Cost of Labor

POURQUOI LE COÛT DU TRAVAIL DOIT GUIDER VOTRE RÉMUNÉRATION

Written by Bianca Valencia on . Posted in Uncategorized.

Garantir une rémunération équitable du personnel est un véritable exercice d’équilibre. En tant que leader sur le marché du travail, votre organisation souhaite attirer et retenir les meilleurs talents tout en restant dans les limites du budget de rémunération.

Les responsables des ressources humaines utilisent une série de facteurs pour établir et régler les salaires. Les deux facteurs les plus courants qui guident les stratégies de rémunération sont le coût du travail et le coût de la vie. Le coût du travail reflète la valeur marchande d’un emploi spécifique. En revanche, le coût de la vie reflète les dépenses nécessaires aux salariés pour maintenir un certain niveau de vie dans un lieu donné.

Il y a un débat en cours sur quel facteur est le plus important. Faut-il baser son salaire sur la valeur du marché pour une fonction (coût du travail), ou bien le statut civil et le niveau de vie d’une personne doivent-ils dicter le salaire (coût de la vie) ?

Cet article de blog soutient que vos stratégies de rémunération doivent être guidées par le coût du travail pour une approche plus juste et plus durable. Voyons pourquoi le coût de la vie n’est pas une référence fiable et, surtout, pourquoi le coût du travail devrait occuper le devant de la scène.

Pourquoi le coût de la vie n’est pas fiable

Certaines organisations utilisent le coût de la vie pour fixer les salaires. Cependant, cette méthode n’est pas assez équitable. Voici quelques raisons pour lesquelles l’utilisation du coût de la vie peut être trompeuse :

Désuet et imparfait. Bien qu’il soit traditionnellement utilisé pour ajuster les salaires, le coût de la vie est fortement influencé par les circonstances individuelles, ce qui en fait une mesure peu fiable. Des facteurs tels que l’état civil, le nombre de personnes à charge et les habitudes de consommation peuvent affecter de manière significative le coût de la vie d’un individu. Le fait de baser les salaires uniquement sur le coût de la vie ne reflète pas la valeur réelle de l’emploi sur le marché du travail. 

Biais de localisation. L’utilisation du coût de la vie crée un biais géographique. Mais la localisation ne devrait pas dicter la valeur d’un travail. Un spécialiste du suivi hautement qualifié dans un bureau local peut être payé considérablement moins qu’un collègue moins expérimenté au siège, simplement en raison de l’endroit où il travaille. 

Défis liés à la définition du coût de la vie. Définir un coût de la vie juste et précis représente un défi. Contrairement à une mesure fixe, il varie considérablement car le montant nécessaire pour vivre confortablement peut varier considérablement d’une personne à l’autre. Même au sein d’un même pays, les gens peuvent avoir des habitudes de dépenses et des choix de consommation très différents, rendant impossible l’établissement d’une norme unique. 

Sans rapport avec le travail. L’objectif premier de la rémunération est de payer le personnel en échange de ses services. Cependant, le coût de la vie met l’accent sur des circonstances personnelles sans rapport avec l’objectif du travail. Il ne détermine pas la valeur d’un emploi sur le marché du travail, alors pourquoi l’utiliser pour déterminer les salaires ?

Un changement de perspective

Les employeurs doivent se rappeler qu’il n’est pas de leur responsabilité de maintenir le mode de vie de leur personnel. Un salaire compétitif doit permettre au personnel d’atteindre un niveau de vie décent, mais les choix individuels et leur situation financière influencent considérablement cette équation. 

Mieux encore, se concentrant sur le coût du travail assure la clarté et la transparence. Vous avez la capacité de communiquer votre politique de rémunération et le montant que vous êtes prêt à payer pour des postes sur vos marchés cibles.

L’importance du coût du travail

Bien que le coût de la vie semble être une façon compatissante de structurer les salaires, il ne permet pas de mettre en place un programme de rémunération équitable et durable. Voici pourquoi se concentrer sur le coût du travail est la meilleure approche, et souvent la seule, qui compte :

Objectivité et transparence

Justification des donateurs. Pour les organisations à but non lucratif qui dépendent du financement des donateurs, le coût du travail fournit des données précises et objectives pour justifier les salaires. Les donateurs attendent une utilisation responsable des fonds, et l’utilisation du coût du travail comme référence montre que les salaires sont basés sur la valeur du marché du travail. Le coût de la vie n’offre que peu de justification dans ce scénario.

