Think ouTside.
Global
Market Brief
& Labor Risk Index
2009
eporT
4
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 croatia 64 israel
11 chile 22 india 39 czech republic 65 kuwait
12 el salvador 23 indonesia 40 denmark 66 morocco
13 mexico 24 Japan 41 France 67 nigeria
14 united states 25 malaysia 42 germany 68 Qatar
15 Venezuela 26 new Zealand 43 hungary 69 saudi arabia
27 philippines 44 ireland 70 south africa
28 singapore 45 italy 71 united arab emirates
29 south korea 46 luxembourg
30 sri lanka 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: pudong district, shanghai, china © 2009 Alex Nikada
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 Q4 2009 preFace
meThodology
The americas
asia paciFic
Preface
europe
management of labor pools and Argentina and Venezuela risk labor and eurasia
middle easT
expectations of future labor markets. tension in the face of inflation and
and aFrica
real wage destruction. Russia’s aBouT sponsors
On the upside, Japan, Australia, economic turnaround is dependent
China, and India all sidestepped the on oil prices instead of real reforms,
worst of the downturn. Germany with unemployment potentially
and France beat the US to show rising again. The same trend is at
economic improvement, but the US work in Africa where resource-rich
and Canada now appear on track for countries used the downturn as an
a protracted recovery. Aggressive excuse to avoid making difficult
fiscal spending backed by strong decisions to improve labor markets.
domestic demand and lowered Asian economies by and large have
➔ While the global macroeconomic vulnerabilities has spent their way out of the crisis and
macroeconomic picture may look perhaps put Brazil in the best position chose to put off structural reforms for
for recovery, while African and Middle sunnier days, which means that the
more stable, labor markets are still
Eastern countries are also responding coming year will be characterized by
on shaky ground. Many of the world’s
positively to the turnaround in continued labor market inflexibility.
economies are navigating out of
commodity demand from the world’s Lastly, the US’s labor markets will
the economic downturn, with some
leading economies. remain fragile for the foreseeable
tentatively swinging upward and
rolf kleiner, ian Bremmer, future, while Europe is still very
senior Vice-president, president, others just now bottoming out. But However, arriving at this point has
vulnerable to credit and liquidity
kellyocg eurasia group many of the strategies deployed to revealed structural shortcomings
risks, with subsequent risks to
weather the recession have strained and exposed the reluctance of
labor markets.
underlying structural fundamentals governments to undertake reforms,
particularly in labor markets.
and squeezed countries’ ■ ■ ■


conTenTs
gloBal markeT BrieF & laBor risk index Q4 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 economy 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 Market Brief & Labor for Foreign investment
This variable measures how 8 Quality
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 Q4 2009 preFace
meThodology
The americas
overview
Overview:
risk index
government’s stimulus efforts and double-digit inflation. The recovery argentina
a pickup in commodity prices. The of the labor market will go hand-in- Brazil
The Americas US and Canada are also showing
positive signs of a turnaround, but
hand with the scope and size of the
economic recovery throughout the
canada
chile
el salvador
a fragile labor market in the US region. While unemployment levels
mexico
and subdued manufacturing and are already beginning to decline united states
exports in Canada will likely translate in Brazil and Canada, they remain Venezuala
➔ Most countries in the into a more modest, protracted stubbornly high elsewhere in the asia paciFic
Americas appear to have reached economic recovery. At the other Americas. Labor tension is also on the europe
and eurasia
or are approaching bottom after end of the spectrum, Argentina rise in some of the region’s economic middle easT
several quarters of economic decline, and Venezuela, while also showing laggards, particularly Argentina and and aFrica
aBouT sponsors
and are beginning to show tentative signs of bottoming out, are likely to Venezuela, where both the Cristina
signs of economic recovery. Brazil struggle to restart economic growth de Kirchner and Hugo Chavez
appears to be the best positioned because of their negative policy administrations are struggling to
of all, with GDP growth projected mixes, which continue to discourage increase wages alongside inflation.
