EUK responds to Swiss currency crisis

“While it’s a worrying time for the Swiss agencies, in our business – and, indeed, in any international business – currency fluctuations are an occupational hazard”

Eddie Byers is Chief Executive of English UK, the UK’s ELT organisation with around 470 members, fully-accredited language-teaching centres in the state and private sector.

The news that some Swiss agencies are apparently attempting to renegotiate commission agreements with partner schools elsewhere in Europe as a result of its soaring currency is raising a few eyebrows here in the UK.

The PIE’s story on the consequences of Switzerland’s unpegging of its franc from the Euro supported some of the stories we’re hearing from English UK members.

As your report explained, the rise in the value of the currency – by up to 15% – has given the Swiss consumer more buying power, which could be good news for language schools around Europe. The unexpected development is the reaction of some Swiss agencies, as they discover a drop in the value of their commission when it is paid in other currencies. Apparently, some agencies are “reaching out to partner schools asking for consideration of the new currency situation.”

While it’s a worrying time for the Swiss agencies, in our business – and, indeed, in any international business – currency fluctuations are an occupational hazard. Clearly, our sector thrives on goodwill and firm partnerships, but it’s hard to recall any event which has led to agencies accepting lower commissions en masse to help out international schools on the wrong end of an exchange rate movement.

“It’s hard to recall any event which has led to agencies accepting lower commissions en masse to help out international schools on the wrong end of an exchange rate movement”

It’s not just exchange rates which can harm profit margins: the vast majority of quality UK language schools have found themselves absorbing some significant rises in costs in recent years.

A few which immediately spring to mind are exchange rates at various times during the global financial crisis, increasing regulation and of course the student visa regime. Each year, our members invest in everything from teachers’ professional development, to new technology, course materials and upgrading the student environment.

“Here in the UK, our members genuinely feel the pain of Swiss agents: we’ve felt it ourselves as currencies wax and wane”

It wouldn’t be surprising if one or two agents were quietly asking to renegotiate with their partner centres: it’s part of the cut and thrust of international businesses. What would be surprising was if there was some wider spread to this, as the PIE story suggests.

Here in the UK, our members genuinely feel the pain of Swiss agents: we’ve felt it ourselves as currencies wax and wane. In good business partnerships, each side understands that life isn’t always easy for the other. But we also understand that exchange rates can go down as well as up, and we hope that agencies’ alarm is short-lived and self-resolving.