Attirer les bons talents. Pour attirer les bons talents possédant les bonnes compétences dans le secteur privé, il faut comprendre la valeur du marché. En comprenant les tendances salariales et les pratiques de rémunération pour les fonctions et les niveaux de grade sur leurs marchés cibles, les organisations peuvent élaborer des offres compétitives. 

Durabilité

Clair et axé sur le travail. Le coût du travail se concentre sur la valeur du travail lui-même. Il tient compte des données du marché pour des postes de valeur équivalente, ce qui garantit l’équité et la clarté pour attirer et retenir les talents dont vous avez besoin.

Des décisions éclairées et un alignement budgétaire. En comprenant vos coûts de rémunération à travers le prisme du coût du travail, vous pouvez prendre des décisions mieux informées qui s’alignent sur votre budget et votre identité de marque sur le marché du travail. Se concentrant sur le coût du travail permet également de procéder à des ajustements plus stratégiques en cas de ralentissement économique ou de périodes de troubles sociaux, ce qui favorise la viabilité à long terme.

En conclusion

Nous recommandons de fixer les salaires en fonction du coût du travail, c’est-à-dire du montant payé par d’autres employeurs sur le marché du travail pour des fonctions identiques ou similaires. Cette approche consiste à fixer les salaires sur la base de données d’enquêtes sur le marché du travail fondées sur une évaluation simple et claire des emplois, qui évolue indépendamment du coût de la vie et est influencée par l’offre et la demande sur le marché du travail.

Contacter le Birches Group

Baser les salaires sur le coût du travail est un élément essentiel d’un cadre de rémunération bien conçu, mais ce n’est qu’un début. Il faut également obtenir de données crédibles sur le marché, telles que des enquêtes salariales, pour évaluer votre position sur le marché.

Restez au fait des tendances du marché du travail. Accédez à nos enquêtes salariales complètes et utilisez nos données pour prendre des décisions éclairées en matière de rémunération. Nous publions trois fois par an des données actualisées sur le marché du travail dans plus de 150 pays, ce qui vous permet de disposer des informations les plus récentes pour répondre à vos besoins en matière de gestion des talents.

Contactez Birches Group dès aujourd’hui pour en savoir plus sur nos enquêtes salariales et sur les avantages qu’elles peuvent apporter à votre organisation.

Carla is a part-time copywriter on 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 LinkedIn for more content on pay management and HR solutions.

regularly participating in salary surveys

POURQUOI LA PARTICIPATION RÉGULIÈRE AUX ENQUÊTES SALARIALES EST VITALE POUR VOTRE ORGANISATION

Written by Bianca Valencia on . Posted in Uncategorized.

Définir une rémunération compétitive n’est pas un jeu de devinettes, c’est une stratégie. Mais sans données actualisées sur le marché du travail, vous risquez de sous-payer ou de surpayer les talents, de susciter le ressentiment ou d’épuiser les ressources.

Les enquêtes salariales sont vos points de repère. Ces outils dévoilent les tendances du marché et vous aident à établir des rémunérations justes et éclairées qui attirent les meilleurs talents, stimulent le moral et créent une excellente image de marque pour l’employeur. En participant régulièrement à des enquêtes salariales, votre organisation obtient une vue d’ensemble du marché du travail et une perspective plus large qui vous permettent de prendre des décisions informées en matière de rémunération.

En participant chaque année à des enquêtes salariales, vous investissez dans l’équité et dans les pratiques salariales fondées sur des données. Même si votre organisation n’a pas encore besoin d’une révision salariale, la participation à une enquête salariale annuelle vous permet de vous tenir au courant des tendances sur le marché du travail et d’établir un budget adéquat lorsque les salaires doivent être mis à jour. 

Obtenez des informations sur les pratiques salariales compétitives et assurez votre place en tant qu’employeur de choix. Cet article de blog vous guidera à travers l’importance des enquêtes salariales et les avantages d’une participation régulière. Laissez-nous tracer le chemin de votre organisation vers la clarté en matière de rémunération.