to be flat this year and as much investment and have produced
as 4.5% in 2010, thanks to the heavy economic distortions such as ■ ■ ■


conTenTs
gloBal markeT BrieF & laBor risk index Q4 2009 preFace
meThodology
The americas
overview
The americas – risk index summary TaBle – Q4 2009
risk index
argentina
macro risks laBor risks Brazil
Foreign canada
political social security economic Flexibility availability Quality (dis) content
investment chile
el salvador
Argentina 5 Y 6 8 4 5 Y 4 6 7 4 Y mexico
united states
Brazil 7 6 7 5 X 5 Y 3 6 5 6 Y Y Venezuala
asia paciFic
Canada 6 Y 8 10 7 X 8 7 8 9 6 Y europe
and eurasia
Chile 7 6 9 6 X 7 5 5 8 6 Y middle easT
and aFrica
aBouT sponsors
El Salvador 6 6 5 5 X 7 4 4 5 6 Y
Mexico 6 6 5 X 5 X 7 3 X 4 6 6 Y Y
United States 8 8 Y 7 6 Y 9 7 7 8 7 Y Y
Venezuela 7 5 6 3 2 2 5 5 1 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 Q4 2009 preFace
meThodology
The americas
overview
Argentina
risk index
elections, had pushed to delay provinces are among the most active argentina
annual wage negotiations between in Argentina, but conflict intensified Brazil
companies and unions. Following the this year as oil production dropped canada
chile
vote, the government announced a along with the decline in oil prices
el salvador
➔ According to recent 21% increase in the minimum wage. and the deteriorating regulatory
mexico
indicators, Argentina’s economy has Earlier in June, the local teamsters environment. In another sector, a united states
hit bottom and may soon experience and metal workers—considered conflict involving Kraft Foods turned Venezuala
a mild recovery, helped by improving the labor movement’s benchmark violent in late September, after the asia paciFic
company refused to reinstate 157 europe
global economic conditions. But negotiators—had obtained 17% and and eurasia
political uncertainty and pressures on 16.5% wage increases, respectively. workers fired in July. These types middle easT
and aFrica
the private sector will put a limit on of protests will likely continue as The Cristina Fernandez de
aBouT sponsors
its recovery. For example, a recent Elsewhere, labor tension continues unemployment and inflation remain Kirchner administration
round of wage increases confirms to rise. Massive violent protests high in spite of the country’s mild emerged weakened from its
that labor activism remains high. The erupted in the oil and gas producing economic recovery. defeat in the June elections.
government, which was keen to keep provinces of Santa Cruz and Chubut The government, however,
labor tension at a minimum before in August and September. The ■ ■ ■ has resisted pressures to
the 28 June midterm legislative oil workers’ unions in these two adjust to economic policy.
In fact, it has intensified its
battles with the media and
the farming sector. Political
tension will increase further in
March 2010 when the newly
low risk 10
MACRO RISKS LABOR RISKS elected congress is installed.
9
8
7
6
5
4
3
2
1
high risk 0
Political Social Security Economic Foreign Flexibility Availability Quality (Dis)content
Investment
very positive trend current quarter
positive trend prior quarter
negative trend current quarter
very negative trend prior quarter


conTenTs
gloBal markeT BrieF & laBor risk index Q4 2009 preFace
meThodology
The americas
overview
United States
risk index
are improving, financial markets reflected by an unanticipated argentina
are rebounding, and residential jump in layoffs in September and a Brazil
construction and home sales are contraction in the labor participation canada
chile
recovering—though this is partially rate, as discouraged workers
el salvador
➔ A gradual and tentative due to government support drop out of the labor market. This
mexico
recovery is gathering pace in the programs like Cash for Clunkers and could put pressure on the Obama united states
US, but there is some doubt about a generous homebuyer tax credit. administration and Congress to show Venezuala
the economy’s underlying strength The recent bounce in the equities that the costly stimulus package asia paciFic
is working or to pursue additional europe
and durability. Nevertheless, the markets might portend a wider and eurasia
steep decline in GDP halted mid- recovery. stimulus measures. On current trends, middle easT
and aFrica
year, bringing an end to the worst an economic recovery will be modest A bumpy and uneven
aBouT sponsors
single-year performance in the However, the unemployment rate in the latter half of 2009 before economic recovery seems to
postwar era. The improved result is approaching 10% and there is increasing to a 2%–3% GDP growth be emerging in the US as
was propelled by modest business concern that the pace of recovery will range in 2010. businesses resume production
and consumer spending, and an not be enough to reduce the large and consumers open their
end to the rundown in inventories. number of job seekers. The labor ■ ■ ■ wallets. Financial markets
Corporate and consumer confidence market remains extremely fragile— are stabilizing and credit
risk normalized, but a glut
of unemployed and under-
employed mean the broader
recovery will be painstaking.
