Tag: developing markets

fastest-growing economies

FORECASTS TO WATCH: A LOOK AT 2024’S FASTEST-GROWING ECONOMIES

Written by Kai Donesa on . Posted in Resources.

As we look forward to a new year, we are pleased to highlight some of the fastest-growing economies in 2024. This bulletin provides a snapshot of the dynamic global economic landscape, underscoring labor markets that are resilient and highly expected to grow.

Overview of global economic trends

Global economic growth is expected to slow in 2024, but a recession is not likely, says the International Monetary Fund (IMF) in its October 2023 World Economic Outlook. The IMF projects global growth to slow to 2.9%, down from 3% in 2023. This slowdown is due to several factors, including the long-term consequences of the COVID-19 pandemic, the war in Ukraine, and the tightening monetary policy of central banks worldwide.

Emerging markets are expected to continue to outperform advanced economies. The IMF forecasts emerging and developing markets to grow by 4% in 2024, while advanced economies will grow by 1.4%.

The fastest-growing economies

Which countries will see the most growth in 2024? According to the IMF, 20 economies across the Asia Pacific, the Americas, Sub-Saharan Africa, the Middle East, and North Africa top the list.

A map of central and south america.
A map of asia and pacific countries.
A map of sub saharan africa.
A map showing the countries of africa.

Source: International Monetary Fund, World Economic Outlook, October 2023

Many of the fastest-growing economies are in the Asia Pacific and Sub-Saharan Africa. These regions are home to some of the world’s most populous countries, and their economies have expanded rapidly in recent years.

A bar chart showing the number of sales in a year.

A rapidly moving labor market reflects a fast-growing economy. Using data from our most recent Multi-sector Salary Survey, we have found that many of the rapidly growing economies are moving in a positive direction.

Our salary surveys provide valuable market movement data for nearly all the countries listed, making them a comprehensive resource for understanding global labor market trends. This extensive coverage ensures that you have access to information on different nations, allowing you to make informed decisions about hiring and international expansion.

Three economies to watch

The IMF further reports that Sub-Saharan Africa will be the second fastest-growing region in 2024. Growth in this part of the world is projected at 4%, well above the 2.9% global average.

For this bulletin, we will focus on three economies in Sub-Saharan Africa: The Gambia, Ethiopia, and Burundi. We have chosen these markets because they all show significant labor market movement based on our October 2023 salary survey data.

The Gambia

Over 6% GDP growth, declining inflation, and continued recovery in tourism

According to the World Bank’s Third Gambia Economic Update, the Gambia has displayed “remarkable resilience in the face of global economic challenges.” Its economy is expected to grow by 6.2% in 2024, accelerating from 5.6% in 2023.

Several factors drive this outlook, including the continued recovery of tourism and moderating consumer prices. Inflation is expected to decline from 17% in 2023 to 12.3% in 2024 as global commodity prices normalize.

According to World Bank economist Ephrem Niyongabo, the Gambian government must implement policies to accelerate financial inclusion, enhance access to financial services, and support economic growth.

What our salary survey data reveals. Using data from our Multi-Sector Salary Survey, we examined market movement in the Gambia from October 2022 to October 2023.

Salaries for support workers in the West African nation of 2.5 million people increased by an average of 13.6% over the period. On the other hand, professional workers experienced an average market movement of 14.3% over the same period.

Our data shows that the labor market in the Gambia is moving upward, with salaries increasing for both support and professional workers. This is a positive sign, suggesting that organizations are growing and can afford to pay their employees more.

Driving forces of economic growth. Analysts and economists say the Gambia’s growth will pick up in 2024 due to increased activity in all sectors, notably:

  1. Tourism. Tourism in the Gambia has been hit hard by the COVID-19 pandemic but is now on the road to recovery. Fitch Solutions reports that tourist arrivals to the Gambia will be strengthened by improving economic conditions in key markets such as the United Kingdom.
  2. Agriculture. Agriculture is another important sector of the Gambian economy. The World Bank cites improved agricultural production as contributing to Gambia’s growth.
  3. Infrastructure. The World Bank further notes that investments in infrastructure programs such as roads and bridges are also expected to drive growth.