Comprendre les enquêtes salariales

Avant d’aborder les avantages, il convient de simplifier le concept.

Les enquêtes salariales permettent de déterminer les tendances en matière de rémunération dans les différents secteurs ou sur les marchés du travail. Ces enquêtes collectent des données sur une série de facteurs, notamment le salaire de base, les primes et les avantages sociaux et les analysent afin de mettre en évidence des points de référence utiles pour différentes fonctions et différents niveaux d’emploi.

Les informations tirées de ces enquêtes sont inestimables, car elles permettent à votre organisation de connaître sa position sur le marché et d’apporter les ajustements nécessaires à sa stratégie de rémunération.

En participant régulièrement à des enquêtes salariales, vous vous assurez également que vos données sont toujours à jour. Cela vous permet de suivre les tendances du marché et de réagir rapidement aux changements. En outre, ces enquêtes fournissent une vue globale des rémunérations dans le secteur, ce qui permet à votre organisation d’élaborer une stratégie de rémunération compréhensive et compétitive.

Utiliser efficacement les enquêtes salariales

Pour pouvoir utiliser effectivement les données fournies par les enquêtes salariales, il convient de faire un pas en arrière et de se poser une question essentielle : “Qui sommes-nous en tant qu’employeur ?”. La réponse façonne votre Employee Value Proposition (EVP)* et définit votre position unique sur le marché du travail. Celle-ci englobe deux aspects essentiels :

  1. La composition du marché cible. Qui sont vos concurrents en matière de recrutement ? Identifiez les entreprises dont la taille, le secteur d’activité et le marché sont similaires et qui serviront de comparateurs pertinents dans vos enquêtes.
  2. Position sur le marché cible. Où voulez-vous vous situer en termes de compétitivité salariale ? Voulez-vous vous situer dans la moyenne du marché, attirer les meilleurs talents avec un salaire plus élevé, ou être prudent sur les coûts avec un salaire inférieur à la moyenne ?

Les enquêtes salariales ne sont qu’une boussole. Elles fournissent des données très utiles, mais c’est votre politique de rémunération qui détermine vos décisions.

  1. Utiliser des critères cohérents pour les comparateurs. Utilisez toujours les mêmes facteurs pour sélectionner les comparateurs, ce qui garantit des comparaisons précises et fiables.
  2. Trouver le juste milieu. Identifiez votre percentile cible en fonction de votre EVP. Souhaitez-vous faire partie des 10 % les plus performants pour attirer les employés les plus performants, ou vous sentez-vous à l’aise dans la médiane pour pouvoir gérer les coûts ?
  3. Aligner l’EVP. Concevez vos pratiques de rémunération en fonction de votre EVP, en offrant des avantages et des structures salariales qui correspondent au vivier de talents que vous recherchez.
  4. Adapter la rémunération en fonction du marché. Tenez-vous informé des tendances du marché et des offres des concurrents révélées par les enquêtes salariales. Utilisez ces données pour apporter des ajustements éclairés à votre système de rémunération, y compris le salaire de base, les primes et les avantages sociaux.

En fin de compte, votre budget de rémunération et votre position sur le marché cible sont les principaux moteurs de votre structure salariale. Les enquêtes salariales constituent un outil précieux pour calibrer vos offres, rester compétitif et attirer les talents dont vous avez besoin.e your offerings, stay competitive, and attract the talent you need. 

Récolter les fruits de la participation régulière

La participation aux enquêtes salariales n’est pas qu’une simple case à cocher ; c’est un investissement dans la réussite de votre organisation. Une participation fréquente aux enquêtes salariales offre de nombreux avantages :

Le benchmarking compétitif

Pour rester compétitif sur le marché du travail, vous devez savoir comment votre rémunération se situe par rapport à celle des meilleurs. En participant régulièrement à des enquêtes salariales, vous pouvez:

  • Identifier les lacunes. Une fois que vous avez déterminé le niveau de compétitivité que vous souhaitez atteindre sur le marché que vous avez choisi, les enquêtes peuvent vous aider à mettre en évidence les domaines dans lesquels votre rémunération est inférieure, ce qui vous permet d’ajuster les stratégies de votre organisation.
  • Connaître votre position sur le marché. Comprenez comment vos salaires se comparent aux moyennes du secteur et aux leaders du marché. Êtes-vous en tête du peloton ou à la traîne ?
  • Rester à l’avant-garde. Prévoyez les tendances en matière de rémunération (salaires et avantages sociaux) et adaptez de manière proactive la rémunération totale afin de conserver les meilleurs talents et d’attirer de nouvelles recrues.

En utilisant les informations fournies par les enquêtes salariales, vous pouvez vous assurer que votre organisation reste un employeur attractif, ce qui vous permettra de gagner la bataille pour les talents.

Equitable et juste

Participer régulièrement à des enquêtes salariales contribue à promouvoir l’équité et la justice salariales. En profitant des enquêtes salariales, vous pouvez :

  • Combler l’écart de rémunération. L’équité consiste à s’assurer que vous payez pour le rôle et non pour la personne. Éliminez les écarts de rémunération et garantissez l’équité interne. Utilisez les données des enquêtes salariales plutôt que l’historique des salaires de la personne pour informer les politiques de gestion des rémunérations, afin de créer un lieu de travail où tout le monde est récompensé équitablement.
  • Élaborer une structure plus équitable. Utilisez des informations fondées sur des données pour ajuster votre échelle salariale, en garantissant l’équité et l’alignement sur les normes du secteur.
  • Instaurer la confiance et la transparence. Une communication ouverte et des décisions salariales fondées sur des données favorisent une culture de la confiance et du respect, ce qui conduit à un environnement de travail plus positif.

Investir dans des enquêtes salariales, c’est investir dans votre personnel et dans la réussite de votre organisation. En garantissant une rémunération équitable et transparente, vous pouvez constituer une main-d’œuvre plus motivée, plus engagée et plus inclusive, ce qui se traduit par des résultats positifs pour tout le monde.

Prendre des décisions éclairées en matière de rémunération

Les enquêtes salariales peuvent être votre secret pour élaborer une stratégie de ressources humaines gagnante qui attire, retient et libère tout le potentiel de votre personnel. 

En participant chaque année à des enquêtes salariales, vous pouvez améliorer vos pratiques de rémunération en vous permettant de regarder au-delà des chiffres. Si le salaire est essentiel, les enquêtes salariales peuvent vous aider à évaluer ce que les salariés valorisent – des modalités de travail flexibles, des possibilités d’apprentissage et de développement, ainsi que des programmes de reconnaissance et de récompense. 

Concevoir des programmes de rémunération qui vont au-delà du salaire. Si la rémunération est le principal attrait de l’entreprise, sur certains marchés, des avantages sociaux adaptés peuvent également contribuer à maintenir votre avantage concurrentiel.

Les enquêtes salariales sont une mine d’informations et d’analyses qui ne demandent qu’à être découvertes. En exploitant leur puissance, vous pouvez élaborer une stratégie de rémunération qui attire et conserve les meilleurs talents.

Attirer et retenir les meilleurs talents

Attracting and keeping staff needs a data-driven, strategic approach. Gone are the days of generic offers Attirer et conserver le personnel nécessite une approche stratégique fondée sur des données. L’époque des offres génériques et des solutions uniques est révolue. Les organisations doivent cultiver l’EVP convaincant qui trouve un écho auprès des talents qualifiés. 

  • Devenir un employeur de choix. Proposer des enquêtes salariales compétitives et des avantages sociaux attrayants, fondés sur des données d’enquête fiables, attire les meilleurs talents et renforce votre image de marque et votre réputation d’employeur.
  • Personnaliser vos stratégies. Utilisez les résultats des enquêtes pour comprendre les attentes de votre public cible en matière de rémunération et adaptez vos stratégies de recrutement et de fidélisation en conséquence. 
  • Prévoir et prévenir le taux de rotation. Identifiez les risques potentiels en comparant vos rémunérations à celles proposées par les leaders du marché pour des postes similaires. En ajustant votre offre en fonction des données les plus récentes, vous pouvez maintenir l’engagement et la motivation de vos employés.

