The immediate ban on nearly all Palestinian workers to enter Israel following the Hamas-led terror attack of Oct. 7 has dealt a shock to the Israeli economy, the country’s central bank chief said at the World Economic Forum in Davos.

“We’re working in a very uncertain environment, as you can tell, and I would say there are two types of shocks: there is a supply shock,” Bank of Israel governor Amir Yaron told CNBC’s Dan Murphy. “And it’s primarily in the construction industry where … a third of that industry is Palestinians from the West Bank, and now they’re not coming in to work.”

“It’s also affecting agriculture, where they are in, and there are other foreign workers,” Yaron said. “So that will take a little bit, that’s a negative supply shock, and it could affect prices going up towards the second half of the year.”

He said that the bank must monitor these price developments, adding, “On the other hand, we’ve seen negative demand shock, obviously in a war. And so far that negative demand shock has been the most dominant one. And we will have to monitor that as well, as we go forward with how we are thinking about continuing with monetary policy.”

Before Oct. 7, more than 150,000 Palestinian workers from the occupied West Bank entered Israel daily for work in a range of sectors, predominantly in construction and agriculture.

The ban on most of these workers returning to their employment in Israel has dramatically hurt the economy of the West Bank. It has also contributed to anger and rising unrest over Israel’s decades-long occupation and its relentless bombardment of the Gaza Strip, which Palestinian health authorities say has killed more than 24,000 people. The Israeli offensive began after Hamas militants from Gaza launched a surprise attack on southern Israel that killed some 1,200 people and took another 240 hostage, of which 136 people remain in captivity.

In late December, Israel’s finance ministry warned that the ban on Palestinian workers could cost Israel’s economy billions of shekels per month.

“We calculated what the economic damage would be if Palestinians do not go to work…and it is estimated at approximately NIS 3 billion ($830 million) per month,” a representative of the finance ministry told Israel’s parliament, the Knesset, at the time, according to local media.

Business and factory owners in December pressured lawmakers to allow between 8,000 and 10,000 Palestinian workers to return to their jobs in Israeli settlements and businesses in the West Bank.

In comments reported by the Times of Israel, Raul Sargo, president of the Israel Builders Association, had told the Knesset: “We are in very dire straits … The industry is at a complete standstill and is only 30% productive. Fifty percent of the sites are closed and there is an impact on Israel’s economy and the housing market.”

Israel’s agriculture sector is also heavily dependent on foreign labor, in particular workers from Thailand — at least 10,000 of whom have left the country after the October attack, during which many Thai farm workers were killed and taken hostage.

Asked about what tools the bank has at its disposal to respond to a potential expansion of the war to Israel’s northern border with Lebanon, Yaron stressed the focus on preventing financial instability.

“We all hope it doesn’t happen. In case it does, then your mindset becomes financial stability,” the banker said. “That means the whole view on interest rate process … expansionary monetary policy probably stops, and you use the types of tools we’ve used so far, like the FX or things like that, and we hope we don’t need to go there.”

Yaron added that he was optimistic about his country’s ability to deal with shocks, given its familiarity with wars over the decades.

“I think we still have to remember, Israel is a dynamic economy,” he said. “It’s resilient, it has shown it can bounce back … pretty much over every military event, it has shown that it can come back and grow fast. I would say, actually, Homeland Security, economics has demand for that has grown. And hopefully, if there is a day after in which there’s a better environment with moderate states, those will bring in also new opportunities.”

Stellantis said Saturday that its most recent proposal to the United Auto Workers includes raises of nearly 21% over the course of the contract, including an immediate 10% pay increase, and the end of wage tiers for some workers, the latest development in a historic showdown between the big three Detroit automakers and the union.

The Jeep maker’s proposal, which is in line with proposals from Ford and General Motors, would also continue to offer profit sharing to workers, according to new details on the offer released by the company Saturday.

“The teams have been very, very careful to listen, very careful for us to come up with best offers that we can do that also protect … the company,” COO Mark Stewart said on a Saturday call with reporters.

The standoff between the UAW and major automakers Stellantis, Ford and General Motors reached a fever pitch Friday, with the union starting work stoppages after an agreement wasn’t met by a Thursday night deadline. The so-called stand-up strike started with walkouts at three key plants — one for each automaker — with the possibility that the UAW can call on more of its members to join the strike if needed.

