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Frost & Sullivan Case Challenge 2015 © 2015 Frost & Sullivan.
SECURING THE SOCIETY IN SALUSIA
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Frost & Sullivan Case Challenge 2015 © 2015 Frost & Sullivan.
PROBLEM STATEMENT
As the advisor to the Finance Minister of Salusia, you
have been tasked to recommend measures to address
the challenges related to social security and post-
retirement sustenance in the country.
Having served in various related ministries and
departments, you are aware of the social and financial
challenges faced by the country, particularly in post-
retirement related issues. You understand that to
ensure sustainable growth and ensure social harmony,
these issues need to be resolved (see Annex 1 for the
challenges).
You have been mandated to propose measures to
ensure the following:
Reduce financial dependence of retirees in
the economy
Smoothen personal income consumption
over a lifetime
Generate a positive impact on the welfare
of citizens and residents
What measures would you recommend to
the Salusian government in order to ensure
post-retirement sustenance?
The success of the proposed initiatives will be
measured based on the Key Performance
Indicators (KPIs) defined by the Minister (see
Annex 3).
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Frost & Sullivan Case Challenge 2015 © 2015 Frost & Sullivan.
WHAT STRATEGIES SHOULD BE
INCLUDED IN SECURING THE SOCIETY?
A. The vision can be achieved using one of many
possible approaches. You need to decide the best
strategy for the country
B. Create some quick-win strategies which can be
realized in the next 1-2 years
C. Develop critical recommendations that can drive
Salusia’s development over the next 10 years
D. Guiding questions which will help structure your
thinking are listed in Annex 2
E. The recommendations should also align with
your KPIs – both quantitative and qualitative
(see Annex 3)
Notes for Participants Guidance for developing case solution
A. Your case solution must be in Microsoft PowerPoint and should not be more than 10 slides
B. You can refer to and quote any additional information available in the public domain. You can also make assumptions where necessary
C. The solution should be practical and rooted in reality. Out of the box solutions will be given higher ratings during evaluation
Judging criteria
1. Quality of Analysis 2. Clarity of the presentation and solution flow 3. Creativity in developing out-of-the box solutions 4. Actionable recommendations 5. Language and completeness of solution
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Frost & Sullivan Case Challenge 2015 © 2015 Frost & Sullivan.
alusia, officially the Democratic
Republic of Salusia, is a country in Latin
America, situated west of Argentina. The
Salusian War of Independence was a series of
military conflicts beginning in 1982 that
culminated in the proclamation of the
independence of Salusia on July 24, 1997. The
wars of independence took place with the
background of the 1990-1991 uprising by
indigenous leader Franco Valentina II and the
earlier removal of Upper Salusia Regions.
Salusia is well known for its primary industry,
including agriculture, general manufacturing.
The economic roadmap of the current
government of Mr. Rodriguez Dominic focuses
on the development of the services sector.
Salusia recovered quickly since the Great
Depression, and has seen strong growth in its
economy, attracting investments in many of its
industries.
However, this quick economic recovery has
created new social challenges. During the global
financial crisis, the retirement age in Salusia was
lowered to 58 years (from earlier 60 years) to
create new jobs for younger generations. This
has led to a need for social welfare schemes for
the retirees. While the short-term issue can be
resolved by adding to the retirement fund
through added taxation, the government
believes that this is not a sustainable solution as
it hampers economic development and flow of
foreign capital.
Some key challenges that continue to affect the
society are highlighted below
S
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Frost & Sullivan Case Challenge 2015 © 2015 Frost & Sullivan.
Key Challenges Focus on Illiquid Assets
Traditionally, Salusian people have preferred assets that cannot be sold quickly because of a lack of
ready and willing investors or speculators to purchase the asset, such as real estate, cars and antiques.
With a global dip in foreign capital flows, the real estate prices also declined in Salusia. This makes it
hard for silver generation to liquidate their assets to finance their retirement. The typical savings rate is
20.2% of the GDP.
Shrinking Nest Eggs
Experts reveal that in order to overcome the increased cost of living and longer life expectancy, citizens
need a minimum sum of SL$ 250,000 for their post-retirement life span. Only 22.3% of the population
has this amount, while the average citizen currently has SL$ 88,000.
Lack of Medical Insurance
Recent polls have indicated that 82.3% of the population does not have any medical insurance coverage.
Of these, 77.5% do not intend to purchase, or upgrade their insurance due to lack of awareness and high
financial costs associated with the insurance. As such, only 32.4% of senior citizens mention that they
are able to afford the health care in the country.
Rising cost of Living
Salusian currency has depreciated 10.2% against the US$ in the last 3 years. This has resulted in an
average of 6.2% year-on-year inflation (real) since 2010.
High Budget Deficit
As per the latest available data, the budget deficit is 6.2% of GDP – limiting the government’s ability to
increase spending.
High tax rates
The tax rates in Salusia are one of the highest in the world – at 30.5% on average. This limits the
government’s capability to raise funds for any social security scheme. The government is looking at
innovative solutions to address these funding challenges.
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Frost & Sullivan Case Challenge 2015 © 2015 Frost & Sullivan.