L’exploitation d’enquêtes salariales solides n’est pas seulement une bonne pratique, c’est un avantage concurrentiel. Comprendre les taux du marché vous permet d’élaborer des programmes de rémunération convaincants qui attirent les candidats ciblés et garantissent l’équité interne. Le résultat ? Une plus grande satisfaction des employés, une réduction du taux de rotation et une main-d’œuvre plus dynamique.

De l’information à l’action

La participation régulière à des enquêtes salariales vous permet de prendre des décisions éclairées en matière de rémunération, d’attirer et de retenir les meilleurs talents et de cultiver une organisation saine et performante. Ne passez pas à côté de cette ressource inestimable. Birches Group fournit des données sur le marché du travail dans plus de 150 pays et nous sommes là pour vous aider. Inscrivez-vous dès aujourd’hui à nos enquêtes salariales complètes et assurez le succès futur de votre organisation ou prenez contact avec nous pour en savoir plus.

Carla is a part-time copywriter on 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 LinkedIn for more content on pay management and HR solutions.

Close-up of a police officer holding a riot shield among a crowd of civilians. The shield has the word "POLICE" written on it. The ground is partially visible, with some debris scattered.

Haiti at a Standstill: What to Know About the Escalating Gang Violence in the Capital

Written by Kai Donesa on . Posted in Uncategorized.

Birches Group monitors the world’s most dynamic labor markets, keeping you informed about critical trends and developments gaining significant media attention.  

Port-au-Prince is in a state of paralysis as Haiti gang violence spirals out of control. This eruption of chaos has led to the resignation of Prime Minister Ariel Henry in the face of mounting pressure.  

With a power vacuum now in place, the gangs are expanding their influence in Port-au-Prince and fighting for control of the city. Yet, the future of Haiti’s government appears increasingly uncertain. As a result, Haitians are grappling with the immediate dangers and the long-term question of who will guide the Caribbean nation out of the crisis. 

What is happening in Haiti? 

On the week of 29 February 2024, armed gangs in Port-au-Prince attacked two of Haiti’s largest prisons and other key infrastructure. More than 3,800 inmates have fled, and the gangs have openly tried to assert political control in the country. This recent escalation of Haiti gang violence unfolded after Henry left the country on a trip to Kenya to seek support in combating Haiti’s long-standing gang problem.  

Gang leaders took advantage of Henry’s travel to seize control of the capital. The gangs attacked police stations and the international airport, preventing the Prime Minister from returning. Its most visible leader, Jimmy Chérizier, has called on Haiti’s many criminal groups to join forces and overthrow Henry’s government. 

After two weeks of continuous violence back home, Henry announced in Puerto Rico on 12 March 2024 that he would resign as soon as a transitional presidential council was formed. However, Henry remains unable to return to Haiti, and creating the council requires careful consideration and planning. 

According to United Nations (UN) officials, about 80% of Port-au-Prince and the surrounding region is now under gang control. Furthermore, UN reports estimate that 5.5 million people—nearly half of Haiti’s population—need humanitarian aid.  

How is the crisis affecting humanitarian groups? 

What is clear is that Haiti’s new surge of unrest is causing a dramatic increase in the country’s humanitarian needs, displacing tens of thousands. 

The escalating Haiti gang violence in Port-au-Prince has created a nightmarish situation for humanitarian groups trying to deliver aid. Restricted movement and fierce clashes have severely disrupted the flow of essential supplies, including food, water, and medicine. 

Caught in the crossfire. Beyond the logistical challenges, aid groups face the constant threat of violence. Staff members are forced to navigate volatile areas controlled by gangs, putting their safety at risk. 

The path forward. The immediate focus is restoring security and facilitating the safe passage of aid workers so they can respond swiftly to the deepening crisis. Analysts and observers agree that collaboration between Haitian authorities, international organizations, and local nonprofits is vital to setting up secure aid corridors. 

The long road to recovery. The long-term consequences of this crisis on development and humanitarian efforts are a growing concern. Disruptions to aid delivery will worsen existing issues like poverty and malnutrition. 

How are the Haitian government and the international community responding to the crisis? 

In response to the increased violence, the Haitian government declared a state of emergency on 3 March 2024. Nighttime curfews are also being enforced in some areas to “take appropriate measures in order to regain control of the situation.” Additionally, the government has deployed more police forces. However, these efforts have been largely ineffective against heavily armed gangs. 