Ethiopia

Above 6% GDP growth, greater political stability, and liberalization efforts

Africa’s second-most populous country has grown by nearly 9% annually over the past decade. The Ethiopian economy is expected to accelerate in 2024, with most analysts predicting GDP growth above 6%. The IMF projects 6.2% growth, slightly higher than the 6.1% rate in 2023. Consumer prices are expected to drop from 29.1% in 2023 to 20.7% in 2024.

Ethiopia’s rebound is driven by several factors, including post-conflict reconstruction, continued progress on reforms, and expected IMF financing worth at least US$2 billion.

What our salary survey data reveals. Upon reviewing the market movement in Ethiopia from October 2022 to October 2023, we saw an average salary movement of 19.1% across job roles. The salary movement for support roles was higher at 20.8%. On the other hand, the salary movement for professional roles saw a slightly lower increase of 17.4%.

Our data suggests that Ethiopia’s job market is strong, and salaries are increasing across roles.

Driving forces of economic growth. What factors support Ethiopia’s accelerated growth in 2024?

  1. Peace and political stability. The Tigray War in the north from 2020 to 2022 substantially impacted lives, livelihoods, and infrastructure. Since then, a peace agreement with Tigray’s regional administration has been a crucial step to elevating investor sentiment, the World Bank notes. The Economist Intelligence Unit adds that a relative improvement in political stability will drive a gradual increase in growth.
  2. Market liberalization and privatization. The African Development Bank states that liberalizing more sectors to unlock foreign investments may boost Ethiopia’s economic outlook. Analysts from Coface and Lloyds Bank describe the opening and modernization of banking, finance, and telecommunications as promising. The government is also pursuing its “Homegrown Economic Reform Agenda 2.0,” a policy mix addressing investment and trade, productivity, and climate resilience.
  3. Agricultural potential. Ethiopia is the fifth-largest coffee producer in the world. Lloyds Bank says agriculture contributes to over a third of Ethiopia’s GDP and employs more than two-thirds of the workforce. Additionally, the authorities have been making sustained efforts to add value to agricultural products and plan to develop agro-industrial parks across the country.

Burundi

6% GDP growth, increased government spending, and improvements in agriculture

Burundi’s economy is projected to grow by 6% in 2024, much higher than the expected growth of 3.3% in 2023. This is driven by government spending and increased earnings from mining and agriculture. Consumer prices are expected to decline to 16.1% from an estimated 20.1% in 2023, as measures to boost farm production and stabilize the exchange rate take effect.

Overall, the outlook for Burundi is positive. However, achieving growth will require the government to address key challenges and implement sound economic policies.

What our monitoring reveals. Our data shows that salaries in Burundi increased by an average of 14.2% from October 2022 to October 2023. Higher salary increases were seen at 16.2% in professional roles. In comparison, lower salary increases were seen at 12.2% in support roles.

Driving forces of economic growth. Burundi is poised for encouraging growth in 2024. Three key drivers are fueling this momentum:

  1. Government spending. An infrastructure shortage is one of the significant constraints to modernizing Burundi’s economy. The government plans to increase spending by about 65% in the 2023–24 fiscal year—particularly on infrastructure—to stimulate economic activity. Coface cites that constructing a new railway line between coastal Tanzania and landlocked Burundi will begin in 2024, making supplying food and exporting minerals easier.
  2. Mining. Burundi has untapped mining potential, which could be a “game-changer for its development,” says the Institute for Security Studies Africa. The East African nation is rich in mineral resources, including nickel, gold, phosphates, and rare earth elements. Yet, since April 2021, the activities of foreign mining firms have been suspended. In June 2023, the government published a new Mining Code to improve the regulatory environment and attract the return of foreign investments in mining.
  3. Agriculture. ISS Africa further predicts that agriculture will have the most significant impact on reducing poverty in the short term. Agriculture is the backbone of Burundi’s economy, accounting for more than 30% of GDP and employing over 85% of the workforce. The World Bank expects agricultural production to pick up in 2024. It also notes that more private sector activity in agriculture is an opportunity for Burundi to increase food production.

