PDA

View Full Version : $s slide cutting pay by up to 25% in Middle East


mozzie
13th Jan 2004, 21:47
Working for an airline where the local currency is fixed to the US $ the pay has effectively reduced by nearly 25% in two years..and the slide is continuing.

So, for example, if you get payed 20,000 of the currency per month it will still buy you as many $s but convert it into Euros or GBs and then it has taken a massive 25% hit. Even if you take into account that some of these airlines include an 'exchange rate protection scheme' linked to your local currency, it calculated last month that 1200 of the local currency would cover the shortfall... but that only accounts for 6%.

It makes a big difference when you are trying to pay off your mortgage back home...

Airbubba
13th Jan 2004, 21:58
Added to that, salaries in the Middle East have been locked in a time warp.

Widebody captains might make as little as $120K, half what they make in the post 9-11 U.S., after concessions, with a major carrier.

When was the last time a Middle Eastern airline got a significant pay raise?

Earl
13th Jan 2004, 22:24
Have to agree with you their.
Even if your airline pays you in USD such as in my case, you lose alot when you convert it to the local currency.

BANANASBANANAS
13th Jan 2004, 22:46
Sympathy from the Far East guys where the Brunei/Singapore $ has dropped by 40% against UK Pound in last 7 years and we have also had a pay freeze and seen some allowances withdrawn in that time. No exchange rate protection either. Factor inflation into that and its about 50% in real terms.

I am now netting less in UK Pounds as a Captain than I did as a year 1 First Officer.

Sir Kitt Braker
14th Jan 2004, 00:53
Where were you when the $ was high? We never heard you saying how lucky you were! Never mind - it'll go back up again, sure as eggs is eggs...

mozzie
14th Jan 2004, 01:37
Can't pay the mortgage with eggs...

breguet
14th Jan 2004, 02:02
Watch closelythe eggs market...You might be able to sell those eggs at a profit.

But don't wait too long otherwise you will have to check the chicken market and get a profit.

But again don't wait too long, because we are back with eggs...:D

Sir Kitt Braker
14th Jan 2004, 02:35
Well, eggs will go up again as well - which will surprise a few chickens!

angels
14th Jan 2004, 17:30
Don't be so sure, SirKitt.

As well as foreign exchange being my line of my business I also worked in Singapore and Hong Kong for some eight years, so I know all about the effect of forex fluctuations on ex-pat salaries (I was in Singapore during the Asian currency crisis -- that hurt)!

3-1/2 or so years ago the dollar was overvalued. The euro was at a low of around $0.82 having floated at $1.16 odd. Now that the euro is trading at near record highs of $1.27 it is in fact only at it's interpolated long-term average!

While the U.S. continues to run a billion dollar a day trade deficit it needs to attract funds to plug the gap. It's doing that by letting the currency slide -- it's called benign neglect -- despite the fact the politicians keep saying they want a strong dollar.

The current thinking in the market is that the euro could top out at $1.40.

That said, euro zone exporters are starting to feel the pain of the strong euro, so some in the market reckon the ECB may take action. It's started already in that various ECB board members are jawboning, moaning about the rapidity of the euro's rise.

Some, but not many say there could be a euro zone rate cut (at two percent, the euro zone interest rate is double that of the U.S., increasing the euro's attraction to investors). Others say the ECB may directly intervene and sell euros for dollars.

I think either is unlikely just for now.

ferris
14th Jan 2004, 19:24
I think either is unlikely just for now What's your reasoning? How long/low can this 'benigness' continue (IYHO)?

An interested egg-owner.

Kaptin M
14th Jan 2004, 21:27
"Aussie Dollar the best performing currency over the past 12 months" :mad: :{
And boy oh boy aren't we Aussies feeling it, being paid in Bush Pesos.
We've seen a 33+% depreciation in OUR BP (USD) salaries.
And the medium term forecast that I received some 12 months ago is running true to forecast..."..expect the USD to decline in strength against most major currencies over the next 2 years"...that is still another 12 moths away :mad: .."before levelling off. and starting a slow rise."

Unfortunately, the :mad: forecast has proven to be quite accurate :{

OTOH, I am also able to offer EXTREMELY accurate financial advice to those who want it - Whatever I do, do the opposite for assured financial gain.

angels
14th Jan 2004, 21:40
Hi ferris. IMHO - The reason for no cut in interest rates is relatively straightforward.

Inflation -- the ECB's main remit -- even at a time of low growth in the main euro zone economies, is still up at just over two percent. The ECB target is 2.0 pct. Central banks usually don't lower interest rates when inflation is above target.

The U.S. will continue to have a benign neglect policy until their massive budget deficit begins to get smaller. IE The dollar must fall to a level where imports begin to contract and exports expand.

The trouble is, China is one of the biggest exporters to the U.S. and the yuan is pegged (loosely) to the dollar. It means the euro zone suffers. China's imports remain at a similar US dollar price, the euro zone's don't (unless the exporters trim their profit margins).

Intervention is lessl ikely because of the political ructions it would cause. The U.S. as I said is happy with an easing dollar. They wouldn't be too happy if the euro zone jumped in to buy dollars and sell euros. This will be discussed at the G7 meet next month in February, rest assured.

Cheers.

Sorry if this isn't too clear but I'm fairly busy at the moment. Can add deets later if you wish.

mozzie
17th Jan 2004, 23:42
What advice is there that would lessen the effects of the USD slide?

The main worry is that the provident fund, a poor excuse for a pension, is also linked to the USD. Whilst the main part cannot be moved, the personal contributions and AVCs can.