The international community has expressed deep concern over the rapidly deteriorating situation in Haiti. UN Secretary-General Antonio Guterres emphasized the urgency of addressing the crisis. Specifically, he called for increased financial support for the UN-authorized multinational security mission, which is critical to restoring stability in the nation. 

How Birches Group can help 

The current turmoil in Haiti highlights the importance of having a Special Measures Policy. This type of policy allows your organization to adapt its human resources strategies even when faced with unforeseen events. A well-crafted Special Measures Policy includes triggers and immediate responses to cushion the effects of crises on staff while assessing market movement in succeeding months.  

Don’t wait for a crisis to happen—take a proactive approach. Birches Group can help you develop a Special Measures Policy today. Our expert guidance will address your needs, ensuring your organization continues functioning amid social unrest. By taking this critical step, your organization stays resilient in an ever-changing world. Contact Birches Group today. 

While this headline article was written in mid-March 2024, Haiti’s social unrest and political crisis are rapidly evolving. The information presented, including statistics and events, reflects the understanding at the time of writing. 

References 

From Power Struggles to People’s Plight: The True Cost of Myanmar’s Power Play 

Written by Kai Donesa on . Posted in Uncategorized.

Birches Group closely monitors labor markets that are making headlines worldwide, keeping you updated on trends and developments. 

In Myanmar, a Southeast Asian nation brimming with hope for democracy, a brutal reality continues to grip the country. A February 2021 military coup d’état overthrew opposition leader Aung San Suu Kyi and her elected government—returning Myanmar to authoritarian rule, shattering years of progress toward democracy, and plunging the country into a relentless power struggle. 

While the world’s attention has focused on the political turmoil, mass displacement, and human rights abuses, another tragedy unfolds. Three years into military rule, the junta has once again extended the state of emergency for another six months. Sadly, Myanmar’s people continue to endure the worst of the crisis. 

This headline article goes beneath the surface of violence and unrest in Myanmar, exploring how the coup has devastated the country’s economy. 

Shifting tactics: Junta faces renewed resistance 

Since seizing power in February 2021, Myanmar’s military junta has faced unwavering opposition. The Global Center for the Responsibility to Protect reports that hundreds of thousands of citizens have joined peaceful protests and strikes against military rule. The International Crisis Group also reports, “Some of the country’s ethnic armed groups have gone on the offensive, and new forms of armed resistance by civilian militias and underground networks have emerged.” 

The past five months have seen a shift in both the military’s tactics and the nature of resistance. The government has been rapidly losing ground to rebel forces in several regions of Myanmar. In late October 2023, an alliance of three ethnic armed groups launched a coordinated attack against the regime, posing the strongest challenge since the 2021 coup. 

Reuters reports that Myanmar’s junta is now “facing the fiercest threat to its power since seizing control.” Collective campaigns targeting the military have emerged across the country, and the military’s control has been shaken, its resources strained, and the morale of its soldiers undermined. 

As it battles an unprecedented alliance of opponents while being weakened by internal dissent and defections, the military regime has escalated its crackdown on civilians. The junta has stepped up its increasingly brutal methods like mass arrests, forced displacements, and aerial bombardments. 

Analysts from the United States Institute of Peace, however, say that “There is simply no way back for an enfeebled and stretched junta that is rapidly losing its ability to control the public. Its airstrikes and arson attacks on civilian populations have only served to deepen the public’s commitment to resist.” 

This interplay between shifting tactics and renewed resistance paints a grim picture of Myanmar’s current situation, where the cost of the power struggle is borne by the increasingly desperate civilian population. Amid the escalation of the fighting, the United Nations (UN) reports that over 2.5 million people have been displaced by the armed conflicts. 

Yun Sun, a nonresident fellow of the Brookings Institution, comments, “Some Myanmar watchers believe that the balance of power may shift sufficiently to change the tides within the country or the military government.” Even though there have been some significant and strategic gains for ethnic armed organizations who have been working with increased cooperation, the conflict is ongoing with no obvious end in sight, says the UN Office for the Coordination of Humanitarian Affairs (UN OCHA) in its Myanmar Humanitarian Needs and Response Plan for 2024. The Economist Intelligence Unit further notes that while “the junta’s control has weakened substantially and now controls about 30-40% of Myanmar’s territory, it is unlikely to fall.” 