How Birches Group’s salary surveys can help you

Strategic insights are crucial for organizations looking to work in emerging markets. Register today for Birches Group’s extensive salary survey database and equip yourself with the most comprehensive and up-to-date compensation and benefits data.

Birches Group provides invaluable insights into salary structures, benefits packages, and market trends in over 150 countries. Using our data, you can make informed decisions, navigate diverse markets, and ensure your human resources strategies align with the ever-changing global environment.

References :

  • African Development Bank. 2023. Burundi Economic Outlook. Accessed December 09, 2023. https://www.afdb.org/en/countries/east-africa/burundi/burundi-economic-outlook.
  • —. 2023. Ethiopia Economic Outlook. Accessed December 08, 2023. https://www.afdb.org/en/countries/east-africa/ethiopia/ethiopia-economic-outlook.
  • —. 2023. Gambia Economic Outlook. Accessed December 07, 2023. https://www.afdb.org/en/countries/west-africa/gambia/gambia-economic-outlook.
  • Coface. 2023. Burundi. August. Accessed December 09, 2023. https://www.coface.com/news-economy-and-insights/business-risk-dashboard/country-risk-files/burundi.
  • —. 2023. Ethiopia. June. Accessed December 08, 2023. https://www.coface.com/news-economy-and-insights/business-risk-dashboard/country-risk-files/ethiopia.

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 LinkedIn for more content on pay management and HR solutions.

Using Local Market Data

USING MARKET DATA FROM NEIGHBORING COUNTRIES AS A PROXY IS NOT THE RIGHT APPROACH

Written by Kai Donesa on . Posted in Resources.

When companies need to set or review salaries, they normally use local market data as their external reference. But what do you do when there is no local market data available? This is common in smaller countries where there are not as many established employers and little to no survey providers are present. As HR consultants, we have received many inquiries on this matter and have seen companies resort to using salary data from nearby countries in the region as their proxy.

While it is understandable that in this case, companies would think that salary data closest to them in terms of proximity could be a valid alternative because perhaps countries within the same region would share similar characteristics, this is certainly not the case. We conduct salary surveys in over 150 countries, three times a year and would argue that while the country next door would have many similar jobs as your own, salary rates and pay packages are considerably different.

In Birches Group, we believe that local staff salaries should always be based on local market data. Here’s why:

The cost of labor in every country varies significantly, even if they all belong to the same region. Local conditions and availability of talent are what drive salary movement in any country. Talent that could be widely available in one market, may be very limited in another. So, when smaller markets reference their salaries against larger markets, especially if they are regional locations where wages are usually three to four times higher, those salaries would be overstated if put into the local context.

Using the example above, this is a chart that illustrates the equivalent pay range for a BG-10, a Seasoned Professional, in each of the Southeast Asian labor markets. If you are an employer in Laos and lack salary data for a BG-10 level, it would not be advisable to reference the equivalent salary range in Thailand just because you share a border with them. Similarly, if you were to apply Thailand pay ranges locally in Myanmar, not only are you significantly overpaying, but this would also be challenging to defend and maintain moving forward.

