The trickle of companies leaving Russia seems endless. Yesterday Universal Music announced that it was going to suspend all its operations in the country and close its office. However, they will continue to pay the salaries of their employees for an indefinite period of time. This idea has not been from Universal Music, the first to adopt this decision was Coca-Cola.
The soft drink multinational announced just a week ago that it was going to maintain its operations in Russia despite the invasion of Ukraine. His justification? “We are fully responsible to our partners, society and our thousands of employees in Russia. Our top priority is the safety of our workers.” However, on Tuesday it was forced to rectify and announce the suspension of all its operations in Russia. The decision to stay in the country began to affect his brand, a situation very similar to that of .
Keeping workers on staff for an indeterminate period may seem like a risky decision at first, however, it has an explanation. Since the war began, the ruble, the Russian currency, has depreciated 37% against the euro. But what does this mean?
Paying the salaries of Russian workers is now 37% cheaper than on February 24, the day the invasion began. In the year, the fall is around 50%, this means that the companies that have decided not to lower the blind completely and keep the workers will be able to pay two payrolls with one.
This is why they can take refuge in safeguarding employees and customers. As Danone has done. “We have a responsibility to the people we feed, the farmers who provide us with milk and the tens of thousands of people who depend on us,” said the CEO of the French company, Antoine de Saint-Affrique. The French multinational, the world’s largest yogurt maker, has around 8,000 employees in more than a dozen production sites in Russia, where most of its revenue comes from dairy and yogurt sales and its most popular brand is local. Prostokvashino.
The loss of value in the Russian economy has also had a response from Moody’s. The rating agency has downgraded Russia’s sovereign credit rating, which was already in the junk bond, to Ca from B3 on expectations that Russian Central Bank capital controls will restrict cross-border payments, including service of government bond debt.
“The downgrade to Ca is driven by major concerns about Russia’s willingness and ability to pay its debt obligations,” the agency stressed in a statement, indicating that the country’s outlook remains negative two weeks after the beginning of the invasion.
Contrary to what happens with the Russian currency, the grivna (the Ukrainian currency) has risen slightly in the last two weeks and since February 23 it has appreciated a little more than 1%.
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