Author: Kai Donesa

understanding the difference between recognition and reward

UNDERSTANDING THE DIFFERENCE BETWEEN RECOGNIZING AND REWARDING YOUR PEOPLE

Written by Kai Donesa on . Posted in Resources.

When was the last time you acknowledged your people for a job well done?

It’s easy to get caught up in the daily grind and forget to recognize the efforts of those around us. As leaders and managers, it’s crucial to understand the difference between recognizing and rewarding the hard work of our staff.

While recognition and reward are essential in motivating and encouraging employees, they are vastly different. Each word carries varying connotations and outcomes. Recognition is about acknowledging staff for improving at their jobs, while reward is about commending individual staff for their exceptional performance and achievements.

Knowing the difference between both strategies can transform your workplace dynamics. In this blog post, we will explore the nuances between recognizing and rewarding staff and how you can strike a balance to create a culture of appreciation and excellence in your organization.

Why you must distinguish between reward and recognition

Recognizing and rewarding staff are two distinct concepts often misunderstood and used interchangeably. Distinguishing between the two is critical because it informs how your organization appreciates and incentivizes its people. At the same time, recognition and reward complement each other in creating a balanced and positive workplace culture.

A common mistake in organizations is using recognition and reward synonymously. However, this mindset can lead to a skewed view of what motivates staff. Recognition and reward have different impacts, and implementing a balanced approach can significantly improve your human resources strategies.

Understanding recognition

At work, recognition can be a powerful motivator. Recognizing the growth in your people’s skills and knowledge boosts their morale and promotes a positive work culture. It’s an often-overlooked gesture that can significantly affect job satisfaction. When staff members feel valued and appreciated, they are more likely to put in their best effort.

The role of employee recognition in fostering a motivated, satisfied, and high-performing workforce cannot be overstated. As we better understand what recognition focuses on, remember that each point holds unique value in shaping an employee’s job progression.

Valuing knowledge. The knowledge and expertise of your people are the driving forces behind your organization’s innovation, problem-solving, and decision-making. Recognizing and appreciating the depth and breadth of your staff’s knowledge can foster a culture of learning and growth. It encourages employees to continue expanding their knowledge base, contributing to their personal and professional development.

Appreciating skills growth. Skills are the practical application of knowledge. They are tools that enable staff to work effectively. Recognizing the skills of your people, from technical prowess to interpersonal abilities, is important. By acknowledging the growth in your staff’s skill sets, you confirm their value to the organization.

Recognizing capacity. Capacity refers to a person’s ability to meet the demands of the job. Recognizing an employee’s capacity is acknowledging their potential and ability to take on challenges. You trust their abilities and are confident in their growth potential. This recognition can empower staff to push them beyond their limits and strive for achievement.

Focusing on professional development. Professional development is important in an employee’s career progression. Recognizing your staff’s commitment to continuous learning and improvement shows you value their drive to better themselves.

Managing fair and objective pay increases. When your staff feel that their hard work and dedication are recognized with appropriate compensation, it boosts their morale. Additionally, fair pay increases demonstrate that your organization values and appreciates their contributions, encouraging staff to continue improving their skills and knowledge.

Recognizing and appreciating employees’ efforts creates a positive work environment where everyone feels valued. The Birches Group approach to recognizing employees is rooted in skills growth. Managers and staff members collaborate and have equal ownership of measuring and growing their skills. Providing your people with a framework that objectively measures and recognizes their skills growth, you enable the following opportunities:

  • Your managers and staff provide input on the pace of their growth
  • Your people are recognized and compensated as they become better at their jobs.

Understanding reward

Reward is integral to an organization’s approach to managing people. Most organizations tend to link reward to high-achieving, outstanding employees. However, at Birches Group, we also reward a majority of the staff who meet the expectations of their jobs.

So, what differentiates reward from recognition?

Recognizing results. Reward is often tied to specific outcomes or achievements, such as exceeding targets or completing a project successfully. It is a way to acknowledge and celebrate the results that staff members have delivered. Recognizing staff accomplishments reinforces the importance of their contributions and motivates them to perform at their best.

Acknowledging impact. Whether it’s through ideas, client service, or an ability to solve complex problems, the impact of one’s work is felt throughout the organization. Rewarding this impact is a powerful way to show staff that their job matters and makes a difference. By focusing on output, your organization can encourage employees to think creatively. More importantly, focusing on getting things done gives your staff the flexibility to try different paths to achieving their output.

Highlighting critical incidents. Critical incidents are situations that require immediate attention and exceptional handling. When your staff successfully navigates these challenging situations, it’s important to recognize their quick thinking and problem-solving skills. This will boost their confidence and motivate them to manage future incidents with the same level of competence.

Celebrating achievements. Achievements deserve credit and kudos. By celebrating your staff’s achievements, you acknowledge their efforts and foster a sense of pride in their work. When you take time to celebrate individual or team accomplishments, it also encourages a spirit of camaraderie and communal success.

Offering bonuses. Bonuses are a tangible way of rewarding exceptional performance. They show your employees that you notice and appreciate their hard work. Offering bonuses as a form of recognition can incentivize employees to continue performing at a high level.

recognizing the difference of recognition and reward

Why your organization should both recognize and reward staff

A successful organization is like a well-oiled machine, with each part playing a role in supporting smooth operations. Employees are the most vital, powering the machine with their skills, dedication, and creativity. Thus, organizations must not only recognize but also reward staff.

As discussed earlier, recognition is a powerful tool that can significantly increase staff morale. When employees feel their hard work and dedication are recognized, they feel valued in the organization. This, in turn, can boost their productivity and enthusiasm for their work. Moreover, recognition fosters a positive work culture where employees feel appreciated and are likelier to go the extra mile for their job.

While recognition fuels pride in one’s work, reward reinforces this sentiment. Whether monetary or otherwise, rewards are a tangible acknowledgment of an employee’s contributions. They function as a driving force, motivating staff to exceed their performance levels and strive for higher achievements.

How to balance recognition and rewards in your workplace

Recognition and rewards help foster a positive work environment. They reinforce the behaviors and values that contribute to an organization’s success. However, striking the right balance between the two is a delicate process. If not appropriately managed, it can lead to discontent and demotivation among staff.

An overemphasis on rewards may make recognition seem hollow, while focusing too much on recognition may leave staff members feeling undervalued due to the lack of tangible benefits. Your organization can achieve an optimal balance by maintaining a consistent pattern of recognition and tying rewards to clearly defined performance benchmarks.

Recognize effort and reward results. Recognition should be frequent and consistent, aimed at acknowledging effort. This approach motivates all team members and not just top performers. Employees who see their efforts recognized will likely continue contributing to their best abilities. On the other hand, rewards should be linked to significant achievements and results. This approach reinforces the link between performance and rewards, encouraging employees to strive for excellence.

Implement a fair and transparent system. Fairness is vital in balancing recognition and rewards. Ensure that all employees understand how the recognition and reward system works and that it is applied consistently and uniformly across teams. Make sure the rules and criteria for recognition and reward are well-defined and communicated to each staff member. This involves outlining the performance standards or behaviors that will be rewarded or recognized, and the types of rewards or recognition that employees can earn.

