Highest expat packages for middle managers are in the UK, global survey shows

by Ray Clancy on July 21, 2016

The UK has the highest global expat packages among the top 40 financial hub countries in the world, new research shows.

The cost to companies of a typical total expat pay package for middle managers in the UK is around US$390,000 per year on average, according to the latest survey published annually by ECA International.

When considering the cost of an expat package, companies need to factor in three main elements: the cash salary, benefits such as accommodation, international schools, utilities or cars and tax.

The total cost of expat packages in the UK, in US dollars, has fallen by 9% in the past year and the report says this is mainly due to a weakened pound against the US dollar, making the UK comparatively cheaper.

But typical middle manager expatriate salaries also fell in local currency, down £1,500 in the past year. Depending on how a package is put together, the cost of providing benefits can be considerable, even dwarfing the cash salary element, the survey report points out.

dollarGLOBE‘This is the case for the UK as well as Hong Kong and the United States. However, while the tax component of the package is small in Hong Kong it has a huge impact on overall costs when relocating someone to the UK,’ said Mark Harrison, manager of remuneration services at ECA International.

Countries like Qatar, the United Arab Emirates and Saudi Arabia with no personal income tax are all near the bottom of the ranking, even though salary costs are high by international standards.

Indeed, the highest middle manager expat salaries are found in the UAE and Saudi Arabia. However, as the employee pays no tax on their salaries or benefits in these countries the total cost is low by international standards with both sitting in the cheapest four locations in the global rankings.

The survey also shows that Japan is home to Asia’s highest expat packages and the second highest on the global scale. On average, a package for an expat middle manager there is worth US$329,000. The total package has fallen by a significant amount from last year’s total of US$375,000, with the yen weakening significantly against the US dollar over the past year.

The gap has widened between the total expat packages typically offered in Singapore and Hong Kong, with Hong Kong rising to fourth place in the global rankings. A typical expat package offered in Hong Kong is now US$267,000.

Although both locations have seen a decrease in the total cost of packages to companies, Singapore’s overall packages have experienced a more notable decline because of the relative strength of the Hong Kong dollar.

Mainland China has moved up to the third highest in the world, having overtaken locations such as France and Brazil in the past year. A total package for an expat middle manager in China is worth over US$290,000, up 5% in US dollars from last year. China has experienced the largest increase in the Asia Pacific region this year.

Australia has the sixth highest expat pay packages in the world, down by 12% over 12 months when converted to US dollars. This fall is despite modest rises in salary, benefits and tax in the total costs in local currency, taking typical total expat package for middle managers in Australia to US$265,000.

International assignment pay packages can be designed in a variety of ways, the report points out. The most common approach is to use the employee’s salary in their home country as the starting point, then adjust for cost of living and any other allowances, and tax.

‘When choosing an expatriate pay approach, it is essential for companies to be clear about the reasons behind the assignment so that their choice reinforces this,’ Harrison explained.

‘This will also help them to decide whether they wish to create equity among home or host country peers, something that has become even more complex as companies manage increasingly diverse nationalities in and out of different markets. And of course all this needs to balance against benefits and costs to the business,’ he added.

{ 0 comments… add one now }

Leave a Comment

Previous post:

Next post: