Think ouTside.
2009
Global
Market Brief
& Labor Risk Index
eporT only
ampler
hodo l ogy s
meT


Global
Market Brief
& Labor Risk Index
2009
This is meThodology sample reporT only.
To subscribe to the global market Brief & labor risk index, visit kellyocg.com/marketbrief

conTenTs
3 preface: rolf kleiner, senior Vice-president, kelly ocg & ian Bremmer, president, eurasia group
4 methodology
72 about sponsors
The Americas Asia Pacific Europe and Eurasia Middle East and Africa
6 overview 17 overview 34 overview 60 overview
7 risk index 18 risk index 35 risk index 61 risk index
8 argentina 19 australia 36 Baltics 62 algeria
9 Brazil 20 china 37 Belgium 63 egypt
10 canada 21 hong kong 38 Bulgaria 64 israel
11 chile 22 india 39 czech republic 65 kenya
12 colombia 23 indonesia 40 denmark 66 kuwait
13 mexico 24 Japan 41 France 67 morocco
14 panama 25 malaysia 42 germany 68 Qatar
15 united states 26 new Zealand 43 hungary 69 saudi arabia
27 pakistan 44 ireland 70 south africa
28 philippines 45 italy 71 united arab emirates
29 singapore 46 luxembourg
30 south korea 47 netherlands
31 Thailand 48 norway
32 Vietnam 49 poland
50 portugal
51 romania
52 russia
53 spain
54 sweden
55 switzerland
56 Turkey
57 ukraine
58 united kingdom
cover: awbari region, syria © 2007 Tobias Helbig
This material was produced by Eurasia Group in collaboration with KellyOCG. This is intended as general background research and is not intended to constitute advice on any particular commercial
investment, trade matter, or issue, and should not be relied upon for such purposes. Eurasia Group is a private research and consulting firm. © 2009 KellyOCG and Eurasia Group.

conTenTs
gloBal markeT BrieF & laBor risk index Q3 2009 preFace
meThodology
The americas
asia paciFic
Preface
europe
Services, first explored developing Published on a quarterly basis, and eurasia
middle easT
a future-oriented research tool the Market Insights and Labor
and aFrica
together, we were struck by our Risk Index report is segmented aBouT sponsors
ability to create something unique by four geographies: the Americas,
in the marketplace. Asia-Pacific, Europe and Eurasia,
and the Middle East and Africa, with
Leveraging Kelly’s global labor detailed insights for 55 of the world’s
market knowledge, Eurasia most important economies.
Group’s expertise in political and
socio-economic risk analysis has The result, we trust you will agree,
delivered a groundbreaking new is a comprehensive overview of key
➔ It is with pleasure that we global trends and developments,
resource for companies as they
bring you the first quarterly edition of and we look forward to sharing
assess investments and global labor
the Global Market Brief & Labor Risk future editions with you. This report
strategies. By applying Eurasia
Index. It has been the culmination represents just one aspect of the
Group’s renowned risk assessment
of hundreds of work hours, with the KellyOCG / Eurasia partnership – to
methodologies to workforces across
input of dozens of individuals from find out more about how we can add
the globe, we have endeavoured
across the globe. more insight to your global planning,
rolf kleiner, ian Bremmer, to both elevate Labor to its rightful
please contact your KellyOCG or
senior Vice-president, president, When Eurasia Group, the leading place in long-term risk assessment,
Eurasia representative.
kelly ocg eurasia group political risk research and consulting as well as provide organizations the
company, and KellyOCG, the ability to ‘peer around the corner’ ■ ■ ■
Outsourcing and Consulting Group and identify potential issues
of human resources provider Kelly and opportunities.


