PwC: Macroeconomic, labor force, and environmental challenges ahead

15 April 2019 Consulting.us

The world is facing risks from a host of factors: climate change is set to create long-term issues if not dealt with in a timely manner, while aging populations will impact 40 of the world’s larger economies going forward, resulting in economic and social strains. Trade disputes between the US and other economies continue, while the US also continues to borrow heavily.  

The mini-boom noted between 2016 and 2018 has ended, with 2019 set for slower global growth as the world’s second largest economy scales back expectations. US fiscal stimulus is set to fade, with a resultant decrease in growth rate, while higher interest rates – even with the Fed slowing increases – are likely to impact consumer spending.

Economic projections are routinely made by the big consulting firms, supplementing insights from government agencies and university researchers. The latest PwC "Global Economy Watch" report considers key possible changes to the global economy on the basis of projections for the year ahead.

While Trump has held off on new tariffs in the US's spat with China, he may still deploy them if nothing can be agreed upon between the world’s largest economies. PwC expects businesses to remain in a cloud of uncertainty for 2019 in regards to tariffs, with China only one battleground for future protectionism.Large global shifts as critical issues surfaceWhile the US is seeking to lower its global trade imbalance, the government continues to spend considerably more than it takes in through tax receipts. Analysis shows that the large tax cut is likely to see US government debt surpass $1 trillion annually this year, a figure last seen post-crisis in 2012. The figure will continue to grow as the deficit runs more than 5% of GDP over the coming three years. The figure is well above that of the EU28, whose deficit is around a fifth of that of the US. 

Global issues

The US is likely to face a variety of long-term threats to prosperity, according to the report. Climate change is a key area of concern, cited as one of the world’s biggest risks that could lead to profound social instability, according a recent World Economic Forum report. Devastating wildfires in California caused $400 billion in damages last year – a significant percentage of the state's GDP. 2018 was one of the world’s four hottest on record since records began in 1880, with temperatures close to 1C above long-term trends.

While a warming world is set to create considerable burdens for young people today, the older generation continues to age, with their dependence on the young set to rise significantly over the coming decade in terms of accelerated healthcare and social security spending. The firm’s analysis shows that 40 of the world’s economies will see their workforce shrink. Former Soviet bloc countries are set to have the most significant decreases in working age populations: Ukraine tops the list, followed by Bulgaria, Romania, and Lithuania. The Netherlands and Belgium however, could begin to see their workforces contract going into 2019. A declining workforce can be problematic, particularly if the workforce is also aging, as it requires that lower output is filled by higher productivity to keep economic parity.

The firm notes that the UK is set to lose it status as the fifth-largest global economy in 2019, as India – with the world’s highest population, one of the highest GDP growth figures, and one of the youngest working age populations – surpasses the UK economy. France, too, is likely to pass the UK this year, as Brexit uncertainties and a strong euro push the French economy slightly above that of Britain's.

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Korn Ferry rolls out SoFi financial wellness products to its US workers

16 April 2019 Consulting.us

Consulting firm Korn Ferry has partnered with personal finance firm SoFi to offer financial products and tools to its US workforce.

Financial stress is a heavy burden on US workers, with long-term stress often leading to mental and physical conditions. Stress reduces the ability of the immune system to fight off bacteria and viruses, while chronic stress can impair memory and increase aggression.

Financially stressed workers are also less productive, with an estimated $250 billion in US annual wage losses attributed to the effects of stress, according to a 2017 Mercer study. The average American employee spends 13 hours per month worrying about their financial security.

The central issue related to stress at work is low pay, according to surveyed employees, followed by inadequate staffing and company culture.Korn Ferry rolls out SoFi financial wellness products to its US workersFirms will sometimes implement financial wellness programs as a part of their overall benefits package, aiming to create happy and healthy workers with hopefully less outlay than massive salary increases. For firms that pay competitive wages – like most consultancies – financial tools such as investment advice and budgeting software are another feather in the cap of an impressive overall benefits package meant to attract and retain top-end talent in a shrinking market.

Likewise, human resources consultancies such as Korn Ferry have to set a good example with their own benefits and practices outside of the simple goal of effective talent management. After all, how can you expect companies to trust you as a benefits advisor if your own organization doesn’t have a first-class set-up?

To this end, Korn Ferry has further expanded its financial wellness offering for its US employees through a partnership with online personal finance company SoFi. Korn Ferry workers will now be able to access SoFi’s student loan refinancing, personal loan, home loan, and investing products, as well as financial guidance via SoFi financial advisors.

“We offer a complete package of wellbeing benefits that appeal to our colleagues’ physical, emotional, financial, and social wellbeing,” Brian Bloom, vice president of global benefits at Korn Ferry, said. “This new financial offering from SoFi is a natural addition to our Korn Ferry Cares package. We continue to look for new offerings and services to help our global Korn Ferry colleagues and their families.”

Korn Ferry’s global workforce is more than 50% millennials and Gen Z – groups that would be especially well served by SoFi’s refinancing, loan, and advisory offerings.

SoFi’s roots trace back to a loan pilot project devised by a group of Stanford business school graduates, wherein alumni would offer loans to low-risk students. Since 2011, the San Francisco-based firm has expanded to employ more than 1,000 people, and posted $547 million in revenue in 2017.

Korn Ferry and SoFi previously worked together on KF Advance, which expanded career development offerings to SoFi’s 600,000 members. The platform delivers online assessment, resume review, career coaching, and other services drawing on Korn Ferry’s extensive expertise in the area.