How Birches Group’s approach and tools can help

At Birches Group, we understand the importance of recognition and rewards in engaging your staff. Our Community™ approach has made it possible to distinguish recognition from reward, where pay movement is linked to skills growth, and performance is linked to rewarding achievement.

Our online platform offers comprehensive tools and resources to help your organization recognize and reward employees effectively. In addition, our compensation and benefits surveys provide data and insights into what similar organizations in your labor market are doing to recognize and reward staff.

We also offer training and consulting services to help you develop and implement effective recognition and rewards programs. Our team of experts is ready to guide your organization using Community™. Contact Birches Group today and let us guide you in distinguishing recognition and reward.

Carla is a part-time copywriter in our marketing team in Manila. Before shifting to freelance writing in 2020, she worked as a marketing and communications specialist at the offices of EY and Grant Thornton. She has written about HR and career development for Kalibrr. 

Follow us on our LinkedIn for more content on pay management and HR solutions.

Ghanaian currency notes of varying denominations featuring images of notable figures and intricate designs.

Navigating Ghana’s Debt Crisis: An Update

Written by Kai Donesa on . Posted in Uncategorized.

Birches Group monitors labor market trends making headlines worldwide, ensuring you are updated on the latest developments.

As the world grapples with economic uncertainty, one country that stands out in its struggle is Ghana—a gold, cocoa, and oil producer in West Africa.

In 2022, we published a headline article on Ghana, detailing the government’s efforts to stabilize the economy amidst a cost-of-living crisis. In our article, “Ghana’s Cost of Living Crisis: What You Need to Know,” we also explored the growing concerns surrounding the country’s surging inflation.

Since then, Ghana has plunged into a financial crisis—its worst in a generation—mostly due to its rising debts. AllAfrica.com reports that Ghana’s debt-to-GDP (Gross Domestic Product) ratio has reached 98.7%, severely hindering the country’s economic growth and stability.

According to an article by the New York Times, Ghana’s debt crisis has reached a critical juncture: the government was struggling to meet its financial obligations. On 19 December 2022, Ghana suspended payments on most of its external debts, effectively entering a state of default. By the end of 2022, Ghana owed US$63.3 billion to both foreign creditors and domestic lenders.

The government’s decision was met with mixed reactions, with some welcoming it as a necessary step to restructure Ghana’s debts. Other voiced concerns about its long-term implications.

A strain on households and businesses

The debt crisis is greatly affecting individuals and firms across Ghana. In a survey by Afrobarometer, 87% of citizens think the country is heading “in the wrong direction.” Rising prices have eroded purchasing power, making it difficult for many to afford necessities. Businesses are facing increased costs and reduced consumer demand.

A World Bank report estimated that 850,000 Ghanaians have drifted into poverty due to double-digit inflation. And over the past two years, anti-government protests have become more frequent, news outlets like the BBC and Business Insider Africa have reported.

The government’s response to the debt crisis

However, the Ghanaian government has not been idle in the face of the debt crisis. It has embarked on several actions to address the matter, including seeking aid from the International Monetary Fund (IMF) and implementing austerity measures.

Seeking financial aid from the IMF. In May 2023, Ghana secured an Extended Credit Facility amounting to US$3 billion over the span of three years. “It is the 17th time Ghana has been compelled to turn to the fund since it gained independence in 1957,” the New York Timesnotes.

The Washington-based lender has laid out a detailed rescue plan to get Ghana back on its feet. The plan includes measures to cut back on debt and spending, raise revenues, and protect the poorest. In the meantime, Ghana shall continue to negotiate with its foreign creditors.

As a result of its strong performance in meeting IMF targets, Ghana reached an agreement on 6 October 2023 to unlock the next US$600 million of its financing.

Restructuring debts. To meet IMF conditions, Ghana has also embarked on comprehensive debt restructuring. The New York Times remarks that “the debt situation was so unusual that the IMF, for the first time, made settling its domestic debt a prerequisite for a bailout.” A partial restructuring, which included swapping local bonds with new ones and extending due dates, was launched in December 2022 and completed in February 2023.

In May 2023, Ghana’s creditors formed a committee for debt restructuring talks. It received a “working proposal” a month later, sources with direct knowledge of the matter told Reuters. As of this writing, Reuters reports that Ghana is in the advanced stages of restructuring its external debts, with hopes of achieving a resolution by the end of 2023.

Other reforms. Additionally, the Ghanaian government is complementing IMF aid and debt restructuring with reforms in tax policy, revenue administration, and public financial management. The reforms aim to restore economic stability and debt sustainability, while protecting the vulnerable, preserving financial stability, and laying the foundation for strong and inclusive recovery.

Despite the challenges, there have been some positive developments. The IMF sees that Ghana’s commitment to strong policies and reforms is bearing fruit. “Signs of economic stabilization are emerging. Growth in 2023 has proven more resilient than initially envisaged, inflation has declined, the fiscal and external positions have improved, and the exchange rate has stabilized,” the lender said after its first review in October 2023.

Despite these efforts, Ghana’s debt crisis is far from over. As they navigates this challenging period, it is crucial for organizations to stay informed. By understanding Ghana’s debt crisis, your organization can better prepare for similar situations in other labor markets.

How Birches Group can help

Ensure you are always prepared for changes in market conditions with our Market Monitor. Our trusted resource provides you with insights into current developments in emerging markets, empowering you to make informed decisions and adapt to new challenges.

Subscribe now and embark on a journey toward a deeper understanding of the market. Take the first step toward enhanced market insights today.

References:

A group of people sitting around a table in an office.

WHY ORGANIZATIONS SHOULD OUTSOURCE THEIR SALARY SCALE DESIGN

Written by Kai Donesa on . Posted in Resources.

Organizations are beginning to recognize that the key to attracting and retaining top talent hinges heavily on a strategic, fair, and competitive salary scale. Yet, tailoring this structure to your unique needs can be complex.

Do you have the tools to properly analyze labor market data? Can your human resources (HR) team maintain the salary scale annually, in addition to addressing other responsibilities? Is there a way to design and update your salary scale more efficiently? This is where outsourcing is necessary.

Outsourcing the design and maintenance of your salary scale unburdens you and your HR team from this intricate task, allowing you to focus on your core business operations. Handing this responsibility over to more experienced professionals does not only save time; it ensures that your salary scale aligns with your strategic goals, global policies, market trends, and industry standards.

This article discusses why organizations should consider outsourcing the design and maintenance of their salary scale. We will explore how this pragmatic move can help you, from gaining expert advice to ensuring market alignment. If you’ve been second-guessing whether you need to outsource your salary scale design, our insights might be what you need to make an informed decision.

Understanding salary scale design

Your salary scale is the single most important document in HR. The structure determines how much an employee will be paid based on their role, their value for experience at each grade level, and the difference between one grade level to the next. It tells your stakeholders everything they need to know about your organization, including:

  • How you position yourself in the market
  • What value you place on your jobs
  • How you manage relationships across jobs
  • What are the possible career progressions
  • Where you stand on equity and transparency

A well-balanced salary scale is crucial for your people to work efficiently and achieve team cohesion. Your salary scale drives all other HR programs, including recruitment, staff retention, promotion, and career development.

Designing the scale is not only about deciding how much to pay an employee or listing pay grades. It is driven by building a fair and equitable compensation structure that shows how you attract and retain talent, as well as motivate staff. It involves balancing internal considerations and team dynamics with the external market.

However, designing and updating your salary scale requires a deep understanding of your business strategy, a thorough knowledge of the labor market, and keen insight into the motivations and expectations of staff. These tasks demand a high level of skill, expertise, and experience.

Why it’s essential to have a well-designed salary scale

A well-designed salary scale establishes a framework for determining staff compensation and sets the standard for pay equity within your organization. It also helps ensure employees are rewarded fairly, boosting morale and motivation.

Your salary scale also serves as a roadmap for career progression, giving staff a clear idea of what they can expect as they advance. This transparency can help foster trust and loyalty among staff, leading to increased job satisfaction and lower turnover rates.

Further, a well-designed and updated salary scale can help your organization attract and retain top talent. By offering competitive salaries in line with market rates, you can position your organization as an employer of choice.

Common challenges in designing a salary scale

Designing a salary scale is not without its challenges, though. One of the fundamental issues is determining the appropriate pay range for each grade level within your organization. This requires a thorough understanding of the job market and the ability to assess the value of each level accurately, carefully balancing your organization’s workforce needs and overall budget.

Another challenge is ensuring pay equity. This involves making sure employees are paid fairly for their work. Achieving pay equity can be complicated, especially in large organizations with a diverse workforce across labor markets.

Keeping the salary scale up to date is also a concern. The job market constantly evolves, and the value of specific roles can change rapidly. The salary scale must be updated every year to reflect market trends.

The benefits of outsourcing salary scale design

Outsourcing the design of your salary scale offers several advantages:

  1. First, it frees up valuable time and resources. Designing a salary scale requires a significant amount of time and expertise. By outsourcing this task, your HR team can focus on other vital projects, such as employee engagement and talent development.
  2. Second, outsourcing gives you access to expert knowledge and insights. An HR consultancy firm like Birches Group has a deeper understanding of labor markets across continents. Additionally, firms such as ours can share accurate and timely information about salary trends and benchmarks.
  3. Finally, outsourcing ensures fairness and objectivity. An external firm can design a salary scale free of internal biases or conflicts of interest.

Case study: Elizabeth Glaser Pediatric AIDS Foundation

To illustrate the benefits of outsourcing your salary scale design and maintenance, let’s consider the case of the Elizabeth Glaser Pediatric AIDS Foundation (EGPAF), a nonprofit organization supporting activities in 19 countries. EGPAF had a centralized salary system but needed to ensure its salary scales kept up with the market, especially in Africa.

EGPAF tapped us to design its salary scale over several years. Doing so refined the nonprofit’s salary scales with a view closer to the local setting. We then looked at each African location, improving EGPAF’s pay structures and systems based on our NGO Surveys. Based on their budget, we developed three different salary scale options for each country.

As a result, EGPAF can now:

  • Name which comparators are relevant to them based on consistent comparator criteria developed for their salary scale review, and which scale design approach best addressed its internal compensation issues, all while staying within budget.
  • Get a more precise snapshot of the labor market through our salary survey data.
  • Anticipate and be better equipped when sudden changes in the market occur.

This case illustrates the significant benefits that can be gained from outsourcing your salary scale design.

How Birches Group can help you design and update your salary scale

Creating and maintaining a salary scale is a technical and creative process best left to specialists. If you’re considering developing or updating your organization’s salary scale, we at Birches Group are here to help. With our team of experienced professionals, we can provide salary scale options tailored to your needs.

We have extensive expertise in adapting or creating salary structures through our work with many clients from the public and private sectors. We believe proper salary scale design must be tailored to your needs and culture, as well as your compensation philosophy, market position, and budget. A well-designed salary scale must also align with the local market and adhere to corporate policy and compensation goals.

If you’re ready to learn more about how we can design and maintain your salary scale, contact us today.

Carla is a part-time copywriter in our marketing team in Manila. Before shifting to freelance writing in 2020, she worked as a marketing and communications specialist at the offices of EY and Grant Thornton. She has written about HR and career development for Kalibrr. 

Follow us on our LinkedIn for more content on pay management and HR solutions.

Navigating Volatility: A Closer Look at Argentina’s Peso Crisis

Written by Kai Donesa on . Posted in Uncategorized.

Birches Group monitors labor market trends making headlines worldwide, ensuring you are updated on the latest developments.

On 14 August 2023, the Argentine government took the bold step of hiking interest rates and decreasing the value of its currency. This intervention came a day after the country’s primary elections, adding a layer of uncertainty and volatility to Argentina’s economic landscape.

Unexpected timing

After far-right and anti-establishment candidate Javier Milei obtained the most votes, the results sparked a sell-off of the Argentine peso, shares, and bonds. Anticipating a market backlash, the Banco Central de la Republica Argentina (BCRA) devalued its currency by 20% (to AR$350 per dollar) to reassure jittery investors. The Buenos Aires Timesreports that the devaluation was the largest in a single day since December 2015. The BCRA said the move would help cushion “exchange rate expectations and minimize the repercussion on prices.”

The BCRA added that the peso would be held at AR$350 per dollar until the general elections in October. But many news outlets and think tanks say the devaluation leaves the official exchange rate far from the parallel market rate, which is AR$690 per dollar.

Reuters cites that the financial markets had been betting on a solid performance by a more moderate political candidate. Bloomberg reports that Milei, a representative and economist, supports dollarizing the economy. Riding on a wave of popular discontent, Milei has also called to liberalize the economy, vowed to abolish the central bank, and advocated for sharp spending cuts.

“Investors like Milei’s economic message but fear the execution and institutional risk, considering his lack of power and aggressive style,” a chief Argentina strategist at a financial services company told Bloomberg. “Milei represents uncertainty,” a fixed-income strategist at an investment management firm shared.

With negative international reserves, inflation at over 120%, poverty at 40%, and tight capital controls among its many economic woes, Argentina faces fresh uncertainty ahead of the October elections.

Argentines feel the impact

The recent drop in the peso’s value has affected ordinary Argentines, worsening already high inflation and making everyday life more challenging. The prices of essentials have skyrocketed, putting a strain on household budgets. In fact, consumer goods companies have increased their prices by nearly 10%, further stretching purchasing power.

To make matters worse, supermarkets have confirmed that the supply of goods has been disrupted, making it harder for people to find and afford the necessities they rely on.

Additionally, the devaluation of the peso is expected to have a ripple effect on gas prices, as oil companies expect their costs to rise. This means that Argentines will also face higher prices for transportation and utilities.

Due to economic hardship, the savings of many Argentines have further eroded. The cost of living has reached crisis levels, making it increasingly difficult for people to meet their basic needs. There are concerns that, if the situation worsens, the country could face hyperinflation.

What our Market Monitor says

Our Market Monitor report offers a sobering analysis:

1 January to 1 June 2023. During the first half of the year, Argentina alternated between Levels Two and Three (out of six levels of volatility), with an average exchange rate movement of 39.9%. Level Two shows dynamic market conditions and an exchange rate movement of over 20% in the past six months. On the other hand, Level Three shows rapidly evolving market conditions and an exchange rate movement of over 40% in the past six months.

15 June to 15 August 2023. From 15 June to 15 August, Argentina climbed to Level Three with an average exchange rate movement of 44.8%.

1 September onwards. Beginning on 1 September, Argentina’s level of volatility rose to Level Four. This level of volatility reflects a sudden, unexpected social or economic event (i.e., the peso devaluation, among other factors) or a currency devaluation of at least 50% in six months. In the case of Argentina, the exchange rate moved by 74.4%.

Our latest salary surveys report that many organizations still denominate salaries in Argentine pesos, keeping the South American country at Level Four.

How Birches Group can help

Argentina’s peso crisis underlines the importance of developing a Special Measures Policy in response to economic instability. Such policies can help protect your organization and employees from economic shocks.

If your organization grapples with the effects of market volatility and needs help formulating a clear Special Measures Policy, our consultants are here to assist you. With their extensive experience and in-depth understanding of emerging labor markets like Argentina, they can provide you with the tools and advice you need to navigate these uncertain times.

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Ensuring Equity

BUILDING A SUCCESSFUL HR MANAGEMENT STRATEGY BY ENSURING EQUITY

Written by Kai Donesa on . Posted in Resources.

A discourse is taking center stage in human resources (HR): equity. More than just a buzzword, ensuring equity in the workplace is now a concern across organizations, sparking conversations between HR professionals and business leaders.

But equity is more than just fairness. Equity ensures every employee has equal access to opportunities, resources, and fair treatment. In an era where diversity and inclusion have become the core of corporate values, equity is impossible to ignore. Integrating equity into your organization’s HR strategies is crucial to cultivating employee satisfaction and success.

Additionally, it’s important to distinguish between equity and equality. While equality involves providing the same resources to everyone, equity acknowledges that individual circumstances vary and, as such, an organization should offer the necessary resources to achieve equal outcomes.

Ensuring Equity in the work place
Image source: Robert Wood Johnson Foundation

As organizations navigate an increasingly diverse and dynamic landscape, establishing a fair HR strategy goes beyond ethics and compliance.

This blog post will explore the hot topic of equity, its role in HR practices, and how HR can foster an environment where equity is a reality. Drawing from industry insights and proven systems, the blog article will help guide you toward cultivating a fairer and more equitable workplace.

What is equity?

As an HR professional, you have probably heard the term “equity” thrown around in your workplace. But what does it mean?

Equity is the fair treatment of access, opportunity, and advancement for all individuals. While the term is often associated with pay, equity acknowledges that every staff member has unique needs and circumstances.

Ensuring equity involves customizing resources and opportunities so that everyone has an equal chance of success. According to the Society for Human Resources Management, this includes “identifying and working to eliminate barriers to fair treatment for disadvantaged groups, from the team level through systemic changes in organizations and industries.” For example, providing added training to employees who lack specific skills can be an example of equity.

You might wonder why equity is significant and how it affects your organization. The truth is that equity is the backbone of any successful HR management strategy. Without it, your organization could face many challenges, including high turnover rates, low employee morale, and even legal issues.

How vital is equity in HR?

Equity in HR is more than a matter of ethics or compliance. It’s a strategic necessity. Employees who feel treated fairly are more likely to be engaged and productive. They are more likely to stay with your organization and contribute to its success.

A lack of equity, on the other hand, can lead to a toxic work culture. Employees who feel they are not treated fairly are more likely to be disengaged and unproductive. They are likelier to leave your organization, leading to high turnover rates and recruitment costs. Moreover, a lack of equity can also expose your organization to legal risks, as it could potentially violate anti-discrimination laws.

Another reason ensuring equity is vital in HR is that it helps attract and keep top talent. Job seekers are not just looking for a paycheck. They are looking for a workplace that values diversity and inclusion and treats all employees fairly. By ensuring equity, you can make your organization a more attractive place to work.

Ensuring equity in the organization is vital as the workplace constantly evolves. How can organizations support equity when their staff is dispersed across various locations, both locally and internationally? How do they ensure equal opportunities when most staff opt for remote work instead of coming to the office?

HR plays a crucial role in implementing policies and practices that promote fair treatment and challenge systemic bias. They must create an environment where every employee has a chance to succeed regardless of their background.

How do I build Equity into our HR strategy?

Building equity into your HR strategy may seem daunting, but it doesn’t have to be. Here are some steps you can take to ensure equity in your organization:

Assess your current situation. Are there any areas where some employees are treated less favorably than others? Are there any policies or practices that could potentially discriminate against certain groups of employees? Thoroughly auditing your HR processes can help. Collect and analyze relevant data to identify any equity issues. Once you have identified these concerns, take action to address them.

Develop a clear policy on equity. Should individuals in the same job receive similar pay rates, regardless of their location in vastly different markets? Alternatively, should compensation be determined based on what the organization considers fair and competitive within the specific market where the employee is situated? Your policy should clearly articulate your organization’s dedication to equitable treatment for all employees, set up parameters for addressing and rectifying potential equity concerns, and emphasize the significance of communicating this policy to all employees while offering training in equity and diversity.

Implement fair HR practices. Promoting equity requires an integrated approach where every individual feels valued and heard. This involves creating an environment where diversity is celebrated and employees are given equal access to opportunities through unbiased recruitment processes, proper compensation structures, and inclusive workplace policies. Remember, the goal is not just to treat everyone the same but to give everyone an equal opportunity to succeed.

Communicate your targets and share your progress. Set clear, measurable goals for equity, and track your progress towards these goals. Be transparent about your progress and any challenges you are facing. Most importantly, set up transparent communication channels that allow for open dialogue about organizational decisions, fostering trust and empowerment among staff members.

Promote the importance of equity. Make sure that your organization’s leaders and staff are aware of the benefits of equity and why it is essential to success. Remember that equity is an ongoing commitment that requires continuous monitoring and improvement. By promoting an environment of fairness and respect, you can ensure that your people can thrive and contribute meaningfully to fulfilling the organization’s mission.

How Birches Group can help you ensure workplace equity

At Birches Group, we understand the importance of equity in HR. That’s why we’ve developed Community SkillsTM, a platform and tool that can help you ensure equity in your organization.

Community SkillsTM is designed to help assess your people’s skills and knowledge growth. It allows you to create a skills profile for each employee, which can aid in finding skills gaps and developing learning & development plans.

In addition, the platform offers benchmarks for various roles and functions to better ensure fair compensation for all employees. By using Community SkillsTM, you can ensure that all your employees are given an equal opportunity to grow and succeed.

Equity is a crucial factor in building a successful HR management strategy. It’s not just about treating everyone the same, but about giving everyone an equal opportunity to succeed. By understanding equity, recognizing its importance, and integrating it into your HR practices, you can create a workplace that is fair, inclusive, and conducive to success.

Contact Birches Group today to learn about our Community SkillsTM platform and request a demo.

Carla is a part-time copywriter in our marketing team in Manila. Before shifting to freelance writing in 2020, she worked as a marketing and communications specialist at the offices of EY and Grant Thornton. She has written about HR and career development for Kalibrr. 