conTenTs
gloBal markeT BrieF & laBor risk index Q3 2009 preFace
meThodology
The americas
asia paciFic
Methodology
europe
For all variables, scores range 4 economic human resources, the ability of labor and eurasia
middle easT
from 1 to 10, where 1 is ‘high risk’ This variable captures the current to engage in collective action, and and aFrica
and 10 is ‘low risk’. health of the macroeconomic the potential for the labor regulatory aBouT sponsors
environment and the stability environment to change.
macro risks of future economic activity
by aggregating measures of 7 availability
1 political
government fiscal stability, the This variable incorporates migration,
This variable captures regime stability
monetary environment, national urban population, the size of the
by assessing popular legitimacy,
account balances, and economic labor force, and the extent to which
which is in part influenced by how
growth. women participate in the labor force
well the government functions, and
as a measure of the availability of
the regime’s ability to enforce policy
5 policy environment labor in the economy.
compliance.
➔ The Global Market Brief & for Foreign investment
This variable measures how 8 Quality
Labor Risk Index is based on detailed 2 social
hospitable the policy and regulatory This variable considers measures
analysis of hard metrics of 30 unique This variable captures the extent to
environment is for foreign investment of the education and skill level of a
labor market, socio-economic, and which ethnic and other minorities are
by assessing the extent to which labor force, a measure of the general
political factors, layered with localized engaged in social or political conflict,
there are barriers to economic health of the population, and labor
expertise of in-country consultants. controlling for the mitigating effects
activity, particularly cross-border productivity.
of the socioeconomic wellbeing of
The analysis aggregates the the population and the equality of activity, and the degree to which the
9 (dis)content
individual factors into 9 core risk wealth distribution. economy is a destination for foreign
This variable examines the
variables: 5 macro variables and 4 investment.
potential for near-term labor unrest
labor variables that are each assigned 3 security
by aggregating factors such as
a score on a 10-point scale projecting This variable is a function of the
laBor risks unemployment and assessments
the degree of risk over the next existence or risk of armed conflict
6 Flexibility of the likelihood of labor unrest by
90 days. Each risk variable is also (either domestic insurgencies or
This variable considers the flexibility subject matter experts.
assessed as to whether it is trending cross-border threats) and internal
negative or positive. personal security issues. that employers have in managing ■ ■ ■
In addition to assessing the current risk environment, this report also takes into consideration the trajectory of risk trends.
Arrows alongside risk scores explain where risks are likely to show a very positive trend (X X), positive trend (X),
negative trend (Y), very negative trend (Y Y ), or remain unchanged (blank) over the 3-month period of the report.


conTenTs
gloBal markeT BrieF & laBor risk index Q3 2009 preFace
meThodology
The americas
overview
Overview:
risk index
mean that labor markets are likely boom years. As a result, they have argentina
to remain depressed for the rest of not been able to provide much- Brazil
The Americas the year. needed stimulus measures. canada
chile
colombia
A large number of governments—led Some countries will also face the
mexico
by the US, Canada, Brazil, and difficult task of preserving jobs panama
Chile—have embarked on aggressive while at the same time tempering united states
➔ Countries in the Americas countercyclical fiscal policies, labor unions’ demands for higher asia paciFic
are in the midst of a severe economic including infrastructure spending and wages. The Argentine and Chilean europe
and eurasia
contraction that is putting significant tax exemptions for labor-intensive governments, both of which are middle easT
pressure on labor markets across industries to weather the storm and facing elections this year, are in the and aFrica
aBouT sponsors
the region. While there have been buttress economic growth. However, middle of negotiations with union
hopeful signs of an incipient recovery other countries—such as Argentina, movements that carry a great deal of
during the second quarter of 2009, Colombia, and Mexico—have been political clout.
depressed consumer confidence and fiscally constrained by lower-than-
ongoing cost-cutting measures in the expected revenues and, in some ■ ■ ■
manufacturing and services sectors cases, their failure to save during the


conTenTs
gloBal markeT BrieF & laBor risk index Q3 2009 preFace
meThodology
The americas
overview
The americas – risk index summary TaBle – Q3 2009
risk index
argentina
macro risks laBor risks Brazil
Foreign canada
political social security economic Flexibility availability Quality (dis) content
investment chile
colombia
Argentina 6 Y 6 7 5 Y 5 5 6 7 5 Y Y mexico
panama
Brazil 8 7 6 6 X 6 4 7 5 6 Y united states
asia paciFic
Canada 9 7 9 7 Y 8 6 8 XX 8 6 Y Y europe
and eurasia
Chile 9 8 8 7 8 5 6 7 6 Y Y middle easT
and aFrica
aBouT sponsors
Colombia 7 7 4 X 6 7 5 6 6 6 Y
Mexico 7 7 5 Y 5 Y 7 3 5 6 7 Y
Panama 7 6 7 6 7 3 5 6 6 Y
United States 9 8 8 7 9 6 8 8 9 Y
For all variables, scores range from 1 to 10, where 1 is ‘high risk’ and 10 is ‘low risk’.
very positive trend
positive trend
negative trend
very negative trend


conTenTs
gloBal markeT BrieF & laBor risk index Q3 2009 preFace
meThodology
The americas
overview
Canada
risk index
Sharp falls in output and high that the pace of economic decline argentina
inventories are likely to spill into will slow in coming months, and Brazil
jobless numbers for months. that consumer confidence may start canada
chile
The manufacturing sector is bearing turning around as spending improves
colombia
➔ Canada’s economy grew for the brunt of unemployment, while and the housing market stabilizes.
mexico
the first time in 11 months in June, the services sector continues to One of the primary concerns now is panama
although not enough to reverse defy the downturn in terms of the strength of the Canadian dollar, united states
the quarter’s negative result and labor numbers. But concerns about which has appreciated strongly and is asia paciFic
curtailing export growth at precisely europe
the country’s worst economy for 20 impending job cuts in the services and eurasia
years. Fueled by a substantial drop sector persist because companies the time it is most needed. middle easT
and aFrica
in business investment and a steep could make a more concerted Lured by the prospect of
aBouT sponsors
decline in manufacturing, GDP is effort to boost margins by trimming
■ ■ ■
Europe’s growing economic
expected to contract further in 2009. employment costs. clout and nervous about “buy-
The job market has been depressed, American” sentiments in the
with unemployment rising to 8.7% in All things considered, Canada’s future US, Canada has embarked on
August, with total employment falling may not be quite as bleak as the bilateral trade talks with the
by 387,000 since October 2008. numbers suggest. There is optimism EU, which could open up big
opportunities for Canadian
exporters. The US currently
purchases about 75% of
Canadian exports, but rising
protectionist sentiments could
MACRO RISKS LABOR RISKS
low risk 10 cause this number to decline.
9
A Canada-EU free trade
8
7
agreement could increase trade
6 by 20%, but removing trade
5 barriers in the agricultural
4
sector will prove challenging.
3
2
1
high risk 0
Political Social Security Economic Foreign Flexibility Availability Quality (Dis)content
Investment
very positive trend
positive trend
negative trend
very negative trend


conTenTs
gloBal markeT BrieF & laBor risk index Q3 2009 preFace
meThodology
The americas
overview
Mexico
risk index
The government estimates that to see any signs of a bottom. The argentina
the swine flu outbreak deepened lagged effects of the sharp decline in Brazil
Mexico’s economic recession. The the early part of 2009 and swine flu canada
chile
biggest hit occurred in the services are exacerbating Mexico’s economic
colombia
➔ The Mexican economy is sector, which account for about two- deterioration.
mexico
facing a prolonged slowdown that thirds of GDP. Tourism (at a much panama
smaller 8% of GDP) was also affected. A recovery is most likely to begin in
was aggravated by the recent H1N1 united states
Secretary of Finance Agustin the second quarter of 2010, as US asia paciFic
virus outbreak. The government
Carstens said the overall impact stimulus measures take hold and flow europe
projects that the economy will and eurasia
of the outbreak could have been through to the broader economy. But
shrink by 5.5% in 2009, a sharper middle easT
the Mexican labor market is expected and aFrica
fall than was expected in the early 0.3% GDP, or $2.3 billion, but other Standard & Poor’s downgraded
to remain weak for the foreseeable aBouT sponsors
part of the year. Steep declines in economic analysts put the number Mexico’s credit rating from
future, and job losses will continue
the manufacturing and construction higher at 0.5%. Unemployment is stable to negative in May, based
through 2009.
sectors, combined with a weak expected to remain at 5% or slightly on concerns about the country’s
services sector, are driving the current higher in 2009, likely fueled by further long-term debt. Government
■ ■ ■
outlook as the recession in the US, job losses in the services, agriculture, revenues are falling because
Mexico’s largest export market, manufacturing, and construction of the economic downturn
continues to take a significant toll. sectors. Looking ahead, it is hard and declining oil receipts.
While major fiscal reforms
still face stiff opposition in
congress, the government
will cut spending and is likely
MACRO RISKS LABOR RISKS
low risk 10 to ramp up tax collections
9
from existing contributors by
8
7
closing loopholes and denying
6 deductions to make up for
5 losses. This could increase the
4
tax bills of some corporations.
3
2
1
high risk 0
Political Social Security Economic Foreign Flexibility Availability Quality (Dis)content
Investment
very positive trend
positive trend
negative trend
very negative trend


conTenTs
gloBal markeT BrieF & laBor risk index Q3 2009 preFace
meThodology
The americas
asia paciFic
Overview:
overview
In response, China, Japan, Malaysia, reliance on trade. In Japan, the risk index
South Korea, and other regional upcoming election could move Tokyo australia
Asia Pacific governments have drawn on
resources accumulated in recent
to increase its focus on consumer
interests relative to business interests.
china
hong kong
india
years and embarked on large-scale
indonesia
stimulus efforts, which appear to Asia’s long-term prospects remain
Japan
have mitigated some of the pain bright, but still-rising unemployment
malaysia
these economies would otherwise may present political challenges in new Zealand
have experienced. In addition to the short term. Countries like China pakistan
➔ As a whole, Asia-Pacific and Indonesia need to maintain high philippines
planned stimulus programs,
economies remain competitive levels of growth to produce jobs for singapore
elections in India and Indonesia
south korea
and dynamic, and the region is not the large numbers of young workers
have injected substantial money Thailand
experiencing the worst effects of the entering their workforces each year.
into those economies, with positive Vietnam
global economic slowdown. But the The developed countries in the europe
short-term results.
and eurasia
region has not been entirely immune, Asia-Pacific region also face
middle easT
and labor markets in this part of the The economic downturn may also employment challenges that will and aFrica
world are undoubtedly suffering. be catalyzing longer-term structural create key political issues in Australia, aBouT sponsors
The economies that previously changes. In China, the sharp decline New Zealand, and Hong Kong
experienced the fastest export-led in exports has intensified the policy throughout 2009.
growth are now undergoing the most debate over rebalancing China’s
■ ■ ■
serious contractions. economy away from its heavy


conTenTs
gloBal markeT BrieF & laBor risk index Q3 2009 preFace
meThodology
The americas
asia paciFic
asia paciFic – risk index summary TaBle – Q3 2009
overview
risk index
macro risks laBor risks australia
Foreign china
political social security economic Flexibility availability Quality (dis) content
investment hong kong
india
Australia 9 8 Y 9 8 8 X 6 7 8 9 Y indonesia
China 5 6 8 6 X 5 Y 5 X 8 5 7 Y Japan
malaysia
Hong Kong 8 Y 7 9 6 X 10 7 8 8 6 Y Y new Zealand
pakistan
India 8 5 5 6 5 X 4 5 2 X 9 Y philippines
Indonesia 6 X 6 6 5 X 5 3 6 5 6 X Y singapore
south korea
Japan 8 8 10 7 8 7 6 9 9 Y Thailand
Vietnam
Malaysia 7 Y 6 Y 8 6 Y 7 7 5 6 8 Y europe
and eurasia
New Zealand 9 9 10 6 9 7 7 8 9 Y middle easT
and aFrica
Pakistan 3 Y 4 2 Y 3 5 2 4 2 4 Y Y aBouT sponsors
Philippines 5 XX 5 7 5 X 4 4 5 X 6 8 Y
Singapore 9 8 9 8 Y 9 10 7 8 9 Y Y
South Korea 7 7 6 Y 7 X 7 2 6 7 6 Y
Thailand 5 Y 5 7 5 6 Y 6 6 6 8 Y
Vietnam 8 7 8 5 X 5 X 6 7 5 8 Y
For all variables, scores range from 1 to 10, where 1 is ‘high risk’ and 10 is ‘low risk’.
very positive trend
positive trend
negative trend
very negative trend


conTenTs
gloBal markeT BrieF & laBor risk index Q3 2009 preFace
meThodology
The americas
asia paciFic
China
overview
on-year was 6.1%. The government credit is likely to avert any further risk index
has encouraged a surge in new bank downturn in the short term. But australia
lending and is spending money on without serious reform, China’s china
hong kong
infrastructure, education, and health reliance on large, developed
india
➔ As one of the largest and social services. This will likely countries for economic growth
indonesia
producers of manufactured goods, boost jobs in the immediate term, threatens to remain a long-term Japan
China’s export sector has suffered particularly in the infrastructure and hindrance. Beijing is clearly putting malaysia
greatly from the global economic construction sectors. But more than increased resources toward new Zealand
six million college graduates enter strengthening the domestic market pakistan
downturn. The ensuing domestic
philippines
slowdown has raised concerns about the job market every year in China. and encouraging the rural citizenry
singapore
the return of international demand This year, employment opportunities to spend, but the full extent of the The first meeting of a south korea
and the worrisome prospect of rising are decreasing and competition is leadership’s success in pursuing this modified US and China Thailand
unemployment. fierce. Many graduates are fleeing reform is uncertain. For now, China Strategic and Economic Vietnam
to the US to enter universities or are will continue to turn to its major Dialogue will be held in europe
and eurasia
Some early indicators, however, being pushed toward rural areas to trading partners for export demand. Washington in late July. The middle easT
suggest that the economy may be find work. Obama administration hopes and aFrica
improving. Beijing’s 4 trillion yuan aBouT sponsors
■ ■ ■
to discuss both geopolitical
stimulus package seems to be Policymakers expect that bolstering
and economic policies with
encouraging stabilization this year: the economy through direct fiscal
the Chinese, but economic
In the first quarter, GDP growth year- stimulus measures and expanding
issues will take center stage
during this round. The two
sides will likely consider
MACRO RISKS LABOR RISKS
low risk 10 new mutual trade and
9
investment opportunities, and
8
7
environmental and financial
6 regulations will also be
5 major topics for discussion.
4
3
2
1
high risk 0
Political Social Security Economic Foreign Flexibility Availability Quality (Dis)content
Investment
very positive trend
positive trend
negative trend
very negative trend