MACRO RISKS LABOR RISKS
low risk 10
9
8
7
6
5
4
3
2
1
high risk 0
Political Social Security Economic Foreign Flexibility Availability Quality (Dis)content
Investment
very positive trend current quarter
positive trend prior quarter
negative trend current quarter
very negative trend prior quarter


conTenTs
gloBal markeT BrieF & laBor risk index Q4 2009 preFace
meThodology
The americas
asia paciFic
Overview:
overview
the global economic downturn, and National politics are also affecting risk index
growth projections across Asia have economic prospects in Asia. On the australia
Asia Pacific been bumped upwards. upside, political stability in Malaysia
and a strong mandate for the
china
hong kong
Going forward, however, some india
incumbent president in Indonesia will
indonesia
Asian governments may be hard- allow these governments to focus on Japan
pressed to maintain their current fostering economic growth. On the malaysia
spending levels—particularly if the downside, continuing political chaos new Zealand
US and other foreign markets do not in Thailand is hampering effective philippines
➔ The Asia-Pacific region pick up significantly in 2010. Much singapore
policymaking. Perhaps the biggest
showed concrete signs of recovery of Asia’s recent growth has been south korea
political story in recent months is
sri lanka
in the second quarter. Among the supported by government stimulus the victory of the Democratic Party Thailand
region’s largest economies, Japan spending, rather than a recovery of Japan (DPJ) in recent elections, Vietnam
returned to positive growth and in the region’s export markets. The europe
ending decades of rule by the Liberal
and eurasia
China accelerated by almost two global downturn has also highlighted Democratic Party (LDP). The new DPJ middle easT
percentage points. Australia avoided a range of structural problems in the and aFrica
government is likely to move ahead
a technical recession with just one Asian economies, including inflexible aBouT sponsors
with stimulus plans to boost social
quarter of negative growth, and labor markets. As a rule, Asian spending in a long-term effort to
its central bank has been the first governments prefer to spend money increase private consumption. Many
to raise interest rates among the at home and hope for a recovery countries in Asia could benefit from
industrialized countries. Meanwhile, abroad rather than tackle politically similar goals.
India remained very little affected by difficult reforms.
■ ■ ■


conTenTs
gloBal markeT BrieF & laBor risk index Q4 2009 preFace
meThodology
The americas
asia paciFic
asia paciFic – risk index summary TaBle – Q4 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 8 9 9 7 8 7 7 Y 8 7 Y indonesia
China 7 6 8 6 X 6 5 7 6 7 Y Japan
malaysia
Hong Kong 7 Y 8 10 6 X 10 7 6 8 7 Y new Zealand
philippines
India 7 5 5 5 X 5 5 5 3 5 Y singapore
Indonesia 7 X 6 8 XX 5 4 X 3 6 4 5 Y south korea
sri lanka
Japan 8 X 9 10 6 8 X 5 Y 5 9 9 Y Thailand
Vietnam
Malaysia 7 4 Y 7 4 Y 7 X 5 4 7 7 Y europe
and eurasia
New Zealand 8 9 10 6 8 Y 7 7 8 7 Y middle easT
and aFrica
Philippines 4 XX 4 X 8 5 X 3 X 4 X 6 5 7 Y aBouT sponsors
Singapore 9 Y 8 Y 8 6 Y 9 7 6 8 8 Y
South Korea 7 X 9 7 X 7 X 8 4 X 6 7 6 Y Y
Sri Lanka 6 4 Y 8 4 Y 5 Y 5 4 4 6 Y Y
Thailand 4 X 5 8 4 X 7 5 5 6 7 Y
Vietnam 8 6 8 4 X 6 X 5 6 X 5 7 Y 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 Q4 2009 preFace
meThodology
The americas
asia paciFic
Australia
overview
was shorter and shallower than consumer spending. The government risk index
forecasted, with just one quarter is so far resisting political pressure to australia
of negative economic growth. The china
withdraw spending from its February
hong kong
Reserve Bank predicts a return to 3% stimulus package, worth some 42 india
➔ Australia’s central bank GDP growth in 2010 and has also
billion Australian dollars ($27 billion). indonesia
became the first in the industrialized cut the forecast for unemployment, Japan
It is under no fiscal pressure to reduce
world to raise official interest rates in originally expected to reach 8.5%. malaysia
spending given that the country’s
what is seen as a harbinger of a fuller new Zealand