Note: These questions are meant to guide your thinking as you work on your analysis. They are not intended to
serve as an exhaustive sweep of all underlying issues.
What should be the framework to ensure
post-retirement sustenance of the population?
Think of non-traditional solutions, as much as
possible.
What can we do in order to address the post-
retirement needs of the ‘silver tsunami*’ within
the next 5 years?
How can we balance economic development,
while meeting social needs?
How can we provide affordable health care
health care for the elderly, without
overspending government’s budget?
How should the policies be segmented to cater
to the different needs of Salusians?
What are some of the negative impact
resulting from the policies, and how
should the government balance this?
*Silver tsunami refers to the a large number of
persons turning 60 and above, as a result of the
post war baby boom
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Frost & Sullivan Case Challenge 2015 © 2015 Frost & Sullivan.
Note: These KPIs are a guide to measure the impact of your proposed strategies. You may choose to meet all or
some of these KPIs.
Key Performance Indicators (Targets)
Reduce government budget deficit to below
4% of GDP
Inflation rate to be below 5%
GDP growth to be maintained at 4% or above
Increase in the number of citizens with the
minimum sum ($250,000) by 10%
Increasing retirement savings sum per
capita by 20% by 2030.
Improve senior-citizen population’s access to
health care to old-age health care
Encourage savings per capita in the
economy
Reduce the social disparity amongst
different segments of the population
Minimize the public spending on the
initiatives, while maximizing the self-
sustenance/private funding of
initiatives
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Frost & Sullivan Case Challenge 2015 © 2015 Frost & Sullivan.
Geography Location: Southern Latin America, bordering the Pacific Ocean Area: 406,752 sq. Km.
Government
Government Type: Democratic Federal Republic Elections: Every 5 years (Scheduled) Parliamentary System: Bicameral Administrative Systems: 15 states and 2 Federal Districts (Athome – administrative
capital, and Venan – main economic centre)
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Frost & Sullivan Case Challenge 2015 © 2015 Frost & Sullivan.
Economy
GDP, current (SL$): 1,523.3 billion (2014), 1,438.0 billion (2013) GDP growth (2014, %): 5.6% GDP growth (2013, %): 4.5% Annual Inflation: 7.6% (2014) Budget Surplus (Deficit): (6.2%) of GDP (2014) || target: deficit below 4% by 2020 Public Debt: 49.5% of GDP (2013) SME Contribution to GDP (2013): 36.2% of the GDP (incl. Foreign SMEs) Exports: 70.3% of GDP || 20.2% of total Exports are for the Services Imports: 75.4% of GDP || 56.7% of total Imports is Services Foreign Direct Investment, net inflow (% of GDP, 2014): 3.5 % of the GDP Foreign Direct Investment, net outflow (% of GDP, 2014): 0.8% of the GDP Composition of Economy: Agriculture 36.4% || Industry 32.1% || Services: 21.5% Tax Rate: Businesses (25.0%) || Individuals (30.5%, average) Currency Unit: Salusian Dollar (SL$) Exchange Rate: 1 US$ = 8.68 L$ Joined World Trade Organization (WTO) in 2009
Demographics
Population: 63.3 million (2010 census) Population growth rate: 2.2% (annually from 2000 to 2010) Ethnic Mix: Ethnic races such as Silesia, Butenese, and Tihas form approximately 92% of
the population. Other ethnicities such as Spanish, Portugese, Chinese, and Indians form the remaining 8%
Languages: Salusee (87%), English (68%), Spanish (32%), Portugese (27%) Age Split (2010 census):
o 0-14 years: 15.6% of population o 15-25 years: 16.8% of population o 26-40 years: 25.7% of population o 40-58 years: 33.6% of population o >58 years: 8.3% of population
Gender Split (2010 census): o Male: 53.4% of population o Female: 46.6% of population
Net migration Rate (2010): 0.3 migrant(s) per 1,000 population (official) Urbanization: 42.2% of population (2010, growth rate of 2.3% annually) Life Expectancy at birth: 71.2 years (overall) || 70.3 (male), 72.4 (females) Population below poverty line: 33.6% (2012) Distribution of family income (Gini Index, 2011): 41.4
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Frost & Sullivan Case Challenge 2015 © 2015 Frost & Sullivan.
Labour statistics
Literacy Rate: Total Population (76.8%) || Males (80.1%), Females (70.3%) Labour Force (2010 census): 32.7 million || 60.3% males, 39.5% females, Labour force by Education: 26.7% (primary) || 25.3% (secondary) || 48.0% (tertiary) Unemployment: 7.7% (2013) Foreign Workforce Participation: 40.2% (skilled), 60.4% (unskilled) – (2013) Public Expenditure on Education: 3.1% of GDP (2013) Number of Graduates (Degree): 305,247 (2014) Universities: 10 with federal status, and 23 associated with various states in the
country
Infrastructure Mobile Penetration: 78.5% (2013) Broadband Penetration (>256kbps): 40.3% (2013) International Airports: 2 (Evimeria – capital, and Salutem – economic centre) –
connected to all major Latin American destinations Sea Ports: 3 Railways: 3,456 km || Roadways: 205,567 km
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