conTenTs
gloBal markeT BrieF & laBor risk index Q3 2009 preFace
meThodology
The americas
asia paciFic
New Zealand
overview
historically low, but more recent rates since last July are causing a risk index
countercyclical fiscal spending is gradual uptick in retail spending australia
expected to cause a ballooning of and property sales. Unemployment, china
hong kong
debt levels that could threaten the however, remains a top concern; the
india
➔ New Zealand was an early government’s credit rating. As a government expects it to reach 8% in
indonesia
casualty in the global downturn, result, the government submitted a 2010, up from 5% in April, with ethnic Japan
entering a recession in the first more modest 2009–2010 budget that minorities having a disproportionately malaysia
quarter of 2008. The IMF expects focused on curbing new spending higher rate of unemployment. new Zealand
Foreign workers, who were in high pakistan
real GDP to contract by 2% in and postponed planned tax cuts for
philippines
2009, although a gradual recovery 2010 and 2011. Nevertheless, deficit demand during boom times, are now
singapore
is expected to start in 2010. The spending is expected to persist for being replaced by local workers. The The government recently south korea
export sector, in particular, has been the next decade. strict conditions on work permits for announced it would suspend Thailand
in a five-year recession because of a foreigners, combined with difficulties payments into the New Zealand Vietnam
strong currency and high domestic While consumer and business renewing visas, mean that the Superannuation Fund, the europe
and eurasia
costs. With heavy reliance on short- confidence continues to be weak, hundreds of thousands of migrants country’s pension fund, for up middle easT
term external debt by private banks, deleveraging by heavily indebted living in New Zealand are likely to to a decade, spurring a heated and aFrica
aBouT sponsors
the country’s sizable current account households would be a positive face employment challenges. debate. Experts were predicting
deficit is considered problematic, macroeconomic trend. There are also that the goods and services tax
especially in a weak global credit recent indications that income tax
■ ■ ■
(GST) would have to be raised
environment. Public debt has been cuts from April and lowered interest from 12.5% to 15% unless the
pension entitlement age was
increased, but Prime Minister
MACRO RISKS LABOR RISKS
low risk 10 John Key remains adamantly
9
opposed to raising the age
8
7
requirement. On a positive
6 note, the fund earned a profit
5 in May because of the recent
4
rebound in equities markets,
3
2
which provides temporary relief.
1
high risk 0
Political Social Security Economic Foreign Flexibility Availability Quality (Dis)content
Investment
very positive trend
positive trend
negative trend
very negative trend


conTenTs
gloBal markeT BrieF & laBor risk index Q3 2009 preFace
meThodology
The americas
asia paciFic
Overview:
europe
countries with more sustainable Economic slowdown and rising and eurasia
overview
fiscal outlooks, such as Germany, unemployment will likely lead to
Europe and Eurasia Norway, the Netherlands, and even
Russia, which is capable of covering
tension with migrant communities,
with some instances (in Italy,
risk index
Baltics
Belgium
its budget deficit with rainy-day Spain, and potentially Russia, Bulgaria
reserve funds. for example) already in evidence. czech republic
While immigration policy may be denmark
➔ With varying fiscal outlooks The labor implications of this situation France
slow to shift, migrants, particularly
and demand pictures across could be important. In countries like germany
those from eastern Europe, may
hungary
countries, Europe is likely to Italy, Spain, Portugal, and Ireland— opt to abandon increasingly hostile ireland
see an uneven recovery. Several which at some point will be forced environments. This could hinder italy
European countries have seen to undertake austerity measures— labor competitiveness in certain luxembourg
their sovereign debt downgraded, policy tools may be insufficient to netherlands
western European countries.
resulting in increasing fears of bond mitigate unemployment. Over the norway
Migrants returning to eastern
poland
defaults and higher interest rates as longer term, though, successful Europe might alleviate labor portugal
investors demand compensation for restructuring efforts might actually shortages there, benefitting romania
heightened risk. As a result, many lead to gains in competitiveness. recovery in eastern Europe. russia
governments may need to undertake Political objection to belt-tightening spain
fiscal consolidation measures, limiting is likely to be an important feature ■ ■ ■ sweden
the extent of their policy actions to of the political landscape, and will switzerland
Turkey
support demand. This suggests an further contribute to what is likely to
ukraine
advantage in terms of recovery for be a very uneven process.
united kingdom
middle easT
and aFrica
aBouT sponsors