and more widespread economic The better than expected outlook debt-to-GDP ratio is roughly 14%, a philippines
has been helped by continuing singapore
recovery. The Reserve Bank was level that is modest by in comparison
south korea
one of the swiftest in cutting rates strong export demand from China, to other developed economies. Now The latest investment sri lanka
in the immediate aftermath of especially for major resources such as the task at hand is to manage the announcements by developers Thailand
the global financial crisis. And in iron ore and coal. The government’s
economic recovery, which will likely
of the massive Gorgon LNG Vietnam
October it raised the cash rate from spending initiatives—targeted at low- field in Western Australia europe
include further interest rate hikes. and eurasia
3.00% to 3.25%. Australia is one of to middle-income households, the highlight the bullish sentiment
middle easT
the few nations to narrowly avoid building and construction sector, and ■ ■ ■
surrounding Australia’s LNG and aFrica
an economic recession, at least major infrastructure projects—have sector, which is expected aBouT sponsors
in a technical sense. Its downturn also helped sustain business and to be a massive job creator
in Western Australia and
Queensland. The greatest
risks to developers are
environmental activism and
low risk 10
MACRO RISKS LABOR RISKS Australia’s emissions trading
9 program that covers the LNG
8 sector. Nevertheless, state
7
governments are actively
6
promoting development of
5
4
gas fields, thereby moderating
3 regulatory threats.
2
1
high risk 0
Political Social Security Economic Foreign Flexibility Availability Quality (Dis)content
Investment
very positive trend current quarter
positive trend prior quarter
negative trend current quarter
very negative trend prior quarter


conTenTs
gloBal markeT BrieF & laBor risk index Q4 2009 preFace
meThodology
The americas
asia paciFic
Singapore
overview
is in place. The property market of December 2009, although at risk index
improved in July, and there has been stepped-down rates of 6% and australia
an increase in the number of new 3% respectively for the next two china
hong kong
business startups. quarters. Despite the wage credits,
india
➔ Singapore is showing the manufacturing industry continues
indonesia
Singapore has seen fewer layoffs to see job losses, although the rate
promising signs of a return to strong Japan
growth. The country’s economic and more job openings over the has slowed. Employment in the malaysia
rebound, which began in the second past quarter. Unemployment has construction and services industries new Zealand
quarter of 2009, is expected to remained lower than expected, at has slowly begun to improve. philippines
singapore
continue for the remainder of the about 3%, due in part to the 4.5 Nevertheless, any sustainable
south korea
year, although overall growth for billion Singapore dollars put into the recovery in Singapore’s economy will One growing concern is sri lanka
2009 is expected to remain negative. government’s Jobs Credit Scheme. rely on the return of global demand. the rapid population increase Thailand
There has been some improvement Under the scheme, the government Singapore remains one of the most over the last two years, to Vietnam
in the manufacturing sector, has paid employers 12% of each trade-dependent economies in the 5 million. Foreigners make up europe
and eurasia
which accounts for a quarter of employee’s monthly wages, up to world, with a trade-to-GDP ratio of 1.25 million of that number—
middle easT
Singapore’s economy. Electronics and 2,500 Singapore dollars per month. more than 300%. an increase of 500,000 from and aFrica
pharmaceuticals in particular have The government has extended the 2008—and the number of aBouT sponsors
■ ■ ■
shown signs of improvement. Other scheme for an additional six months permanent residents has risen
indicators also suggest a recovery beyond the previous deadline
to a total of 533,000. Further
rapid increases in population
size in the near term would put
excessive strain on the country’s
low risk 10
MACRO RISKS LABOR RISKS current infrastructure. Existing
9 government projections only
8 plan for the population to
7
hit 6.5 million in the
6
next 20 years.