Follow us on our LinkedIn for more content on pay management and HR solutions.

A devastated cityscape with extensively damaged buildings and rubble. Smoke rises from a fire in the distance under a cloudy sky.

An Unfolding Crisis: Inside the Israel-Hamas War

Written by Kai Donesa on . Posted in Uncategorized.

Birches Group keeps an eye on labor market trends that are grabbing headlines across the globe, ensuring you stay up to date with the latest events.

A massacre in southern Israel appears to be a turning point in the simmering confrontation between Hamas and Israel, says Newsweek. Tensions between the Palestinian militant group and the Middle Eastern nation periodically ignited short-lived, intense conflicts—until recently.

Hamas, which has ruled the Gaza Strip since 2007, launched an unprecedented attack inside Israel in the early morning of October 7, 2023, during a major Jewish holiday.

According to Al Jazeera, Associated Press, and other news agencies, Hamas fired a barrage of rockets into Israel with sirens heard as far away as Tel Aviv. Backed by rockets, hundreds of Hamas gunmen infiltrated Israel’s heavily fortified border and rampaged nearby towns. Over 1,300 people have been killed in the multi-pronged assault, and at least 150 soldiers and civilians, including foreign nationals, have been abducted and held in the Gaza Strip as hostages.

The BBC’s International Editor says it was the most ambitious operation Hamas has ever launched from Gaza and the most serious cross-border attack Israel has faced in over a generation.

On the day of the attack, Israel declared a state of war and approved “significant military steps” in response. According to Time, the goal of Israel’s military operation is to “achieve the destruction of the military and governing capabilities of Hamas.” As Israel launches multiple airstrikes on Gaza and mobilizes its army for a ground invasion, the world’s eyes are focused on what might come next.

Israel retaliates

As a result of the October 7, 2023, surprise attack, Israel has responded with multiple devastating strategies:

Launched a series of airstrikes. When Hamas fires rockets at Israel, warning detectors are set off, civilians flee to a network of bomb shelters, and the Iron Dome system intercepts projectiles in the air. CNN says that, in Gaza, none of those high-tech defenses are available.

The Israeli military had dropped thousands of bombs on Gaza as Hamas militants fired rockets into Israel. The United Nations (UN) Office for the Coordination of Humanitarian Affairs reports that the bombardment of Gaza has destroyed entire neighborhoods, leaving over 20% of the population displaced.

Meanwhile, Human Rights Watch has accused Israel of using white phosphorus, a controversial munition, in its bombings. Sometimes used to mark areas, the highly combustible chemical can severely burn people.

Imposed a total blockade of Gaza. The Gaza Strip has been almost completely cut off from the world for nearly 17 years. Israel and Egypt have imposed a land, air, and sea blockade since Hamas took over the Palestinian territory. The movement of goods is tightly restricted. On October 9, 2023, Israel imposed a “complete siege” of Gaza, cutting access to electricity, food, water, medicines, and fuel until the hostages are returned home. Since then, the enclave of 2.3 million people has been incapable of receiving humanitarian aid.

Ordered a mass evacuation of northern Gaza. The Gaza Strip has one of the world’s highest population densities. Additionally, over 75% of its people are registered refugees. On October 13, 2023, Israel’s army ordered civilians in Gaza City and the north of the Gaza Strip—an estimated 1.1 million people—to evacuate their homes and flee to the south within 24 hours. The UN says the task is dangerous and unfeasible amid constant airstrikes.

The situation leaves civilians in Gaza with no way of escaping the conflict. Two of the three crossings out of the Palestinian territory are shut, and its southern border with Egypt is routinely closed.

Called for troops for a ground offensive. In the first few days of the conflict, Israel has conducted small-scale operations against Hamas fighters to regain control of infiltrated communities.

Although Israeli officials have yet to order a full-scale ground invasion of Gaza as of this writing, they have been planning for it. Numerous news outlets report Israel has amassed over 160,000 soldiers and 360,000 reservists, the biggest call in 50 years. Vast numbers of troops have already assembled on the Israel-Gaza border, along with weaponry, tanks, and armored vehicles.

Fighting between Israel and Hamas is expected to intensify in the coming weeks, and the escalating conflict has heightened fears of a long and brutal war.

The impact of the escalating conflict

The BBC reports that survivors in both Gaza and Israel describe the scale of devastation as “something they have never experienced in the decades of conflict between both sides.” Beyond the immediate toll of death and injury, the Israel-Hamas war has disrupted every facet of daily life, especially for people in the Gaza Strip.

Displaced population. The UN humanitarian office says the bombardment of Gaza has damaged more than 12,000 homes. As airstrikes and shelling continue, more people flee and seek emergency shelter. The UN agency for Palestinian refugees adds that at least 400,000 people have been displaced in schools, hospitals, and other buildings.

Additionally, parts of southern Gaza are becoming more crowded and overstretched as waves of evacuating residents from the north abandon their homes.

Rapidly deteriorating humanitarian crisis. The UN human rights chief said Israel’s announcement of a complete siege worsens the already dire situation in the Gaza Strip. “There is not one drop of water, not one grain of wheat, not a liter of fuel that has been allowed into the Gaza Strip for the last eight days,” remarked Philippe Lazzarini, the Commissioner General of the UN Relief and Works Agency for Palestine Refugees (UNRWAS), on the situation.

Even before the violence escalated, 80% of Gaza’s population needed aid. In addition, the UNRWA told Al Jazeera that it has less than two weeks’ supply of food and water to assist people who have sought refuge in its schools.

As a result, the UN and relief groups are pleading for opening an emergency corridor, allowing the safe passage of civilians and the transfer of much-needed humanitarian aid. CNN reports that tons of vital supplies for people in Gaza are now piling up on the Egyptian side of the border.

The Guardian notes that Gaza’s inhabitants, battered by four wars over 16 years, will pay the heaviest price.

The global response

The international community, spearheaded by the UN, has expressed deep concern over the recent escalation of conflict. UN officials have called for an immediate ceasefire, respect for international law, and the protection of civilians. UN spokesperson Stephane Dujarric said, “The Secretary-General is deeply concerned for the civilian population and urges maximum restraint.”

A turning point

Observers anticipate a major ground assault on Gaza. Israel’s military says it is preparing for the “next stages of the war” against Hamas, with troops gearing up for strikes from the air, sea, and land, as well as a significant ground operation.

Although it is too early to know how long Israel’s military response will last, experts have told Time that it will last into the weeks and months ahead.

Analysts say the brazen attack by Hamas is a turning point in the decades-long Israeli-Palestinian conflict with far-reaching repercussions. “The October 2023 conflict between Israel and Hamas marks the most significant escalation of the ongoing Israeli-Palestinian conflict in several decades,” says the Council on Foreign Relations.

How Birches Group can support your organization

Establishing a Special Measures Policy is crucial for your organization to maintain business continuity during times of conflict, such as the Israel-Hamas conflict. A Special Measures Policy allows you to adapt your compensation practices to changing circumstances, ensuring sustainability despite the challenges.

