can be subject to collateral damage from sanctions just by association.”

A close Maduro ally, Zerpa, 34, rose to prominence by leading the bilateral Venezuela-China fund through which Caracas borrows from Beijing and repays loans in oil and fuel. Venezuela has borrowed over $60 billion from China, earning Zerpa the nickname “Zerpa the Chinese.”

Two additional financial sources said having Zerpa as the company’s head of finance had made it impossible for U.S. entities to assist PDVSA in debt refinancing, even before the U.S. economic sanctions.

Even basic activities, such as a conference call with bondholders, are now essentially unthinkable, the sources said.

Sanctions against Zerpa are having a knock-on effect on Wall Street, affecting imports of food and medicine to Venezuela made through funds headed by Zerpa, according to Delcy Rodriguez, president of Maduro’s new legislative assembly.

“This wasn’t done to affect Venezuelan officials but rather the entire population,” Rodriguez said on Monday.

Zerpa has held several high-profile posts including heading Venezuela’s state economic development bank Bandes and off-budget investment fund Fonden.

Opposition lawmakers have said he is an example of how the late Hugo Chavez’s “21st century socialism” has allowed unprepared political figures to wield power over financial deals.

“I have a negative opinion of him because of the way he handled the Chinese fund,” said opposition lawmaker Angel Alvarado, describing Zerpa as Maduro’s “finance tsar.”

U.S. pressure could force PDVSA to remove Zerpa from his post, at least on paper. However, PDVSA has had issues in the past that have led investors to tread cautiously with Venezuela.

“In part, the sanctions codify an already existing situation in which PDVSA and the Republic have little to no access to international financial markets due to the combination of political risk, unsustainable policies, concerns about legality

of new issues and reputational risk from providing funds to the Venezuelan government,” investment firm Torino Capital wrote in a report to clients after Friday’s sanctions.
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U.S. President Donald Trump is traveling to the state of Missouri to try to build support for his goal of reforming the country’s tax code.

Administration officials say the president will focus on explaining the need for tax reform, but not the specifics of a plan to do so, during a speech Wednesday in the city of Springfield.  They say he will promote tax cuts as a way to help American workers.

Trump has in the past proposed cutting the corporate tax rate from 35 percent to 15 percent.

The U.S. tax code has not undergone a significant overhaul since 1986.

Trump’s Republican Party controls both houses of the U.S. Congress, but failed in its earlier efforts to overhaul another major program as leaders were unable to get enough votes to change the health care system.
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The Middle East and North Africa region loses about $21 billion each year because of an inadequate supply of water and sanitation, the World Bank said Tuesday, warning that urgent action is needed to prevent ripple effects on stability and growth.

Poor management of water resources and sanitation in the world’s most water-scarce region costs about 1 percent of its annual gross domestic product, with conflict-hit states losing as much as 2 to 4 percent each year, the bank said in a report issued at the World Water Week conference in Stockholm, Sweden.

Deaths due to unsafe water and sanitation in some parts of the region, particularly countries affected by conflict, are higher than the global average, it added.

“As the current conflict and migration crisis unfolding in the Middle East and North Africa shows, failure to address water challenges can have severe impacts on people’s well-being and political stability,” the report said.

Peril in Yemen

In Yemen, which is reeling from more than two years of conflict, water supply networks serving its largest cities are at risk of collapse due to war-inflicted damage and disrepair, and about 15 million people have been cut off from regular access to water and sanitation, the U.N. children’s agency (UNICEF) said in a separate statement Tuesday.

In Syria, where the conflict is well into its seventh year, water has frequently been used as “a weapon of war,” with pumps deliberately destroyed and water sources contaminated, and about 15 million people are in need of safe water, including an estimated 6.4 million children, UNICEF said.

Overall, 183 million people lack access to basic drinking water in countries affected by conflict, violence and instability around the world, it added.

Better management

With the urban population in the Middle East and North Africa expected to double by 2050 to nearly 400 million, a combination of policy, technology and water management tools should be used to improve the water situation, the World Bank report said.

“Water productivity — in other words, how much return you get for every drop of water used — in the Middle East in general is the lowest on average in the world,” said Anders Jägerskog, a specialist in water resources management at the World Bank and one of the report’s authors.

Middle Eastern and North African countries are using far more water than can be replenished, said the report.

To reverse the trend, technology and innovation are “essential but not enough,” Jägerskog told the Thomson Reuters Foundation. Water governance — in particular, water tariffs and subsidies — must also be addressed, he said.

The region has the world’s lowest water tariffs and spends the highest proportion of GDP on public water subsidies. Such policies lead to excessive use of already scarce water supplies and are not sustainable, said Jägerskog.

Untreated wastewater

Another challenge is that more than half of the wastewater collected in the region is fed back into the environment untreated.

“Along with better water management, there is room for increasing the supply through nonconventional methods such as desalination and recycling,” Guangzhe Chen, senior director of the World Bank’s global water practice, said in a statement.

Improved water management could bring considerable financial returns, the report noted.

Governments could gain $10 billion annually by improving the storage and delivery of irrigation water to users, while increasing agricultural production by up to 8 percent, the report said.

Egypt, Syria and Iran — which have the largest proportion of irrigated land in the region — are the countries that could benefit most.
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