5
4
3
2
1
high risk 0
Political Social Security Economic Foreign Flexibility Availability Quality (Dis)content
Investment
very positive trend current quarter
positive trend prior quarter
negative trend current quarter
very negative trend prior quarter


conTenTs
gloBal markeT BrieF & laBor risk index Q4 2009 preFace
meThodology
The americas
asia paciFic
Overview:
europe
in the private sector, as banks use than an underlying improvement in and eurasia
overview
ECB funds to purchase government the economic environment, have
Europe and Eurasia debt. The future tax policy
consequences of these responses
supported employment levels and
that unemployment may begin to rise
risk index
Baltics
Belgium
are uneven, but increases are likely again toward the end of the year. croatia
almost everywhere. czech republic
In Turkey, growing debt and deficits denmark
➔ Strains in the financial and Similar risks are evident in Russia, are a major concern. However, a France
real economy are evident across though there have been some new stand-by agreement with the germany
hungary
Europe and Eurasia, despite data recent bright spots—notably a IMF would provide cheap financing
ireland
showing slight growth in some key decline in unemployment, which and leave more room for private
italy
countries. In eastern Europe, credit has been well received by Russian borrowing in domestic debt markets. luxembourg
and liquidity factors are worse than policymakers. However, the Russian Still, budget cuts are a major political netherlands
in western Europe, and the health economic recovery remains tentative challenge because the government norway
poland
of the banking sector is an ongoing and fragile. The economy is highly is wary to take such measures in
portugal
uncertainty. The European Central vulnerable to a correction in oil prices advance of the 2011 election.
romania
Bank’s liquidity-boosting operations and to any return of the global credit russia
■ ■ ■
seem to have helped minimize squeeze that plagued markets in spain
sovereign financing risks, but this may early 2009. Additionally, there are sweden
result in a crowding out of investment concerns that seasonal factors, rather switzerland
Turkey
ukraine
united kingdom
middle easT
and aFrica
aBouT sponsors


conTenTs
gloBal markeT BrieF & laBor risk index Q4 2009 preFace
meThodology
europe and eurasia – risk index summary TaBle – Q4 2009 The americas
asia paciFic
europe
political social security economic Foreign Flexibility availability Quality (dis) content and eurasia
overview
Baltics 7 7 8 4 7 3 5 7 3 risk index
Baltics
Belgium 6 7 8 6 8 5 6 8 6
Belgium
Croatia 6 X 8 8 5 7 5 6 7 4 croatia
Czech Republic 5 Y 9 8 6 6 Y 6 6 8 6 czech republic
denmark
Denmark 7 9 8 7 9 6 5 8 6
France
France 7 8 7 6 8 4 6 8 5 germany
Germany 7 X 9 8 6 8 X 5 6 9 3 hungary
ireland
Hungary 5 Y 7 9 4 X 8 6 6 7 4
italy
Ireland 6 9 8 6 9 6 6 8 5 luxembourg
netherlands
Italy 7 8 7 6 6 4 6 8 5
norway
Luxembourg 7 9 8 7 7 5 5 9 7
poland
Netherlands 6 8 8 6 8 5 5 8 8 portugal
romania
Norway 7 9 8 6 9 4 5 9 8
russia
Poland 6 X 7 9 5 X 7 X 5 6 7 5 spain
Portugal 7 8 7 6 7 Y 2 6 X 7 5 sweden
switzerland
Romania 6 Y 6 7 3 6 4 5 6 3
Turkey
Russia 7 Y 6 Y 6 6 X 6 6 7 6 5 Y ukraine
Spain 7 7 Y 7 6 7 2 8 8 3 united kingdom
middle easT
Sweden 8 9 8 7 8 4 6 X 9 6 and aFrica
Switzerland 7 9 8 7 8 6 5 9 8 aBouT sponsors
Turkey 6 6 5 4 X 7 4 X 5 5 4
Ukraine 4 Y 6 X 7 2 5 6 6 5 5
United Kingdom 7 8 6 6 9 6 6 8 5
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 Q4 2009 preFace
meThodology
The americas
asia paciFic
Belgium
europe
government spending has held up The policymaking efficacy of the and eurasia
overview
reasonably well and helped to boost Belgian political system is often
risk index
public investment. This is, however, compromised by the divide between
Baltics
a reflection of a political decision, the country’s ethno-linguistic groups. Belgium
➔ Unemployment is an rather than recovering fundamentals. While this is not a new phenomenon, croatia
increasingly pressing concern. The In addition, declining tax revenues economic pressures make it a larger czech republic
problem. In addition, because a denmark
jobless rate has topped 8% as the mean increasing governmental
France
country remains locked in a yearlong financing needs. This suggests future good deal of governing responsibility