conTenTs
gloBal markeT BrieF & laBor risk index Q3 2009 preFace
meThodology
europe and eurasia – risk index summary TaBle – Q3 2009 The americas
asia paciFic
macro risks laBor risks
europe
Foreign and eurasia
political social security economic Flexibility availability Quality (dis) content
investment
overview
Baltics 8 6 7.5 4 8 4 5.5 X 6 4.5 risk index
Belgium 9 Y 7 8 6 9 5 6 X 8 6 Baltics
Bulgaria 8 7 6 4 Y 7 4 6 X 6 6 Y Belgium
Bulgaria
Croatia 8 7 8 5 7 4 6 X 6 6
czech republic
Czech Republic 8 X 8 8 6 6 4 6 X 7 7
denmark
Denmark 10 8 8 7 9 6 6 X 8 8 France
Estonia 9 X 7 8 5 8 4 6 X 6 6 germany
France 9 7 7 7 8 4 7 X 8 6 Y hungary
Germany 9 Y 8 8 7 8 4 7 X 9 6 Y ireland
Hungary 6 Y 8 9 6 Y 8 5 6 7 6 Y italy
luxembourg
Ireland 9 Y 8 9 6 9 6 7 X 8 7 Y netherlands
Italy 8 Y 7 Y 7 5 6 3 6 X 7 5 Y norway
Latvia 8 6 7 3 8 4 5 X 6 3 poland
Lithuania 8 6 8 5 8 4 6 X 6 6 portugal
Luxembourg 9 8 9 8 7 4 5 X 9 8 romania
Netherlands 9 7 7 7 8 5 6 X 8 8 russia
spain
Norway 9 9 8 8 9 5 6 X 9 8
sweden
Poland 8 X 8 9 6 Y 8 4 6 7 5 Y switzerland
Portugal 9 7 8 5 8 4 6 X 7 5 Y Turkey
Romania 8 Y 6 Y 8 4 Y 8 4 6 X 6 4 Y ukraine
Russia 4 Y 6 Y 7 5 5 5 8 5 7 Y united kingdom
Serbia 7 6 8 4 6 3 5 X 6 4 middle easT
and aFrica
Spain 9 Y 7 Y 7 6 7 4 X 7 X 7 5 YY aBouT sponsors
Sweden 9 9 8 7 8 5 6 X 9 8
Switzerland 10 7 8 7 8 6 6 X 9 10 Y
Turkey 6 6 Y 7 6 Y 7 5 6 5 6 Y
Ukraine 4 Y 6 8 3 6 5 7 5 6
United Kingdom 9 Y 8 8 6 9 7 7 X 8 8
For all variables, scores range from 1 to 10, where 1 is ‘high risk’ and 10 is ‘low risk’.
very positive trend
positive trend
negative trend
very negative trend


conTenTs
gloBal markeT BrieF & laBor risk index Q3 2009 preFace
meThodology
The americas
asia paciFic
Baltics
europe
Latvia, that the currency pegs might Central Bank, which are eager to and eurasia
overview
be abandoned. Such a move would avoid currency crises and keep the
risk index
initially make Latvian products process of expanding the eurozone
Baltics
and exports cheaper, but it would moving forward. Belgium
➔ All three Baltic countries precipitate a major credit and Bulgaria
liquidity crisis because almost all The EU has already provided financial
are expected to eventually adopt czech republic
private sector debt is denominated support to Latvia, and it may do denmark
the euro, but they must first meet
in euros. A devaluation would the same for Lithuania and Estonia. France
the Maastricht criteria, which set
This support included conditions germany
tests for a variety of macroeconomic dramatically increase the borrowing
hungary
costs for firms and households, as on fiscal consolidation, including
indicators. ireland
significant wage restraint. While this
well as increase the risk of inflation as Controlling inflation has italy
As one requirement, Estonia, Latvia, limitation is widely unpopular, it is
imports become more expensive. been the most difficult of the luxembourg
and Lithuania must participate in the viewed as a less-worse outcome netherlands
Maastricht criteria for the
exchange rate mechanism (ERM-2), Cognizant of these risks, particularly than a major devaluation. It increases norway
Baltic countries to meet. As
poland
a structure through which their the effect they could have on the likelihood of government
small, open economies, they portugal
domestic currency is pegged to the firms and households, the Baltic compliance, and suggests a
are highly sensitive to energy romania
euro at a fixed rate. Under significant governments are seeking to significant decline in wages in the
price pass-through, and high russia
pressure in terms of their foreign maintain their currency pegs. They Baltics in the near term.
oil prices have bolstered spain
reserves, however, speculation has are supported by the European sweden
inflationary pressures. Estonia,
Commission and the European ■ ■ ■ switzerland
arisen in each country, particularly however, has recently begun Turkey
to show significant progress. ukraine
There is a strong chance that united kingdom
MACRO RISKS LABOR RISKS
low risk 10 it will come into compliance middle easT
9 and aFrica
on inflation, and it could aBouT sponsors
8
7
adopt the euro in 2011.
6
5
4
3
2
1
high risk 0
Political Social Security Economic Foreign Flexibility Availability Quality (Dis)content
Investment
very positive trend
positive trend
negative trend
very negative trend