The union has been seeking 40% hourly pay increases, a reduced 32-hour workweek, a move back to traditional pensions, the elimination of compensation tiers and a restoration of cost-of-living adjustments, among other items. The UAW didn’t immediately respond to a request for comment about the proposal.

Meanwhile, Ford and GM resumed negotiations Saturday after no talks occurred between the union any of the automakers the previous day. Stellantis said it planned to pick up talks again Monday.

UAW President Shawn Fain said earlier this week that Stellantis had previously offered a 17.5% increase.

Under the new proposal, starting pay for supplemental employees would increase by $4.22, or nearly 27%, to $20 an hour.

The company also said it would cut the timeline for ascending the hourly wage scale in half to four years, meaning all full-time hourly employees would reach the top before the contract expires. Under the offer, the wage-tier system would be eliminated entirely for its Mopar division, which is known for service, parts and customer interfacing.

Stellantis also offered an inflation protection measure within compensation. The company said it has committed more than $1 billion for improvements in the pension and retirement savings plans for current employees and retirees.

Stellantis leadership also pushed back against the union’s descriptions of the automaker’s plans to close or sell 18 facilities. The company has said it aims to run parts distribution centers more efficiently and continue shifting resources toward electric vehicles. Jobs in these plants would be persevered, the company said.

The automaker also stressed its commitment to bargaining and reaching an agreement that is financially feasible, echoing concerns raised by Ford and GM leadership. Ford CEO Jim Farley said in a CNBC interview Friday that the UAW demands would force the company to “choose bankruptcy over supporting our workers.” Stellantis’ leadership noted that the company needs to stay competitive with automakers that don’t have unionized employees.

“It’s not about warfare, it’s about win-win,” Stewart said. “It’s about us finding something that is great for our folks today, able to keep a future for tomorrow … for our company to be able to continue the investment path we have for electrification, and for our U.S. operations to be strong so we can compete against the transplants and we can compete against the new entrants.”

President Joe Biden said Friday that the companies should improve their current offers to ensure a strong contract is agreed on amid a period of record profits.

— CNBC’s Michael Wayland contributed to this report.

India is poised to become the world’s second-largest economy by 2075, leapfrogging not just Japan and Germany, but the U.S. too, says Goldman Sachs.

Currently, India is the world’s fifth-largest economy, behind Germany, Japan, China and the U.S.

On top of a burgeoning population, driving the forecast is the country’s progress in innovation and technology, higher capital investment and rising worker productivity, the investment bank wrote in a recent report.

“Over the next two decades, the dependency ratio of India will be one of the lowest among regional economies,” said Goldman Sachs Research’s India economist, Santanu Sengupta.

A country’s dependency ratio is measured by the number of dependents against the total working-age population. A low dependency ratio indicates that there are proportionally more working age adults who are able to support the youth and elderly.

Sengupta added that the key to drawing out the potential of India’s rapidly growing population is to boost the participation of its labor force. And Sengupta forecasts that India will have one of the lowest dependency ratios among large economies for the next 20 years.

“So that really is the window for India to get it right in terms of setting up manufacturing capacity, continuing to grow services, continuing the growth of infrastructure,” he said.

India’s government has placed a priority on infrastructure creation, especially in the setting up of roads and railways. The country’s recent budget aims to continue the 50-year interest free loan programs to state governments in order to spur investments in infrastructure.

Goldman Sachs believes that this is an appropriate time for the private sector to scale up on creating capacity in manufacturing and services in order to generate more jobs and absorb the large labor force.

Spearheading India’s economic trajectory is also its progress in technology and innovation, the investment bank said.

India’s technology industry revenue is expected to increase by $245 billion by the end of 2023, according to Nasscom, India’s non-governmental trade association. That growth will come from across the IT, business process management and software product streams, Nasscom’s report indicated.

Additionally, Goldman predicted capital investment will be another significant driver of India’s growth.

“India’s savings rate is likely to increase with falling dependency ratios, rising incomes, and deeper financial sector development, which is likely to make the pool of capital available to drive further investment,” Goldman’s report stated.

The Achilles heel to the bank’s projection is the labor force participation rate — and whether it increases at the rate which Goldman projects.

“The labor force participation rate in India has declined over the last 15 years,” the report noted, underlining that women’s participation rate in the labor force is “significantly lower” than men’s.

“A mere 20% of all working-age women in India are in employment,” the investment bank wrote in a separate report in June, citing that the low figure could be due to women being primarily engaged in piecework, which is not accounted for by the economic measures of formal employment.

Net exports have also been a drag on India’s growth, because India runs a current account deficit, Goldman said. The bank highlighted, however, that services exports have been cushioning current account balances.

India’s economy is driven by domestic demand, unlike many more export-dependent economies in the region, with up to 60% of its growth mainly attributed to domestic consumption and investments, according to Goldman’s report.

S&P Global and Morgan Stanley have also predicted that India is on course to become the third-largest economy by 2030.

India’s first-quarter GDP expanded 6.1% year-on-year, handily beating Reuters’ expectations of 5% growth. The country’s full-year growth is estimated to come in at 7.2%, compared with 9.1% growth in the 2021-2022 fiscal year.

Europe was gripped by punishing heat waves in the summer of 2022, with wildfires, droughts and deaths highlighting what many around the world already know: Weather extremes can have devastating, real-world consequences.  

When it comes to temperatures in warmer months, the direction of travel seems to be going one way.

The U.K.’s Met Office is projecting that summers in the country will be between 1 and 6 degrees Celsius warmer by 2070, and as much as 60% drier. It adds that global heat waves linked to climate change are likely to increase. Just this week it said last month was the U.K.’s hottest June on record.

The overall picture is challenging. In May 2023, the World Meteorological Organization said there’s “a 98% likelihood that at least one of the next five years, and the five-year period as a whole, will be the warmest on record.”

The consequences of a warmer planet are going to be multifaceted, affecting billions of people — and the world of work is no exception.

A recent report from the Institution of Mechanical Engineers (IMechE) sketched out how employees could be affected as temperatures rise.

“Thermal comfort is very important in a workplace and if it is not achieved, morale, productivity, health and safety will all likely deteriorate,” the analysis said.

According to those involved in the report’s production, warmer working environments can create some very challenging scenarios indeed.

“There’s a whole range of things in addition to just people becoming fatigued and exhausted and not being able to focus on the industrial tasks they’re trying to undertake,” Tim Fox, its lead author, told CNBC.

That includes “increased potential for accidents, because people’s cognitive thinking isn’t as sharp as it would normally be.”

Issues relating to productivity also apply to equipment, facilities and buildings, Fox said. “Overheating ultimately results in economic productivity loss, [it] impacts on national and international economics.”   

Fox and his co-authors are not alone in highlighting the difficulties of a hotter world.

In 2019, the International Labour Organization published a report which contained some sobering details. 

“The economic losses due to heat stress at work were estimated at US$280 billion in 1995,” the U.N. agency said.

This, it added, “is projected to increase to US$2,400 billion in 2030, with the impact of heat stress being most pronounced in lower-middle- and low-income countries.”

The ILO’s report also highlighted which sectors would likely bear the brunt of rising average temperatures.

Those working in construction and agriculture, it said, were “expected to be the worst affected, accounting for 60 per cent and 19 per cent, respectively, of working hours lost to heat stress in 2030.”

Heat stress is a serious matter. The ILO describes it as referring to “heat received in excess of that which the body can tolerate without physiological impairment.”

Other outdoor jobs may be affected, too. In his interview with CNBC, Fox highlighted the potential challenges faced by workers in oil refineries, gas plants and chemical works.

All the above roles, he said, involve “quite a lot of external activity,” with workers also needing to wear personal protective equipment, or PPE, thanks to the nature of their job.

“This clothing can be quite cumbersome … and quite hot to wear, even under cold conditions,” Fox said.

That in turn makes employees “particularly at risk or vulnerable to … these sort of conditions.”

Factories are another area of concern. Fox noted that buildings of this type haven’t particularly been designed with heat ingress — especially extreme heat ingress — in mind.