germany
economic decline. GDP dropped by tax increases. is at the local level, the ability to
hungary
0.3% in the second quarter of 2009 implement public works programs ireland
and is down 3.7% over the course of Labor unions are strong politically, and other responses that might help Belgium’s economy italy
the year. However, the rate of decline and they are increasingly alter the demand outlook is more remains stuck in recession luxembourg
netherlands
is slowing, raising hopes that the assertive in terms of demands complicated than in many other and unemployment is
norway
economy will shortly see some uplift on the government to deal with countries. uncomfortably high. The
poland
in the wake of stronger performances employment declines. This political export-driven economy has portugal
from the major European economies action could limit wage declines
■ ■ ■
limited scope to dictate its romania
of France and Germany. And while associated with broader demand own fortune and will rely russia
household spending remains weak trends—a situation not uncommon in heavily on the economic spain
sweden
(it has not grown for five quarters), much of Europe. performance of France
switzerland
and Germany, which in Turkey
turn reflect broader global ukraine
MACRO RISKS LABOR RISKS
demand drivers. Accordingly, united kingdom
low risk 10 lawmakers and officials middle easT
9 and aFrica
may have relatively limited aBouT sponsors
8
7
scope for policy responses.
6
5
4
3
2
1
high risk 0
Political Social Security Economic Foreign Flexibility Availability Quality (Dis)content
Investment
very positive trend current quarter
positive trend prior quarter
negative trend current quarter
very negative trend prior quarter


conTenTs
gloBal markeT BrieF & laBor risk index Q4 2009 preFace
meThodology
The americas
asia paciFic
Germany
europe
September elections gave a very efforts to establish a minimum and eurasia
overview
narrow majority to a coalition of wage. This bodes well for labor cost
risk index
the Christian Democrats and the containment. However, while the
Baltics
Free Democrats, ending a four- Social Democrats performed very Belgium
➔ While Germany posted very year arrangement under which the poorly, it is that party’s centrist bloc croatia
narrowly positive GDP growth in Christian Democrats had to rely on that will suffer. As a result, the Social czech republic
mid-2009, significant risks remain. In their usual opponents, the Social Democrats could begin to push for denmark
France
addition, this data may simply reflect Democrats, as a coalition member. more aggressive wage increases
germany
one-off measures, such as a widely While this will bring about a more and other benefits that would raise
hungary
utilized car-scrapping program or ideologically consistent government, costs to employers. They may also ireland
monetary loosening carried out by serious strains are likely to emerge, be politically strengthened if new A significant political battle italy
the ECB. Serious risks to the banking particularly over tax and broader leadership is able to ally with the is brewing over tax cuts. luxembourg
netherlands
sector remain, and a number of firms fiscal policy. In addition, Chancellor Left party—something the outgoing Elements within the Christian
norway
are under heavy pressure. In addition, Angela Merkel could face leadership leadership refused to do. The current Democrats, backed by the
poland
the global demand outlook—vital contests as the new term progresses. strength of the center-right does Free Democrats, want to push portugal
given how important exports are to not mean these risks should be tax reductions. However, romania
The new government is likely to
the German economy—is still taken lightly. the chancellor maintains russia
push back against political pressures
very uncertain. support for a balanced spain
for wage hikes, and will oppose sweden
■ ■ ■
budget. The issue cannot
switzerland
be easily resolved, but the Turkey
breakdown of the prevailing ukraine
consensus on the budget united kingdom
MACRO RISKS LABOR RISKS
low risk 10 could have some spillover middle easT
9 and aFrica
effect, leading to more aBouT sponsors
8
7
divergent fiscal policy in the
6 eurozone as a whole—which
5 in turn could have important
4
implications for wages.
