Last week I had the opportunity to present at the French network group Cercle Magellan’s 7th Africa Day on International Mobility and Compensation & Benefits.
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The COVID-19 pandemic continues to wreak havoc in global markets. In addition to the economic impacts of national lockdowns, travel restrictions, rampant unemployment, slack demand for consumer goods and sharply reduced business activity, the volatility of the oil market has reached crisis levels. While OPEC members agreed to cut production in May and June by 23% earlier this month, oil futures have continued to fall and darken outlooks for the global market this month. Crude oil prices went negative for the first time in history this month due to deficient demand for oil and looming lack of global storage capacity.
AIRINC has been providing weekly updates to spot rates of major currencies on our COVID-19 landing page. The global spread of the COVID-19 pandemic and its economic impacts landed a major blow to the global economy last month, made worse in light of volatility in oil markets sparked by controversy within OPEC+. The result has been historic depreciation in even traditionally stable currencies and unprecedented uncertainty. The last week of March saw unprecedented depreciation. While year-to-date depreciation of many currencies remains high, several major currencies saw an appreciation bump last week between April 6-13.
The Coronavirus crisis is spurring economic uncertainty around the globe. Exchange rate volatility is just one example. Access our 30-minute webinar to learn about how to address this volatility for your international assignees.
When an expatriate’s home country currency weakens, what do you do? In my recent post, I talked about the importance of initiating an increase in their goods and services allowance because the employee’s salary portion, meant to be spent on their market basket, will no longer go as far once converted into their host currency.
COLA is affected by complex economic factors like exchange rate fluctuation and economic volatility, which are highly unpredictable. For a COLA to be effective, the allowance must be reviewed and updated periodically to take these factors into account.
When there are significant exchange rate fluctuations, what does this mean for international assignees, and how should your mobility program address this volatility?
Brexit raises similar concerns for larger and smaller organisations alike. In fact, it affects tens of thousands of small businesses in the UK, who often lack the corporate infrastructure to support the costs and complexities that result from such an unprecedented constitutional change.
The unpredictability of fluctuating foreign exchange rates is a daily reality. For many companies, it can have a significant effect on employee compensation.