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Walmart Raises Wages in Midst of Tax Overhaul

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American retailer Walmart has raised its starting hourly wage from $10 to $11 and vowed to deliver bonuses of up to $1,000 to employees in wake of the US tax overhaul.

The move comes into effect next month, costing $300m on top of already planned annual wage increases. The one-time bonuses aim to reward those who will not benefit from the starting wage bump, ranging from $200 to $1000. They are based on company seniority and how long workers have been with the organisation, amounting to an additional $400m.

Walmart is also expanding its maternity and parental leave policies for full-time workers, adding an adoption benefit of $5,000 to help cover costs.

The world’s largest retailer is no stranger to featuring in news headlines and is currently fighting to improve its bad reputation in the US over its treatment of employees.

In September last year, rival company Target announced it was boosting its minimum hourly wage to $11 an hour with the aim of increasing this to $15 by the end of 2020.

It has been three years since Walmart last announced it was increasing its wages. In 2015, the hourly pay rose to $9, costing America’s largest private employer $1bn, and then a year later to $10 for employees who completed a 90-day training course. This increase was slammed by long-serving workers as unfair to them.

Many states have endorsed minimum wage laws since then, and a portion of Walmart’s 4700 stores already pay $11 an hour.

However, according to the US Census Bureau, many workers will still struggle despite the wage boost if they are the sole breadwinner. For a typical 40-hour week, an hourly rate of $11 converts to some $22,000 a year, under the federal poverty level of $24,600 for a family of four.

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Companies

Whatsapp Launches New Venture Aimed at Businesses

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whatsapp business

Whatsapp has launched a new app targeted at businesses, called the Whatsapp Business App, which they claim will enable companies to “communicate more efficiently” with present and potential customers.

This forms part of Whatsapp’s wider strategy to branch out into the corporate world. It plans to use the app to generate new revenue by charging businesses for using the extra communication tools that will enable them to better connect with their customers.

Although the app is set for worldwide release, at present it will only be available in Indonesia, Italy, Mexico, the UK and US. It includes a feature which indicates a business is authentic with a green tick badge next to their name.

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Companies

Amex: Troubled Credit Card Company Reports $1.2bn Net Loss

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Amex annual report

On Thursday, American Express, or Amex, reported a net loss of $1,197m in the fourth quarter, the first net loss the company has experienced for 26 years.

Although the company stated that revenue from interest expenses was up 10% to $8.8bn, Amex said recent reforms to the US tax code meant the company incurred extra costs, including a repatriation cost on its foreign assets as well as a devaluation of its deferred tax assets. It estimates total costs amounted to $2.6m.

For the full year, net income was $2.7bn compared with $5.4bn the company earned in 2017. However, even with the estimated $2.6m the company claims it incurred from the recent tax charge, net earnings were still $5.3bn, $100m lower compared to last year.

In New York, American Express shares (AXP) took a near 1% tumble at the beginning of trade with shares finishing the day on $99.90.  JPMorgan Chase and Goldman Sachs anticipate greater earnings for 2018.

“Overall, we believe the Tax Act will be a positive development for both the U.S. economy and American Express” said CEO and chairman Kenneth Chenault. Chenault also said he will be leaving Amex in “very strong hands” when his successor, Steve Squeri takes over next month.

American Express has suffered from an ever-reducing share in the credit card market and ended its 14-year relationship with American warehouse chain Costco who in 2016 made an agreement with the market leader, Visa.

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Companies

Tencent Extends Facebook Lead

Tencent Facebook

Tencent has shot past Facebook to become the world’s most valuable social network.

Editor’s Remarks: Although Tencent briefly overtook Facebook in terms of market cap in November, the recent selloff of Facebook shares prompted the Chinese tech titan to regain the lead. Facebook investors responded negatively to news that Mark Zuckerberg’s plans to highlight family and friend-based content on the newsfeed would reduce the amount of time people spent on the site. Shares in Facebook have fallen 5% since that announcement, enabling Tencent to gain a $19bn lead over the US company. Tencent’s growth has been spurred on by its diversification away from its flagship messaging app, WeChat, and into video games.

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