THE complexity of currency exchange rates has brought about a sea of challenges in both paying workers and retaining them, whether it’s compliance, exchange rates’ costs, maintaining worker satisfaction, or planning and scaling future hiring.

Without solving the cross-currency conversion challenge, businesses may find their workforce dwindling and compliance mishaps piling up. The base line is to comply with regulations.

The International Labor Organization says “seafarers shall be given a monthly account of the payments due, and the amounts paid, including wages, additional payments and the rate of exchange used where payment has been made in a currency or at a rate different from the one agreed to.”

Currency exchange rates, you could say, are anchored in all maritime-focused workforce requirements, whether it’s to do with following wage requirements or ensuring timely payments made at regular intervals.

An inability to smoothly adjust payment to fit new rates can present heavy compliance issues for maritime businesses.

Navigating “background” costs

If your worker’s wage is the “leading” cost, the “background” costs are thus all those costs you need to consider to get the wage to your worker — in the right amount, in the right currency, to the right destination, and on time. There are a lot of background costs maritime businesses must consider when paying their workers across the globe; these costs are where currency fluctuations make their biggest imprint. Some examples:

• Adjusting salary and cost of living payments to fit new currency values.

• Risk mitigation costs in the form of expensive hedging tools.

• Additional operational costs — if you are suddenly paying more for labour costs due to currency
   fluctuations, you will have to adjust other costs accordingly.

Worker satisfaction

In early 2024, labour shortage in shipping reached a 17-year high. Now, workforce gaps are one of shipping’s biggest challenges. It’s no surprise if you look at the data.

The latest Seafarers Happiness Index shows considerable dissatisfaction. More than 70% of seafarers say a major difficulty they face being at sea is sending money back home. This is due to the expensive currency conversion rates they must tackle, especially for those looking to transfer money to remote areas harder and more expensive to reach.

Business continuity and digital transformation

Maintaining steady growth in the global workforce and securing the best talent becomes more complex in the face of currency fluctuation. Maritime businesses may find they’re unable to keep their workers’ trust and commitment against the backdrop of erroneous or unsustainable salaries.

This severely limits their ability to form a workforce strategy or plan for varying people power needs.

Securing your business against currency fluctuation: balancing technology and expertise

Relying on local expertise

With in-depth insight into market dynamics, understanding of local regulations and, usually, extensive networks across the country, boots-on-the-ground experts can help keep you one step ahead of any currency conversion risks or around-the-corner volatility.

Centralising and integrating payroll processes

Keeping your finger on the pulse of currency fluctuations involves knowing what's happening. That means centralising and integrating payroll processes where possible, providing full visibility, and alerting you to any problem.

Automating certain payroll processes

To avoid errors and adhere to the necessary currency calculations, automated payroll is the way to go. This enables swift adaptability and real-time exchange rate updates.

Beating currency fluctuations

Risks in currency fluctuations will always be a part of paying workers across the world, perhaps doubly true for maritime businesses which are at the centre of the global economy, playing their role in the cargo supply chain.

There are ways to stay ahead of the risk. As the only payments company focused on global payroll, Papaya Global sees itself as uniquely equipped to help maritime businesses stay ahead of currency fluctuations, by offering the following:

• In-country experts across the globe zeroing in on market dynamics and foreseeing currency risks.

• Payment capabilities optimised for payroll — with top security and efficiency and an ability to pay in
   local currency with competitive FX rates and minimal additional costs.

• Agnostic system integration, enabling data visibility and minimising siloes.

Learn more about Papaya Global’s capabilities here: www.papayaglobal.com/industry/maritime