3
2
1
high risk 0
Political Social Security Economic Foreign Flexibility Availability Quality (Dis)content
Investment
very positive trend current quarter
positive trend prior quarter
negative trend current quarter
very negative trend prior quarter


conTenTs
gloBal markeT BrieF & laBor risk index Q4 2009 preFace
meThodology
The americas
asia paciFic
Overview:
europe
economy, they are also trying to With respect to Africa, commodity- and eurasia
middle easT
design new labor policies and dependent countries such as Algeria,
Middle East
and aFrica
develop reliable human capital, which Zambia, Angola, and Uganda overview
appeared to be lacking as they tried seem to have recovered from the risk index
and Africa to manage the global financial crisis initial shock and consequences of
the global economic crisis. Many
algeria
egypt
domestically. Some nations such
israel
as Saudi Arabia have revived major governments in the region view
kuwait
➔ As commodity prices rise, educational projects. Others—such 2010 as a year of relative economic morocco
many countries in the Middle East as Kuwait, Qatar, and Bahrain—are growth, but they also must deal nigeria
and Africa are starting to operate with structural challenges, which will Qatar
implementing new labor laws that
saudi arabia
under the assumption that the keep them exposed to potential
would raise the skill level of their south africa
recession is nearing an end. But volatility. Widespread concerns about
workforces. Many Gulf leaders united arab
the global financial crisis exposed economic instability across Africa has emirates
now admit that they need to make
significant shortcomings in a number fostered corruption at the highest aBouT sponsors
labor conditions more attractive by
of political and economic systems. levels and weakened the notion of
providing workers with the freedom
Many leaders are now considering good governance and transparency.
to choose their employer and
new economic and labor policies to This could gradually discourage
manage their employment contracts
avoid future financial shocks, but in foreign investors and keep these
as they wish. By creating better
almost all cases the state will remain a economies in a state of stagnation.
working conditions in their countries,
key actor in the local economy. Short of addressing these issues,
governments hope to attract high-
many African governments will not
While many Middle Eastern quality managers, who can train a
be able to withstand another shock.
governments are focused on native workforce and make it more
strengthening their role in the competitive. ■ ■ ■


conTenTs
gloBal markeT BrieF & laBor risk index Q4 2009 preFace
meThodology
The americas
asia paciFic
middle easT and aFrica – risk index summary TaBle – Q4 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 Y 6 4 X 4 Y 3 3 5 4 3 Y egypt
israel
Egypt 6 7 8 5 6 X 5 4 4 1 Y kuwait
morocco
Israel 5 7 5 Y 8 X 8 X 4 4 8 6 Y nigeria
Qatar
Kuwait 3 Y 7 7 5 4 7 X 4 X 8 7 X Y saudi arabia
south africa
Morocco 7 6 9 5 X 7 X 4 4 4 X 5 Y united arab
emirates
Nigeria 5 Y 2 3 3 Y 5 6 5 2 Y 2 Y aBouT sponsors
Qatar 8 X 8 7 6 X 6 6 4 6 Y 8
Saudi Arabia 8 X 7 5 Y 6 7 6 5 6 5
South Africa 7 5 5 Y 5 7 3 YY 7 5 3
UAE 7 8 8 4 Y 6 Y 7 5 8 7
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 Q4 2009 preFace
meThodology
The americas
asia paciFic
Israel
europe
economy, which in turn is pushing office is likely to be very mindful and eurasia
middle easT
up the unemployment rate. The of labor conditions and the
and aFrica
Bank of Israel opted to leave interest unemployment rate. In fact, it has overview
rates unchanged for October, in taken a very solicitous approach to risk index
Israel looks to be emerging firms that are considering layoffs algeria
➔ part due to conditions in the labor
egypt
ahead of most countries from the market and the stronger shekel, or shutting down, offering tax
israel
global slump, thanks to proactive which increased by 2.6% against the breaks and other incentives to keep
kuwait
measures by the Bank of Israel and dollar in September. Unemployment employees on the payrolls. Israel’s morocco
stimulus spending by the normally continues to rise, although at a slower unemployment rate is likely to nigeria
fiscally conservative Prime Minister pace than during previous recessions continue to rise slightly in the coming Qatar
saudi arabia
Benjamin Netanyahu. In September, (notably 2001–2003) and it appears months, but it will stabilize when the Although a confrontation
south africa
Bank of Israel Governor Stanley to be remaining at a lower rate than
dollar strengthens and Israel’s exports between Israel and Hizbullah
united arab
Fischer was the first central banker the central bank anticipated.