We at Birches Group offer expertise in crafting Special Measures policies tailored to your unique needs. Our consultants have deep knowledge and an understanding of crises and unforeseen events, enabling us to provide solutions considering present challenges, risks, and uncertainties.

Don’t wait for conflict to disrupt your operations. Reach out to Birches Group today. Our experts are ready to guide you in developing a clear Special Measures Policy, positioning your organization to withstand volatility and to continue doing business even in the face of conflict. Taking this proactive step can help your organization in the current global climate.

This article was written in mid-October 2023. Please note that the Israel-Hamas War, as discussed in this headline article, is ongoing. The statistics and events discussed are accurate up to the time of writing. However, as this is a dynamic event, there may have been significant changes and developments.

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A close-up image of Nigerian banknotes in various denominations: 100, 200, 500, and 1000 naira, featuring portraits of notable individuals.

The Impact of Devaluing the Nigerian Naira

Written by Kai Donesa on . Posted in Uncategorized.

Birches Group keeps an eye on labor market trends that are making headlines across the globe, ensuring you are up to date on the latest developments.

On 14 June 2023, the Nigerian naira lost a staggering 25% of its value compared to the previous day, macroeconomic intelligence provider Focus Economics reported.

The sharp devaluation was caused by the Central Bank of Nigeria’s decision to allow the naira to fluctuate freely, letting market forces determine the exchange rate. The Central Bank also implemented several reforms, including scrapping the segmentation of its foreign exchange market. For six years, the local exchange rate was held artificially low and changed little.

A welcome, bold start

Following his inauguration on 29 May 2023, President Bola Tinubu hit the ground running with a string of sweeping changes. He noted Nigeria’s monetary policy needed “thorough house cleaning” to help the economy become more competitive. Within his first three weeks in office, Tinubu embarked on some of the most radical reforms in decades:

Petrol subsidy removal. By ending its longstanding petrol subsidy, the Nigerian government is projected to achieve fiscal savings of nearly 4 trillion naira (US$5.10 billion) in 2023. These savings are expected to reach over 11 trillion naira by the end of 2025.

Suspension of Central Bank governor. On 9 June 2023, Tinubu suspended Central Bank Governor Godwin Emefiele following divisive policies. During Emefiele’s term, a black market for foreign exchange thrived.

Reforms in the foreign exchange market. Foreign investors have flagged Nigeria’s foreign exchange restrictions as an obstacle to investing. The move towards a more unified and market-responsive exchange rate will foster a stable economic environment and prevent the dollarization of the economy.

According to Reuters, Tinubu inherited anemic economic growth, record debt, and shrinking oil output. However, he has promised to put the economy back on track and asked Nigerians to support painful decisions. The speed of his decisions took many by surprise.

Short-term pain vs. long-term stability

Every day Nigerians are feeling the brunt of the government’s economic shakeup. The Guardian reports that, while Tinubu’s policies please foreign investors, the devalued naira means ‘national sacrifice mode.’ People are feeling the strain as their new president pushes through the widely unpopular policies. Living costs have further increased.

The currency devaluation is already pushing prices amid a significantly higher foreign exchange rate, cites Africanews. This change will cause considerable short-term pain but will correct the economy, say economic analysts. Nevertheless, Nigeria continues to face rising inflation and increased poverty rates, pressuring the government to address concerns.

On a positive note, the recent changes are considered a welcome development. The floating exchange rate is expected to strengthen investor sentiment and bring in much-needed capital. Observers have described the transition as a “window of opportunity” that could have a transformative impact on millions of Nigerians.

The steps have fired up markets, sending stocks in Africa’s largest economy to their highest level in 15 years. For its August 2023 Nigeria economic outlook, professional services firm PwC reported that the positive investor sentiment drove up the market capitalization of the stock exchange by 9.3%. “Just the fact that you have seen quite a bit of movement in a relatively short space of time has gotten a lot of people in the market excited,” Goldman Sachs economist Andrew Matheny told Reuters.

In a statement, the World Bank said, “The recent removal of the petrol subsidy and the foreign exchange management reforms are critical steps to address long-standing macroeconomic imbalances and have the potential to establish a solid foundation for sustainable and inclusive growth.” “Deepening and sustaining these changes is imperative to enable Nigeria to break out of the cycle of macroeconomic instability, low investment, sluggish economic growth, escalating poverty, and fragility.”

The World Bank expects growth in Nigeria to increase: “While inflation will be higher in 2023, it will be lower in 2024 to 2025 if the right policy mix is sustained.” The creditworthiness and investment profile of the country is also expected to improve.

Bismark Rewane, Chief Executive Officer at Financial Derivatives Company, a Lagos economic think tank, told Reuters, “What we are seeing is the removal of distortions created by inefficient pricing of foreign exchange and in the next few weeks we should start seeing the naira finding its level.” Business Insider Africa says that market participants and stakeholders are closely watching the effects of these significant changes.

What our Market Monitor indicates

In early July 2023, Nigeria entered our list of potentially volatile labor markets at Level Four (of six levels). Level Four shows signs of a sudden, unexpected economic event, as well as a devaluation of the local currency by at least 50% in six months or less. According to the 15 August 2023 edition of our Market Monitor report, the naira dropped as much as 67% in the past six months.

Although this significant devaluation could classify Nigeria at a higher volatility level, our latest salary survey reports that most organizations still denominate salaries in the naira, keeping Nigeria at Level Four for the time being.

Organizations in Nigeria should remain vigilant and closely watch the ever-evolving economic landscape. Staying attuned to shifts in labor market trends, exchange rates, and government policies is imperative to make informed decisions. By being keenly aware of these factors, you can adapt strategies and ensure the sustainability of your business in Africa’s most populous nation.

How Birches Group can help

Get insights into what to consider when your organization develops special policies in response to volatility. Published in English, Spanish, and French every two weeks, our Market Monitor report examines the labor market conditions of over 150 countries for signs of potential volatility.

Subscribe to our biweekly Market Monitor today. Download the 1 and 15 July 2023 editions of our report, where we focus on how you can manage the situation in Nigeria.

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A person walks across a littered, barren dirt field with scattered buildings and a mosque under a clear blue sky in the background.

Understanding the Armed Conflict in Sudan

Written by Kai Donesa on . Posted in Uncategorized.

Birches Group examines labor market developments garnering significant attention, keeping you well-informed and abreast of the latest news.

The scenario many have long feared in Sudan is unfolding. In cities and towns across the northeast African country, including the capital Khartoum, intense fighting between the Sudanese Armed Forces (SAF) and the Rapid Support Forces (RSF) has entered its third month.

On 15 April 2023, armed clashes erupted in Khartoum between two main factions of the ruling military regime: the SAF aligned with de facto leader General Abdel Fattah al-Burhan, and the paramilitary RSF led by al-Burhan’s former deputy Mohamed Hamdan Dagalo. Heavy fighting had been concentrated in urban centers but has now spread throughout what was once Africa’s largest country.

A fierce power struggle

The hostilities between al-Burhan and Dagalo, Sudan’s most powerful generals, broke out after weeks of rising tensions. The delicate power arrangement between the former allies since the 2019 ouster of long-term President Omar al-Bashir had broken down. “Now, their battle for supremacy is tearing Sudan apart,” says the BBC.