Market practice on compensation and benefits is different for every country. For some markets, certain allowances or benefits are mandated by local law, while other markets do not share the same requirement. In other countries, employers provide benefits to address local hardships, such as a company shuttle provided to staff to address the lack of public transport. But if you look at other countries in the same region, this may not be the case. Also, some countries have benefits that are cultural in nature making it unique to their market, while others could have something else. If you reference pay practices from other countries, you risk ignoring the unique conditions of your own market. See this example below:

The chart above illustrates total compensation pay packages for a BG-10 Seasoned Professional in ten countries in east and southern Africa. If you look closely, each component of total compensation varies for every country. Using the example above on pay practices, if you are an employer in Tanzania for example, the pay mix at the BG-10 level is comprised of not only cash benefits on top of base salary but in-kind benefits as well. But choosing to use salary data from Kenya because they are close and they are a regional hub, the pay mix toward total compensation is not the same. If you apply this in the local Tanzanian context, you are missing market practices on in-kind benefits compared to other employers in the local market.

So What Should You Do?

If your organization is in a small market in need of salary survey data, we recommend working with a survey provider whose methodology is designed for developing markets. Survey providers are equipped to launch local salary surveys that can bring employers the market data they need to inform their pay management policies accordingly.

Birches Group’s Community Market Compensation and Benefits Surveys are designed with developing markets in mind. And because developing markets are dynamic, our surveys cover all elements toward total compensation to give our clients the full context of the local labor market. Contact us to access the market data you need or to learn more about our subscription options.

Want to know if your existing compensation practices have the elements of a good compensation program or if there are areas that could use some improvement? Take our quick Compensation Program Assessment Quiz

Bianca manages our Marketing Team in Manila. She crafts messaging around Community™ concepts and develops promotional campaigns answering why Community™ should be each organization’s preferred solution, focusing on its simplicity and integrated approach. She has held various roles within Birches Group since 2009, starting as a Compensation Analyst and worked her way to Compensation Team Lead, and Training Program Services Manager. In addition to her current role in marketing and communications, she represents Birches Group in international HR conferences with private sector audiences.

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

Sri Lanka Economic Crisis: What You Must Know About the Current State of Affairs

Written by Bianca Valencia on . Posted in Uncategorized.

Birches Group has been monitoring the volatile economic conditions in Sri Lanka and wants to provide updates on the current labor market conditions happening in the South Asian nation. 

The past few months have not been easy for Sri Lanka, and the condition has only worsened. The country has been facing economic, political, and social crises due to the impact of the COVID-19 pandemic, rising foreign debt, and a depreciating rupee. According to a news report from BBC, the country’s inflation rate is now at 54.6% as of June 2022. Our August 1 Market Monitor shows that the exchange rate movement against the US dollar, Euro, British pound, and West African CFA franc in the past six months is at 79%. Moreover, after protests forced President Gotabaya Rajapaksa to flee to the Maldives and Singapore, Sri Lanka is in a state of emergency. 

Losing skilled talent 

These are challenging times for employers and staff in the South Asian island nation. It has been noted that there is an increasing number of skilled and educated Sri Lankans—from IT experts to hospitality and marketing professionals—who want to work overseas, where they can maximize the rupee’s devaluation and survive hyperinflation. According to Manusha Nanayakkara, the minister of labor and foreign employment, almost 168,000 Sri Lankans have registered to work abroad. Many intend to work in the Middle East, particularly in Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates (UAE). An independent survey conducted in November 2021 by the country’s Institute for Health Policy reveals that 1 in 4 Sri Lankans wanted to emigrate if they had the opportunity. This ratio has increased to 1 in 3 in July 2022.  

Compensation in Sri Lanka and the Middle East 

Our July 2022 multi-sector survey indicates that compensation ranges in Middle Eastern labor markets are significantly higher than in Sri Lanka. Our survey results show that the average annual salary ranges for support staff at Birches Group Level 6 in Sri Lanka receive a minimum of US$ 5,810 and a maximum of US$9,896, while a senior professional at Birches Group Level 10 receives a minimum of US$ 14,246 and a maximum of US$ 23,517. In Kuwait, support staff at Birches Group Level 6 would be paid approximately seven times more, between U$ 48,054 and US$ 76,418, while a senior professional at Birches Group Level 10 would receive between US$ 108,420 and US$ 153,708. As the chart above indicates, the figures are even higher in the UAE, Saudi Arabia, and Qatar. 