conTenTs
gloBal markeT BrieF & laBor risk index Q3 2009 preFace
meThodology
The americas
asia paciFic
Netherlands
europe
led to a drop in fixed business express confidence that the fall and eurasia
overview
investment. Household consumption in Dutch GDP will moderate
risk index
has fallen due to the deterioration and the government seems to
Baltics
of the Dutch labor market and tight be competently addressing the Belgium
➔ The contraction in the credit. Unemployment has been on financial crisis. Its stimulus package Bulgaria
Netherlands economy quickened in an upward trend since December provides for a spending boost czech republic
the first half of 2009, with GDP falling 2008, and is expected to continue in 2009–2010, assistance for the denmark
France
4.5% compared to 12 months prior. rising considerably. Given the export struggling construction industry, and
germany
Private consumption fell early in the sector and the integration of the fiscal austerity measures for when
hungary
year, while government consumption Dutch and German economies, the economy improves. The budget ireland
grew and imports dropped global demand is a critical factor that balance is expected to drop into a Dutch and Danish electricity italy
noticeably. will shape the timing and nature of deficit in 2009, as revenue is cut, and authorities have signed a luxembourg
netherlands
recovery. This forecasting uncertainty not to return to surplus until 2013. cooperation agreement for
The largest falls in the economy have norway
leaves the Dutch government likely But even with cautionary fiscal policy, a new direct connection
poland
been in exports, fixed investment, to favor fiscal consolidation over the Dutch government has relatively between the Netherlands portugal
and household consumption dramatic stimulatory spending. more room to maneuver than many and Denmark, marking a romania
spending. Slimming profit margins other EU countries. significant step in enhancing russia
and tight credit conditions have On the upside, business surveys
■ ■ ■ energy competition across spain
sweden
northwest European power
switzerland
markets. The Cobra cable Turkey
project is planned to be ukraine
commissioned by 2016–2017 united kingdom
MACRO RISKS LABOR RISKS
low risk 10 and is in line with the EU’s middle easT
9 and aFrica
ambition of creating more aBouT sponsors
8
7
interconnections between
6 European countries.
5
4
3
2
1
high risk 0
Political Social Security Economic Foreign Flexibility Availability Quality (Dis)content
Investment
very positive trend
positive trend
negative trend
very negative trend


conTenTs
gloBal markeT BrieF & laBor risk index Q3 2009 preFace
meThodology
The americas
asia paciFic
Overview:
europe
some anxiety, allowing countries Morocco and Egypt, where large and eurasia
middle easT
engaged in large-scale infrastructure segments of society depend on these
Middle East
and aFrica
development to continue work in the sources of income. Meanwhile, there overview
construction sector, major projects is the risk of social unrest stemming risk index
and Africa could still be cancelled or put on
hold. As a result, job security for both
from higher unemployment and
inflationary pressures, particularly in
algeria
egypt
israel
native and foreign workers will remain Egypt, Kenya, and South Africa, if the
kenya
➔ Countries in the Middle downturn persists.
extremely fragile in the medium term, kuwait
East and Africa are facing serious particularly in countries like Saudi morocco
The key political challenge for
challenges, including commodity Qatar
Arabia, Kuwait, and the UAE. many Middle Eastern and African
saudi arabia
price volatility, political instability,
countries with critical socioeconomic south africa
social discontent, labor risks, and Declining remittances, foreign
uncertainties in the short term will united arab
budgetary pressures. Natural investments, and export revenues emirates
center on budget pressures, and the
resources dependent countries such will hurt the entire region. Israel’s aBouT sponsors
need for painful cuts. But over time,
as Algeria, Qatar, Saudi Arabia, export-oriented sectors have already
the regional objective, especially in
and South Africa are reevaluating been hard hit by the downturn. A
Africa, will be to avoid falling into
their budgetary assumptions and sharp decline of migrant workers’
the debt trap.
spending patterns. While a recent remittances will have significant
rebound in oil prices has soothed consequences on countries such as ■ ■ ■


conTenTs
gloBal markeT BrieF & laBor risk index Q3 2009 preFace
meThodology
The americas
asia paciFic
middle easT and aFrica – risk index summary TaBle – Q3 2009 europe
and eurasia
middle easT
macro risks laBor risks
and aFrica
Foreign overview
political social security economic Flexibility availability Quality (dis) content
investment
risk index
algeria
Algeria 3 YY 5 Y 4 Y 5 3 3 5 4 4 Y egypt
israel
Egypt 7 Y 8 Y 8 Y 5 5 6 5 4 4 Y kenya
kuwait
Israel 7 Y 8 5 6 Y 7 X 4 6 8 8 Y morocco
Qatar
Kenya 4 2 5 3 5 6 5 2 7 Y saudi arabia
south africa
Kuwait 5 YY 5 6 7 5 YY 5 7 7 8 Y Y united arab
emirates
Morocco 4 Y 5 Y 8 5 Y 6 3 4 3 6 Y aBouT sponsors
Qatar 8 8 6 9 8 5 8 7 Y 8
Saudi Arabia 7 4 Y 4 7 5 5 7 7 8
South Africa 7 5 5 X 6 6 3 6 5 3 Y
UAE 7 7 7 7 Y 7 5 7 Y 7 9
For all variables, scores range from 1 to 10, where 1 is ‘high risk’ and 10 is ‘low risk’.
very positive trend
positive trend
negative trend
very negative trend


