Thursday, 20 May 2010

Is expat life all about the money?

Expatriates could be facing significant changes to their salary and benefits packages according to the latest survey by HR consultancy ECA International as foreign employers seek to adjust their compensation schemes in response to the economic downturn.

Historically, many expats have been paid based on a “home based compensation” scheme in which salaries are reflective of current market rates of their home country with around 60% of all expats globally rewarded on this basis. However, recent research has suggested a growing trend of “host-based compensation” in which expats are paid relative to local rates or what other expats in the region receive. Such changes may effectively lead to many expat employees experiencing an equivalent pay cut.

In Singapore, for example, research shows that just over a fifth of expats said that they were based on packages relative to the Singapore market which equates to around 80% of what the equivalent “home based compensation” model would provide. What’s more, these figures show a six per cent rise from last year’s statistics with a similar sized increase seen in Hong Kong providing evidence of a trend that looks set to continue. Perhaps one explanation for this is the fact that many businesses looking to expand are actually seeking to secure staff on more permanent contracts which means that paying above market rate is simply no longer economically viable.

Importantly though, we need to consider what impact if any such changes will have on the long term appeal of the expat life. Is money the be all and end all and one of the prime drivers for moving abroad and will local labour markets be strong enough if the number of expats weaken? Why not tell us your thoughts by completing the 2010 Expat Explorer survey at http://www1.gfk-wi.com/wix/p76220993.aspx. Make sure you register your details at the end of the survey and we will send you a copy of the survey reports when they are produced later this year.

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