Next steps for employers 

Birches Group’s Market Monitor categorizes labor market conditions according to levels of volatility, with Level One as the lowest (reporting standard market conditions and market movement between 0–20%) and Level Six as the highest (where the country has reported labor market collapse, departure of most comparators from the market, and absence of reliable data on currency and inflation). In our most recent Market Monitor, Sri Lanka is now at Level Four, where labor market conditions reflect sudden, unexpected social or economic events, currency devaluation of 50% or more in six months or less, and there is disjointed and unclear comparator response. When the labor market becomes volatile, such as what we are seeing in Sri Lanka, organizations should place policies and procedures to keep pay programs functioning and to maintain business continuity. 

To avoid losing skilled employees leading to brain drain, organizations in Sri Lanka must address the situation by establishing a Special Measures Policy. Through the Special Measures policy, employers can define the appropriate triggers within labor market conditions that warrant a change or update in salaries and benefits. These triggers, in turn, outline what organizations will do to help cushion the impact of hyperinflation on their people.   

How can we help 

We at Birches Group have extensive expertise in developing Special Measures Policies for organizations across different markets and sectors. Contact us today to find out how we can create one for you. 

References: 

  • 1 August Market Monitor Report 
Ghana’s Cost of Living Crisis: What You Need to Know

Ghana’s Cost of Living Crisis: What You Need to Know

Written by Bianca Valencia on . Posted in Uncategorized.

Birches Group has been keeping an eye on economic conditions in Ghana and wants to provide updates on recent developments in the West African nation. 

One of West Africa’s more prosperous countries has been rocked by a cost-of-living crisis. Inflation in Ghana reached 29.8% in June 2022, the highest level in two decades. The Guardian reports that food prices have risen by 30.7% since last year, and energy costs have sharply climbed. Transportation costs have also gone up. 

Our August 1 Market Monitor further indicates that the Ghana cedi has seen an exchange rate movement of 34% against the US dollar, Euro, British Pound, and West African CFA Franc in the past six months. As inflation persisted and broadened, hundreds took to the streets of the capital Accra to protest the deteriorating economy. 

President Nana Akufo-Addo has stressed that the economic challenges the country is facing are the effect of the COVID-19 pandemic and the war in Ukraine. The government is seeking a support package from the International Monetary Fund (IMF), which visited Ghana in July. In a July 13 statement, the IMF said that such adverse developments “have contributed to slowing economic growth, accumulation of unpaid bills, a large exchange rate depreciation, and a surge in inflation.” 

What the labor market indicates 

The Ghanaian labor market exhibits rapidly evolving market conditions. Birches Group’s Market Monitor categorizes labor market conditions according to levels of volatility, with Level One as the lowest (reporting standard market conditions and market movement between 0–20%) and level six as the highest (where the country has reported labor market collapse, departure of most comparators from the market, and absence of reliable data on currency and inflation). In our latest Market Monitor, Ghana is classified as Level Three, where there are rapidly evolving market conditions, movement of more than 40% in the last 12 months, and multiple reviews and revisions are typical amongst comparators. While the surge of inflation has been swift in the country, labor market data has not moved as fast.  

Based on our salary survey analysis, no labor market movement was observed in July 2021.  

The chart above shows labor market movement in Ghana against reported inflation rates from July 2021 to July 2022 based on Birches Group’s multi-sector salary survey. As seen in the chart, labor market movement significantly increased in 2022, but inflation rates have always been much higher and moved at a faster rate from 2021. We believe this is because inflation or the cost of living is not directly proportional to the cost of labor. 

Next steps for employers 

When labor market conditions become volatile, such as in Ghana, organizations should establish policies and procedures to keep pay programs functioning and maintain business continuity. Through a Special Measures Policy, organizations need to determine the appropriate triggers based on labor market conditions that demand an update in salaries and benefits. Organizations must also decide how they plan to implement the next steps for their staff. Employees need to know that they can count on their employer to assist them amid the burgeoning crisis. 