conTenTs
gloBal markeT BrieF & laBor risk index Q3 2009 preFace
meThodology
The americas
asia paciFic
Egypt
europe
for the average consumer and they seekers and improve unemployment and eurasia
middle easT
will only increase during Ramadan, numbers. If unemployed workers
and aFrica
which starts on 22 August. Sustained begin to organize or engage in overview
high prices will likely cause public protests, President Hosni Mubarak risk index
anger, including sporadic protests and the government will be algeria
➔ Egypt has navigated the
egypt
global economic crisis better against the government, though the concerned about social tension, but
israel
than most emerging markets. But authorities will quickly quell them. they will probably not change policy.
kenya
unemployment, officially reaching The government has the resources kuwait
Meanwhile, the government will try to muddle through 2009 without
9.4% in the first quarter of 2009 morocco
to play up the positive news that first facing destabilization. Net reserves Qatar
(though the actual number is
quarter 2009 GDP growth at 4.3% saudi arabia
probably much higher), coupled remain healthy, and another round of The government has denied
was slightly higher than anticipated. south africa
with an expected rise in food prices economic stimulus remains possible. rumors that it was planning
united arab
Over the past three fiscal years,
in August could present temporary If the global economy does not soon to raise high octane gasoline emirates
however, the economy has grown in
problems for political leaders in begin to show signs of a recovery, prices in order to relieve the aBouT sponsors
the 7% range. Without such growth,
the next quarter. While overall Egypt will face more serious trouble subsidies burden and boost
economists assert that the market
inflation—which was a serious in 2010. revenues. It could still happen
will be unable to accommodate
problem in 2008—is down, food during the summer months,
the nearly 700,000 annual new job
prices have remained stubbornly high
■ ■ ■
as authorities are weighing the
impact of increased oil prices
on the cost of subsidies versus
the inflationary pressure of
raising prices. Many officials
MACRO RISKS LABOR RISKS
low risk 10 do not think the impact
9
would be as burdensome as
8
7
last year’s gasoline price hike.
6
5
4
3
2
1
high risk 0
Political Social Security Economic Foreign Flexibility Availability Quality (Dis)content
Investment
very positive trend
positive trend
negative trend
very negative trend


conTenTs
gloBal markeT BrieF & laBor risk index Q3 2009 preFace
meThodology
The americas
asia paciFic
Kuwait
europe
about Emir Sabah’s intentions, will cause further delays in the and eurasia
middle easT
especially his decision to reappoint implementation of much-needed
and aFrica
the same unpopular and ineffective economic reforms and slow the overview
prime minister. The feeling in Kuwait country’s long-term infrastructure risk index
➔ Emir Sabah al Sabah’s City is that the emir’s decision development program. Despite algeria
egypt
decision to reappoint Sheikh Nasser stems from his desire to create stable oil prices, the newly elected
israel
al Sabah as prime minister following enough political instability to justify parliament will likely remain very strict
kenya
the 16 May parliamentary elections dissolution of parliament. He wants about the government’s spending kuwait
does not bode well for political to suspend it long enough to institute strategy and will oppose any moves morocco
stability and the local business needed economic reforms without to revive high-cost and controversial Qatar
saudi arabia
environment will remain unattractive parliamentary interference. However, projects. The same parliamentary Despite the government’s efforts
south africa
to international corporations. Despite the emir appears unable to garner forces that have opposed the prime to manage sectarian relations
united arab
additional pro-cabinet lawmakers enough support from Kuwait’s main minister so vehemently in the past and ensure proper representation emirates
being elected, the prime minister tribal and religious leaders for such a are still in place, and more political of the Shia community in aBouT sponsors
remains a controversial figure and drastic move. friction is likely to occur. A number of government institutions, Sunni-
his management style will continue controversial debates are expected Shia relations remain a source
The current financial turmoil and its
to be questioned. For the past few to resurface. of long-term risk. The Shia
impact on Kuwaiti banks, along with
months, there has been a great deal community represents close to
the prime minister’s appointment,
of incomprehension among Kuwaitis
■ ■ ■
25% of Kuwait’s population,
and it is increasingly sensitive to
events affecting its coreligionists
in Iraq. Many Shias have
MACRO RISKS LABOR RISKS
low risk 10 maintained strong family ties
9
in Iran as well, which has raised
8
7
suspicion among Sunni Kuwaitis
6 about their political loyalty.
5
4
3
2
1
high risk 0
Political Social Security Economic Foreign Flexibility Availability Quality (Dis)content
Investment
very positive trend
positive trend
negative trend
very negative trend


gloBal markeT BrieF & laBor risk index Q3 2009
About this Report
The Global Market Brief & Labor Risk Index is jointly developed by KellyOCG, the Outsourcing and Consulting Group of human resources provider,
Kelly Services and Eurasia Group, the global political risk consultancy. The report, a proprietary blend leveraging Kelly’s labor market knowledge with
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gloBal markeT BrieF & laBor risk index Q3 2009
kellyocg.com/marketbrief
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