“They’re full of equipment that’s generating a lot of heat, and it’s very difficult for factories, buildings, big warehouse buildings, to passively cool themselves,” he said.

Air conditioning is common in offices, but that’s not the case everywhere, he added.

Fox noted that office buildings in countries with temperate climates, like the U.K., “can get quite hot” because not a lot of air-conditioning had been installed.

The overall situation appears grave. For many, preparation and adaptation will be crucial.

The IMechE says this will involve “changes to the design of buildings, infrastructure and other physical assets and systems, both with regard to those that already exist and those that are yet to be built or manufactured, as well as the work, educational, leisure and other activities that humans undertake.”

In a statement issued alongside its report in April, the organization said it also wanted an urgent update to “guidance related to heat impacts on the workforce” so firms can come up with plans and enact changes in their working environments.

At the time, Laura Kent, the IMechE’s public affairs and policy advisor, referenced the challenges authorities face.

“We acknowledge that it would be difficult for the Health and Safety Executive to set a meaningful upper temperature limit due to variations between industries in both working conditions, required PPE and workload,” she said.

“However, HSE guidance needs to be updated to support sectors and industry in the development of appropriate strategies.”

The HSE did not respond to CNBC’s request for comment ahead of this story’s publication.

In other parts of the world, plans are being made to ban work when it’s too hot.

In May, for instance, Spain’s Minister of Labour and Social Economy, Yolanda Díaz, tweeted that carrying out “certain jobs during daylight hours” in extreme temperatures would be prohibited.

Speaking to reporters, Díaz said such prohibitions would take effect when AEMET, the State Meteorological Agency, issues red or orange weather alerts.

Citing Spain’s Labour Ministry, Reuters said the move would affect roles in sectors like agriculture and street cleaning. According to Reuters, in the summer of 2022 a street-sweeper in Madrid died from heatstroke.

Trade unions are also making their voice heard when it comes to working in extreme conditions.

Take Unite the Union, which has a presence in Britain and Ireland. It’s listed a range of advice provided by its health and safety representatives to both workers and employers.

Among other things, it stresses the importance of adequate ventilation for internal workspaces, the provision of cover for workers who are in direct sunlight, and stopping all work in extreme conditions.

Among a wide range of actions, Fox stressed the importance of design in creating safe and comfortable working environments in the face of hotter weather.

He said there needs to be a completely new approach to cooling that does not rely on the use of air conditioning, which has a significant environmental footprint.

“We need to explore … more traditional solutions of natural ventilation, use of shade, internal courtyards,” Fox said.

He noted that there’s “an awful lot” that can be done to prepare for the future. Raising awareness would be key. “In many cases, industries and workforces are just not aware that this challenge is coming, and are not preparing for it,” he said.

On top of that, identifying priorities in research and development and updating engineering methodologies and approaches would be needed.

Unless something is done, there will be, “in the coming years and decades, an increase in the economic impact of more extreme heat waves and just the general raising of the ambient seasonal temperature,” Fox warned.

This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

Investors like jobs growth.

The U.S. labor market is still hot. There were 253,000 new nonfarm jobs last month, handily beating Wall Street estimates for job growth of 180,000. Average hourly earnings unexpectedly rose by 0.5% — the biggest monthly gain in a year.U.S. markets jumped Friday as Apple shares popped and regional bank stocks recovered. Europe’s Stoxx 600 rose 1.1% — Adidas, with an 8.9% surge, was a big winner in the index.If the White House fails to raise the debt ceiling, there will be a “steep economic downturn” and “economic chaos will ensue,” U.S. Treasury Secretary Janet Yellen warned on Sunday. The U.S. might hit its debt ceiling as early as June 1.PRO During Berkshire’s meeting, Buffett shared his favorite stocks. One of them is a “better business than any we own,” Buffett said. Another is “one of the best-managed and important companies in the world” — yet Buffett decided to sell shares in it. Here’s why.

A strong jobs reading, a note from JPMorgan and an optimistic earnings report from Apple buoyed U.S. markets Friday.

The gains made by stocks were impressive — especially after the previous few days of renewed banking fears — so let’s start with them. The Dow Jones Industrial Average added 1.65%, the S&P 500 rose 1.85% and the Nasdaq Composite jumped 2.25%.