rebound. is relatively unlikely in the emirates
in OECD countries to raise interest near term, the Lebanese militia aBouT sponsors
rates. Nonetheless, the continuing Because of its strong alliance
■ ■ ■
has reportedly acquired new
weak US dollar is prolonging troubles with Histadrut, the Israeli labor missiles with ranges that can
for Israel’s export-dependent organization, the prime minister’s reliably target Haifa and Tel
Aviv. If Israel and Hizbullah
descend into conflict, there
would likely be an exodus of
workers from Haifa and Tel
Aviv, and economic activity
MACRO RISKS LABOR RISKS
low risk 10 would be severely constrained.
9
8
7
6
5
4
3
2
1
high risk 0
Political Social Security Economic Foreign Flexibility Availability Quality (Dis)content
Investment
very positive trend current quarter
positive trend prior quarter
negative trend current quarter
very negative trend prior quarter


conTenTs
gloBal markeT BrieF & laBor risk index Q4 2009 preFace
meThodology
The americas
asia paciFic
South Africa
europe
and unions, which form a key part of potable water, and better school and eurasia
middle easT
his support base. The Congress of attendance, levels of inequality are
and aFrica
South African Trade Unions (Cosatu) growing. But 13 million citizens overview
is becoming increasingly vocal in are now recipients of social grants. risk index
After a quiet first 100 days The real economy has come under algeria
➔ its calls for policy change, which
egypt
in office, President Jacob Zuma include banning temporary labor significant pressure from the global
israel
is starting to play a more active brokers and amending the monetary economic crisis. In response, the
kuwait
political role and his authority is policy regime. Zuma’s government is government has indicated that it will morocco
growing. He signaled his intention unlikely to yield to most of Cosatu’s maintain public spending, but with nigeria
to ensure better policy coordination demands, but the resulting tension revenue collection falling, the budget Qatar
saudi arabia
and implementation with solid initial could cause policy paralysis as they deficit will widen. Difficult decisions Annual crime statistics
south africa
appointments and the formation filter through to similar disputes will have to be made if fiscal show a 3.4% decrease in
united arab
of a national planning commission, within cabinet. discipline is to be maintained. the murder rate compared emirates
headed by former finance minister to the previous year. aBouT sponsors
Trevor Manuel. But Zuma’s leadership The policy challenges ahead are
■ ■ ■
However, the murder rate
will be tested as he tries to balance formidable. Despite a decline in remains one of the highest
the competing interests of business poverty levels, improved access to in the world, while the
number of rapes, robberies,
and hijackings increased
from recent years. The
government has committed
additional resources to
MACRO RISKS LABOR RISKS
low risk 10 fighting crime ahead of the
9
FIFA 2010 World Cup.
8
7
6
5
4
3
2
1
high risk 0
Political Social Security Economic Foreign Flexibility Availability Quality (Dis)content
Investment
very positive trend current quarter
positive trend prior quarter
negative trend current quarter
very negative trend prior quarter


gloBal markeT BrieF & laBor risk index Q4 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
Eurasia Group’s expertise in political and socio-economic risk analysis, delivers a groundbreaking resource for companies as they assess market
investments and global labor strategies.
Published on a quarterly basis, the Global Market Brief & Labor Risk Index is segmented by four geographies: the Americas, Asia-Pacific, Europe and Eurasia,
and the Middle East and Africa, with detailed insights for 55 of the world’s most important economies.
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Eurasia Group is the world’s leading global political risk research and consulting firm. Since 1998, it has helped clients make informed business decisions in
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network of experts around the world. For more information, please visit www.eurasiagroup.net.
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gloBal markeT BrieF & laBor risk index Q4 2009
kellyocg.com/marketbrief
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