How can we help 

We at Birches Group have extensive expertise in developing Special Measures Policies for organizations across different markets and sectors. Contact us today to find out how we can create one for you. 

References: 

  • 1 August Market Monitor Report 

JOBS, GRADES, INCUMBENTS: UNDERSTANDING THE LIMITATIONS OF SURVEY DATA AND HOW TO AVOID SURVEY DATA PITFALLS

Written by Kai Donesa on . Posted in Resources.

Salary surveys are an important HR tool. They are necessary for organizations to properly manage and maintain compensation every year. However, survey approaches can differ greatly from one provider to the next, particularly in the information they collect, their approach to job matching, and their treatment and presentation of employer data.

When deciding which survey data to use, it is essential for HR practitioners to familiarize themselves with the kind of information that each survey provides, the methodology behind the analysis, and the limitations that come with every approach. Here are some things to keep in mind to help organizations steer clear of typical salary survey missteps:

  • Limits When Working with Job Data – in our article, “Measuring Market Position”, we explained that too much emphasis has been placed on certain occupations just because they are considered ‘hot jobs.’ But occupational variance is not as significant as you think, especially when looking at salary surveys, because when you update your salary scale, you essentially update your grade levels – and grade levels are generic, not based on occupations. When looking at survey data, job data can be a useful additional reference if you want to look deeper into the market data. But it is important to note that job data is not what impacts your salary scale, but grade level data.
  • Limits When Working with Incumbent Data – we have mentioned in a few of our past articles how incredibly misleading incumbent data can be when used as a survey data reference. Many employers believe that if a salary survey reports actual incumbent salaries, the market data is somehow perceived as more ‘accurate’. In Birches Group, we believe that salary range data, not incumbent data, provides a more stable and realistic view of the labor market. Incumbent salaries are person-based, highly dependent on the qualities of the individual sitting in that position. When working with incumbent salaries, it is common to find outliers that significantly skew the overall market data because their individual salaries are influenced by other factors separate from the job. But when salary ranges become the reference, this provides a more accurate picture of market movement and serves as bookends that prevent outliers in the analysis.
  • Limitations When Working with Just Base Salary – some employers, when looking at survey data, tend to rest their analysis just on base salary information. The problem with this approach is that in majority of labor markets around the world, base salary is only one component of an employee’s actual compensation. To be considered as an employer of choice, you will need to look at the full package, and that includes benefits – cash and in-kind – as well as market practices on non-salary benefits such as pension, medical, etc. In some markets, benefits have a big impact when it comes to recruitment and retention. In other countries, some benefits are mandatory, some cultural, while others address local hardships.

Birches Group’s conducts compensation and benefits surveys in over 150 countries around the world. Our multi-sector approach is designed for high growth, developing markets where leading employers determine local market trends and practices. We capture data from a total compensation perspective because in many of these markets, base salary is only part of the picture. Additionally, because developing markets are volatile, our surveys make use of salary range data to provide our participants a more accurate movement of the market that is linked to the purpose of the job, not the incumbent. Lastly, our surveys are updated three times a year, every April, July, and October which guarantees our clients fresh data every time. Contact us to learn more about our Community™ Compensation and Benefits Survey in your country.

Want to know if your existing compensation practices have the elements of a good compensation program or if there are areas that could use some improvement? Take our quick Compensation Program Assessment Quiz

Bianca manages our Marketing Team in Manila. She crafts messaging around Community™ concepts and develops promotional campaigns answering why Community™ should be each organization’s preferred solution, focusing on its simplicity and integrated approach. She has held various roles within Birches Group since 2009, starting as a Compensation Analyst and worked her way to Compensation Team Lead, and Training Program Services Manager. In addition to her current role in marketing and communications, she represents Birches Group in international HR conferences with private sector audiences.

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