The tech-heavy Nasdaq’s jump is straightforward: Apple shares leaped 4.7% after the company reported better-than-expected earnings and revenue Thursday. Other Big Tech companies, like Microsoft and Amazon, rose alongside Apple.

Broader markets were boosted by April’s jobs report, which showed a higher-than-expected increase in jobs growth and an unemployment rate of 3.4% — a record low since 1969.

Markets’ reaction might seem confusing at first. A tight labor market implies the Federal Reserve might continue raising interest rates. Generally speaking, that’s bad for markets. Recall January’s jobs report: There were 517,000 new jobs in December, almost three times the forecast. Markets fell on the news.  

Yet this time, markets rallied, suggesting that the worry gripping traders is one of recession, not inflation. A strong jobs market increases the probability that the U.S. economy can tame inflation without contracting too severely.

Indeed, there are signs the U.S. economy has been slowing. At the end of April, we learned that GDP rose at an annualized 1.1% pace in the first quarter, about half of what analysts had estimated. The banking crisis — resurrected by First Republic’s failure — is spreading again, causing banks to lend less and ultimately slow growth even further.

There’s good news on that front, however. On Friday, banking titan JPMorgan Chase upgraded three regional bank stocks to “overweight,” saying that Western Alliance, Zions Bancorp and Comerica were all “substantially mispriced” — as I had argued in Friday’s edition of this newsletter.

Investors digested the note and pushed the SPDR S&P Regional Banking ETF (KRE) up 6.3%. Individual bank stocks saw more drastic jumps: PacWest surged 81.7% and Western Alliance popped 49.2%.

But make no mistake: This isn’t a sign that banking fears have been put to rest definitively. If stocks can swing so drastically in one direction on the back of a note, they can do so in the other at the faintest whisper of trouble. What we’re seeing isn’t renewed confidence, but continued volatility.

Subscribe here to get this report sent directly to your inbox each morning before markets open.

The United States is the only advanced economy that does not guarantee paid time off. 

“You have entire cultures like France … where pretty much everybody takes August off, and it’s just part of the culture there,” said Shawn Fremstad, director of law and political economy at the Center for Economic and Policy Research. “You don’t really see that here in the United States.”

The European Union Working Time Directive, which was passed in the early 1990s, requires at least 20 working days of paid vacation in all EU countries.

France provides a minimum of 30 paid vacation days per year. What’s more, many European countries have paid holidays as well, giving workers there even more paid days off.

“When I came to France, I noticed that vacation is a way of life,” said Fatima Cadet-Diaby, an American who has been living in Paris for nearly seven years. “People are constantly talking about their vacations.”

More vacation time could also equate to overall economic gains in the U.S.

“I think people have a stereotype of France in their mind as this kind of lazy culture,” Fremstad said. “But if you look at the employment rate there for prime age workers, so basically 25 through 54, it’s higher than in the U.S. So, they have more people working and they’re much more productive per hour.”

Even though a majority of Americans do have some kind of paid time off, nearly half of workers report not using all of those days. About half worry they might fall behind on their work if they take time off, with close to 20% thinking it could hurt their career growth and 16% saying they fear losing their job, according to data from the Pew Research Center.

“There’s a certain fear we don’t have any legal protections and people have been fired for taking vacation time,” said John de Graaf, author of the book “Take Back Your Time.” 

Watch the video above to learn more about why American’s aren’t going on vacation even though they have the days off and what we can learn from our counterparts in France.

As if there weren’t already enough layoff fears in the tech industry, add ChatGPT to the list of things workers are worrying about, reflecting the advancement of this artificial intelligence-based chatbot trickling its way into the workplace.

So far this year, the tech industry already has cut 5% more jobs than it did in all of 2022, according to Challenger, Gray & Christmas.

The rate of layoffs is on track to pass the job loss numbers of 2001, the worst year for tech layoffs due to the dot-com bust.

As layoffs continue to mount, workers are not only scared of being laid off, they’re scared of being replaced all together. A recent Goldman Sachs report found 300 million jobs around the world stand to be impacted by AI and automation.