The conflict has its roots in disagreements over a proposed transition to civilian rule. It comes less than five months after a framework agreement to relaunch the political process to move to a civilian government. The SAF and RSF showed little willingness to adhere to the agreement, disagreeing on power sharing, setting up a civilian government, and integrating the RSF into the military.

Formal talks brokered by the United States and Saudi Arabia in Jeddah remain suspended. And with a succession of failed ceasefires, observers are deeply concerned that the conflict may continue and the situation will deteriorate further.

Devastating consequences for civilians

An African proverb goes, “When the elephants fight, it is the grass that gets trampled.”

“The scale and speed of what is unfolding in Sudan is unprecedented,” says the United States Agency for International Development. According to reports from United Nations agencies, nearly 1.9 million people have been displaced since mid-April and have fled to safer locations inside and outside Sudan. But the most vulnerable remain stranded due to ongoing fighting, lack of financial means, or trying to keep their property, assets, and livelihoods.

Sudanese lack basic supplies like food, water, and medicine. The physical danger makes accessing essential goods, commodities, and services difficult.

After nine weeks of escalated violence, more than half of Sudan’s population needs humanitarian aid—a 57% increase from the number at the beginning of 2023. But humanitarian organizations have been severely restricted due to high insecurity and infrastructure damage. Aid workers and facilities have also been targeted and attacked, with incidents of looting and supply chain disruptions.

A shock to the Sudanese economy

Sudan’s deepening humanitarian crisis is set against multiple challenges, including economic struggles, natural disasters, and protracted refugee situations. Before the armed conflict began, 65% of the population lived below the poverty line. Decades of war, sanctions, and political instability have also added to the troubled nation’s economic hardships.

The economic fabric of Sudan has experienced a severe shock. Critical infrastructure has been destroyed, pushing health and financial systems to near collapse. Stores, markets, and banks have halted business, fearing attacks. As a result, food prices are rising, and essentials are out of reach for many. Transportation costs to leave conflict-affected areas have likewise increased exponentially.

A fight to the end

The Assessment Capacities Project (ACAPS) reports that fighting is likely to continue soon. Additionally, analysts fear that the conflict risks descending into a sustained civil war. Kholood Khair, a political analyst in Khartoum, told The Guardian, “People in Sudan want to see democracy but don’t believe that either of these actors is going to bring it. It may well be a fight to the end, and neither will come out unscathed.”

Action on Armed Violence adds that the fighting could further fragment the country and worsen political turbulence. Sudan is riddled with other armed groups and militias that could add to the violence, turning a two-sided conflict into a more complex and chaotic situation.

David Miliband, President and Chief Executive Officer of the International Rescue Committee, said, “The worst-case scenario—a complex and protracted conflict—would have catastrophic and destabilizing implications for the region.”

The power struggle in Sudan will have severe repercussions on the vast and strategic country’s transition to democracy, as well as far-reaching implications for regional stability.

How Birches Group can help

Severe social unrest or conflict causes people to be displaced, as we now see in Sudan. The outbreak of violence that has been happening over the last few months has forced thousands to move elsewhere in the country or cross over to neighboring countries for safety.

When faced with social uncertainty and unrest, organizations must apply a response different from how they would typically respond to economic volatility. Your organization must have a Special Measures Policy. This policy should include your triggers and immediate responses to cushion the effects of civil unrest on your staff as you assess the movement of the labor market.

We can help your organization develop a Special Measures Policy that aligns with your objectives and fits local conditions.

Stay informed with our June Market Monitor reports.

Birches Group also offers valuable resources like the Market Monitor report. Published in English, Spanish, and French every two weeks, each edition examines the labor market conditions of over 150 countries for signs of potential volatility.

Subscribe now to access the 1 and 15 June editions of the Market Monitor, where we focus on the conflict in Sudan and the strategies you can consider as you begin developing your Special Measures Policy.

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Rescue workers in red uniforms and helmets with headlamps search through rubble at night near a Turkish flag.

Rebuilding After the Türkiye-Syria Earthquake

Written by Kai Donesa on . Posted in Uncategorized.

Birches Group reports on what is happening in labor markets that are making headlines worldwide, bringing you up to date on the news.

A massive 7.8-magnitude earthquake struck southern Türkiye and northwestern Syria in the early morning hours on 6 February 2023. The quake was followed by a series of aftershocks and a 7.5-magnitude tremblor about nine hours later. The Türkiye-Syria earthquakes occurred near the border and were felt as far away as Lebanon and Egypt.

The earthquake was Türkiye’s worst seismic event since 1939, leaving behind destruction, loss of life, and economic damage. The death toll has reached over 54,000, and around 130,000 more have been injured. Some 24 million people in both countries have been affected in an area spanning 450 km. According to the Center for Strategic and International Studies, the quake hit the heart of a border area home to millions of Syrian refugees during great uncertainty in Turkey and across the region.

Since the two earthquakes on 6 February, there have been thousands of aftershocks, causing fear among communities.

The situation in Türkiye

Turkish President Recep Tayyip Erdogan declared a state of emergency in 10 impacted provinces for up to three months a day after the disaster. The affected provinces have some of the highest poverty rates in Türkiye and host over 1.5 million Syrian refugees.

Estimates of damage

There are several estimates of the destruction caused by the 6 February Türkiye-Syria earthquakes. JPMorgan said the destruction of Türkiye’s physical infrastructure could amount to US$25 billion. Meanwhile, the World Bank estimated the damage to be around US$34.2 billion. According to the Turkish Enterprise and Business Confederation, the total cost of destruction could be as much as US$84 billion.

A long-term needs assessment by the Turkish government with support from the United Nations Development Program (UNDP), the World Bank, and the European Union counts the earthquake damages at over US$100 billion.

Reconstruction efforts

“Türkiye’s immediate and future needs are immense and span the whole range from relief to reconstruction,” said Humberto Lopez, World Bank Country Director for Türkiye.

The Turkish government has erected tent camps and container homes on the outskirts of destroyed cities to shelter the millions displaced. It has also issued rebuilding regulations to enable organizations to help in the urgent task of building new homes. In addition, the government has launched a temporary wage support scheme and banned layoffs to protect workers and businesses. These measures will remain in effect until the end of the three-month emergency rule.

Erdogan—facing an election this summer—pledged to rebuild all destroyed buildings and complete housing reconstruction within a year while preparing a program that would “make the country stand up again.” Less than three weeks after the disaster, construction for tens of thousands of housing units has begun.

But engineers and architects have noted that clearing debris would take considerable time. “It’s hard to put a timeframe on how long that would take since 10 provinces were affected, and that depends on the capabilities, organization, and coordination of the public authorities,” Eyup Muhcu, President of the Union of Chambers of Turkish Engineers and Architects, told Al-Jazeera.

A fragile economy

In addition to repairing and replacing damaged buildings and infrastructure, citizens need to be supported financially, says the Middle East Institute.

The reconstruction costs add to the woes of Turkey’s fragile economy, which has been rattled by hyperinflation and a cost-of-living crisis in recent years.

