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Powerful franc prompts WHO to mull job cuts

The World Health Organisation may cut more jobs at its headquarters in Switzerland as the strong Swiss currency bites into the budget of the UN health agency.

Powerful franc prompts WHO to mull job cuts
Michael Faes

As part of a series of proposed reforms, to be examined during an executive board meeting on November 1st and 2nd, the WHO is considering reducing its costs “by reducing the size of the secretariat staff at headquarters.”

Between 75 and 80 percent of the agency’s income comes in dollars, although about the same proportion of expenditure is in Swiss francs or currencies that have also appreciated against the US currency.

With the franc strengthening dramatically against the dollar, the agency has had to reduce jobs in recent months in order to cope.

Underlining the seriousness of the problem, Andrew Cassels, who is WHO strategy director, noted that “staffing numbers in WHO in the last few years have gone up by about eight percent, but costs have gone up by 40 percent.”

“We are looking quite hard at the costs of different locations, one of the most expensive locations is Geneva,” he noted.

The WHO has previously said that it expects a $300-million deficit this year due to plunging voluntary contributions.

Most of the organisation’s financing needs depends on such contributions.

The WHO subsequently cut its bi-annual budget for 2012-2013 by about one billion dollars and announced that around 300 jobs would go by year-end.

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FRANC

Switzerland STILL has priciest Big Macs in the world

Switzerland has the most overvalued currency in the world according to The Economist’s Big Mac Index 2017, which the alpine country tops once again.

Switzerland STILL has priciest Big Macs in the world
Photo: McDonald's Switzerland
Invented in 1986 as a light-hearted guide to purchasing power parity, the Big Mac Index compares the cost of a McDonald’s Big Mac burger in countries across the world. 
 
Using the US dollar as the base rate, the 2017 Index showed a Big Mac in Switzerland to cost $6.35 compared with $5.06 in the US, meaning the Swiss franc is overvalued by 25.5 percent.
 
The exchange rate that would equalize the price of a burger in the two countries is 1.28 francs to the dollar, while the actual exchange rate is 1.02 francs.
 
The franc far surpassed the second highest country, Norway, where a Big Mac cost $5.67, overvalued by 12 percent.
 
Sweden, Venezuela and Brazil were the only other countries to have pricier burgers than the States. 
 
According to this ‘burgernomics’, the euro and the pound are undervalued by 19.7 percent and 26.3 percent respectively, said The Economist. 
 
However, the situation is different in an adjusted version of the index which takes into account labour costs and GDP. 
 
When adjusting for Switzerland’s average income, the franc is only overvalued by four percent, it found.
 
Brazil topped the adjusted index, which showed the Brazilian real to be 66 percent overvalued.
 
“This adjusted index addresses the criticism that you would expect average burger prices to be cheaper in poor countries than in rich ones because labour costs are lower,” said the Index authors. 
 
“The relationship between prices and GDP per person may be a better guide to the current fair value of a currency.”  
 
Switzerland has topped the raw index for several years. 
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