But ChatGPT and AI shouldn’t ignite fear among employees because these tools will help people and companies work more efficiently, according to Sultan Saidov, co-founder and president of Beamery, a global human capital management software-as-a-service company, which has its own GPT, or generative pretrained transformer, called TalentGPT.

“It’s already being estimated that 300 million jobs are going to be impacted by AI and automation,” Saidov said. “The question is: Does that mean that those people will change jobs or lose their jobs? I think, in many cases, it’s going to be changed rather than lose.”

ChatGPT is one type of GPT tool that uses learning models to generate human-like responses, and Saidov says GPT technology can help workers do more than just have conversations. Especially in the tech industry, specific jobs stand to be impacted more than others.

Saidov points to creatives in the tech industry, like designers, video game creators, photographers, and those who create digital images, as those whose jobs will likely not be completely eradicated. It will help these roles create more and do their jobs quicker, he said.

“If you look back to the industrial revolution, when you suddenly had automation in farming, did it mean fewer people were going to be doing certain jobs in farming?” Saidov said. “Definitely, because you’re not going to need as many people in that area, but it just means the same number of people are going to different jobs.”

Just like similar trends in history, creative jobs will be in demand after the widespread inclusion of generative AI and other AI tech in the workplace.

“With video game creators, if the number of games made globally doesn’t change year over year, you’ll probably need fewer game designers,” Saidov said. “But if you can create more as a company, then this technology will just increase the number of games you’ll be able to get made.”

Due to ChatGPT buzz, many software developers and engineers are apprehensive about their job security, causing some to seek new skills and learn how to engineer generative AI and add these skills to their resume.

“It’s unfair to say that GPT will completely eliminate jobs, like developers and engineers,” says Sameer Penakalapati, chief executive officer at Ceipal, an AI-driven talent acquisition platform.

But even though these jobs will still exist, their tasks and responsibilities could likely be diminished by GPT and generative AI.

There’s an important distinction to be made between GPT specifically and generative AI more broadly when it comes to the job market, according to Penakalapati. GPT is a mathematical or statistical model designed to learn patterns and provide outcomes. But other forms of generative AI can go further, reconstructing different outcomes based on patterns and learnings, and almost mirroring a human brain, he said.

As an example, Penakalapati says if you look at software developers, engineers, and testers, GPT can generate code in a matter of seconds, giving software users and customers exactly what they need without the back and forth of relaying needs, adaptations, and fixes to the development team. GPT can do the job of a coder or tester instantly, rather than the days or weeks it may take a human to generate the same thing, he said.

Generative AI can more broadly impact software engineers, and specifically devops (development and operations) engineers, Penakalapati said, from the development of code to deployment, conducting maintenance, and making updates in software development. In this broader set of tasks, generative AI can mimic what an engineer would do through the development cycle.

While development and engineering roles are quickly adapting to these tools in the workplace, Penakalapati said it’ll be impossible for the tools to totally replace humans. More likely we’ll see a decrease in the number of developers and engineers needed to create a piece of software.

“Whether it’s a piece of code you’re writing, whether you’re testing how users interact with your software, or whether you’re designing software and choosing certain colors from a color palette, you’ll always need somebody, a human, to help in the process,” Penakalapati said.

While GPT and AI will heavily impact more roles than others, the incorporation of these tools will impact every knowledge worker, commonly referred to as anyone who uses or handles information in their job, according to Michael Chui, a partner at the McKinsey Global Institute.

“These technologies enable the ability to create first drafts very quickly, of all kinds of different things, whether it’s writing, generating computer code, creating images, video, and music,” Chui said. “You can imagine almost any knowledge worker being able to benefit from this technology and certainly the technology provides speed with these types of capabilities.”

A recent study by OpenAI, the creator of ChatGPT, found that roughly 80% of the U.S. workforce could have at least 10% of their work tasks affected by the introduction of learning models in GPT tech, while roughly 19% of workers might see 50% of their tasks impacted.

Chui said workers today can’t remember a time when they didn’t have tools like Microsoft Excel or Microsoft Word, so, in some ways, we can predict that workers in the future won’t be able to imagine a world of work without AI and GPT tools.

“Even technologies that greatly increased productivity, in the past, didn’t necessarily lead to having fewer people doing work,” Chui said. “Bottom line is the world will always need more software.”