Caroline Holt, Director for Disasters, Climate, and Crises at the International Federation of Red Cross and Red Crescent Societies (IFRC), estimates that much of the recovery work in Türkiye will be done in two to three years.

But in Syria, the IFRC is looking at five to 10 years.

The situation in Syria

Although the earthquake’s epicenter was in southern Türkiye, the calamity had devastating effects across northwestern Syria. The quake hit a region shattered by more than a decade of civil war, compounding an already dangerous humanitarian crisis.

According to the UN Office for the Coordination of Humanitarian Affairs, the densely populated northwestern region is home to 4 million people who rely on humanitarian aid.

While the international community mobilizes to help Türkiye with its disaster needs, the ability to do so for Syria is much more complex. Demolished roads and tensions between rebel-held and government-controlled parts of the country slowed aid relief for Syria. In its 6 February editorial, The Guardian remarks that “supplying aid is likely to be diplomatically and logistically challenging.”

According to aid organizations, only one official border crossing from Türkiye to Syria is operational, and access has been blocked by debris from the earthquake. The first UN convoy of aid arrived after four days. “Syrians have already endured more than a decade of conflict, and they are now faced with the tragedy of this earthquake,” said Dr. Abdulkarim Ekzayez, a Syrian doctor and health system expert.

Rebuilding efforts will be even more complicated.

The road to recovery

With the rescue operations ending, attention is shifting to the millions without homes or functioning cities. The focus has turned toward shelter, reconstruction work, rehabilitation, and recovery. As of writing, authorities continue to carry out damage assessments in the worst-affected areas. Damage to economic infrastructure, including livelihoods, will also be assessed.

The task ahead is not only to reconstruct homes but also to rebuild lives. Humanitarian partners will need to:

  • Support development and reconstruction,
  • Restore livelihoods, community infrastructure, and basic social services, and
  • Transition to longer-term recovery and rebuilding.

Restoring livelihoods and reviving small businesses

Small businesses are well-positioned to support urgent needs. They can be critical to long-term recovery, including rebuilding infrastructure, getting people back to work, and ensuring communities live healthy lives.

Providing rapid access to income and restoring livelihood infrastructure are keys to jumpstarting socioeconomic recovery.

Building Markets says small and mid-sized enterprises (SMEs) face significant challenges. Nearly 17% of SMEs report being unable to continue business operations. 40 to 55% require funding for employee salaries, inventory, repairs, and new workspaces.

How Birches Group can help

Natural disasters such as the Türkiye-Syria earthquakes occur without warning, and their impact is catastrophic. They also have a devastating effect on businesses. In the wake of a calamity, organizations must take special measures to ensure the safety and well-being of their staff. Your organization’s approach should differ from how you would respond to economic volatility.

We at Birches Group can help your organization prepare for unexpected events by creating a Special Measures Policy. Natural disasters require a different response approach, and we understand the challenges such emergencies pose.

Get our March Market Monitor reports

We offer valuable resources like our Market Monitor reports, highlighting specific labor markets that need closer monitoring. Subscribe today to download our March Market Monitor reports, where we focus on Türkiye and Syria and help guide organizations in developing their Special Measures Policy.

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Businesses Live with Dollarization in Lebanon

Written by Kai Donesa on . Posted in Uncategorized.

Birches Group reports on what is happening in labor markets that are making headlines around the world, bringing you up to date on the news

Experiencing a financial and economic collapse that the World Bank ranks among the world’s worst since the 1850s has led to dollarization in Lebanon.

The country’s currency, the Lebanese Pound (LBP), has lost over 90% of its value since the crisis erupted in 2019. International Crisis Group reports that the plummeting LBP has caused havoc across the Lebanese economy. Salaries have melted in value. Hyperinflation has reached triple digits, immensely reducing purchasing power. According to the United Nations (UN), over 80% of the population lives in sudden, multidimensional poverty.

A highly volatile and dollarized market

Birches Group first observed signs of volatility in Lebanon in November 2022, when the country was listed in the Market Monitor report at Level 4 (of six). In mid-December, Lebanon’s level of volatility escalated to Level 5, indicating a wide prevailing practice to denominate salaries in United States Dollars (USD). (It should be noted that the significant exchange rate movement we have been seeing in Lebanon is most likely caused by the UN switching its source of exchange rates to one that better reflects local conditions.)

The LBP’s plunge has led to a de facto dollarization of the economy, says Arabian Gulf Business Insight. Some observers and economists believe dollarization would be a solution to the crisis and a way to secure monetary stability.

Dollarization explained

Dollarization is the process of replacing the domestic currency with a foreign one to serve the essential roles of money in the economy. This occurs when a country’s currency loses its usefulness as a medium of exchange due to hyperinflation or instability.

Businesses begin to dollarize

The decline in the LBP’s value has led to businesses pricing their items in USD, where customers pay the local currency based on the daily parallel market rate. In March 2023, shops and supermarkets began to price their products in USD. Other businesses have started charging for their goods and services—including rent, household items, clothing, gas, health insurance, and medical care in USD. Outside the public sector, employees are fully or partially paid in USD.

Why are organizations in Lebanon dollarizing?

Trust and confidence in the LBP have waned over the past three years due to many factors and recent events.

Currency devaluation. Since 1997, Banque Du Liban (Lebanon’s central bank) has set the exchange rate at 1,507.50 LBP to 1 USD. The rate remained unchanged for 25 years.

In February 2022, Banque De Liban revalued the official exchange rate to 15,000 LBP to 1 USD—a 90% devaluation from the longtime peg. Officials say the measure is a step towards stabilizing the LBP and eliminating the many exchange rates that have emerged in recent years. But the official exchange rate is well below the rate on the street, says Al-Monitor. According to parallel market rates on LiraRate.org, the LBP trades at 79,000 to 1 USD as of 6 March 2023.

ECA International foresees more devaluations of the official rate in months to come.

Presidential vacuum. Political paralysis has made matters worse for Lebanon. Since the end of October 2022, the country has been without a president. Its deeply divided Parliament has yet to elect a new head of state. This deadlock is unsustainable and paralyzes the government at all levels, says the International Support Group for Lebanon (ISG).

With only a caretaker government and limited authority, an economic plan with reforms required by the International Monetary Fund (IMF) has yet to be devised. The ISG has urged leaders to immediately harmonize exchange and adopt the laws needed to restore investor confidence. Unifying exchange rates, including the parallel market rate used for most goods and services, is a precondition the IMF has set to secure a US$3-billion aid package.

Central bank governor under investigation. European investigators are currently probing the alleged state fraud and actions of Banque Du Liban governor Riad Salameh, who has held the post for three decades. Salameh is suspected of financial misconduct, including money laundering and embezzlement. In March 2023, Lebanese prosecutors charged Salameh, his brother, and an associate with forgery, illicit enrichment, and tax law violations.

How Birches Group can guide your organization

It’s not wrong to dollarize, but denominating salaries in US dollars requires careful thought. Remember that returning to the local currency is difficult once you’ve dollarized. Carefully consider how this process will affect your pay practices and staff.

Is your organization in Lebanon considering paying staff in US dollars? Get guidance on making such a big switch. Contact us today to learn how we can help you develop a Special Measures Policy that includes dollarization.

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