Kyat in crisis: Currency devaluation and eroding purchasing power 

The situation in Myanmar, fueled by the military junta’s desire to maintain power, has triggered a domino effect of consequences affecting the lives of citizens. The political turmoil has translated into a harsh reality of economic hardship, social unrest, and deepening poverty. 

Sanctions imposed by the international community, aimed at pressuring the junta, have crippled Myanmar’s financial system. Some countries have also suspended development funds and imposed embargoes, among other measures. While intended to isolate the military regime, these sanctions have choked the local economy. 

The World Bank notes that Myanmar’s economy has shrunk since the COVID-19 pandemic and the military coup, with economic activity remaining weak and constrained. In fact, it estimates the economy in 2023 to be 30% smaller than it might have been in the absence of the pandemic and coup. 

Trade and investment have dwindled. In its investment climate statement on the country, the United States (US) Department of State says, “The regime’s ongoing violence, repression, and economic mismanagement have significantly reduced Burma’s commercial activity.” 

The US State Department expounds that the Central Bank of Myanmar “has imposed severe foreign exchange restrictions that limit commercial activity and severely limits access to US dollars.” In its most recent economic monitor, the World Bank notes the presence of multiple exchange rates and a widening gap between the official and parallel market rates. 

Rising inflation adds another layer of hardship. Inflation and conflict are driving up the prices of essential goods, such as food and fuel, leaving vulnerable households in distress, says the UN OCHA in its January 2024 update on Myanmar. Additionally, a recent World Bank survey found that about half of the surveyed households reported a decrease in income over the past year. Oxfam adds that over 20% of the population still lives below the poverty line, pushing people at risk deeper into desperation. 

What our Market Monitor reveals 

In the wake of Myanmar’s ongoing political turmoil, concerns arise about its impact on the labor market. To understand this complex and multi-layered issue, we reviewed data from our Market Monitor reports for the past six months. Looking back at the period between 1 August 2023 and 1 February 2024, we wanted to shed light on how the crisis is affecting Myanmar’s labor market. 

Our Market Monitor reports show a significant increase in volatility and exchange rate movement since 1 December 2023, when Myanmar reentered our list of markets to watch at Level 3. Level 3 (out of six levels of volatility) suggests rapidly evolving market conditions and an exchange rate movement of 40% or more in six months. It also implies multiple salary reviews and revisions should be considered among the comparators of our salary surveys in Myanmar. 

In the 15 December 2023 edition of our report, Myanmar’s volatility level quickly rose to Level 4, remaining high since then. Level 4 suggests a sudden, unexpected social/economic event, a currency devaluation of 50% or more in six months, and a disjointed and unclear survey comparator response. Myanmar’s exchange rate movement sharply increased from 40% on 1 December 2023 to 63.3% on 15 December 2023. However, it has slightly decreased to 62.9% since 1 January 2024. As of 15 February 2024, our latest edition, the exchange rate movement over the past six months has further declined to 61.4%. 

How Birches Group can help 

The situation in Myanmar is still fluid, and its future uncertain. We at Birches Group urge readers to pay close attention to the country’s political climate. The ramifications of Myanmar’s economic crisis extend far beyond news headlines. Understanding the current situation and its socioeconomic impact is crucial for organizations operating and managing their workforce in Myanmar. 

Staying informed requires ongoing monitoring. We encourage you to subscribe to our Market Monitor reports for bimonthly updates and analysis. Our latest edition (15 February 2024) focuses on Myanmar as a case study for developing special measures amid volatility. 

Moreover, registering for our salary surveys will equip you with the most recent data on compensation and benefits in Myanmar, allowing you to maintain responsible HR practices during these grim times. 

Birches Group is committed to providing you with the latest insights and resources to navigate this crisis. By staying informed and using reliable data, we can minimize the negative impact of this ‘forgotten emergency’ on the lives of Myanmar’s citizens. Subscribe to our Market Monitor and register for our compensation and benefits surveys today. 

References:

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.

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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.

References:

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.

References:

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.

References:

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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