The cost of expatriate packages in Singapore and Malaysia have fallen 6% and 13%, respectively, over the past five years, according to the latest MyExpatriate Market Pay survey published annually by ECA International.
Singapore is ninth in the Asia Pacific regional rankings this year. The value of a typical expatriate package for Middle Managers in Singapore is now HK$1,827,300 (US$235,500). The cost of an expatriate package has fallen in Singapore by six per cent in USD terms over the past five years.
“In local currency terms, although expatriate salaries continue to rise in Singapore, reaching the highest levels since our survey began, the benefits element has declined significantly. This has meant that the total cost of an expatriate package to companies in Singapore has fallen over the past few years in local and USD terms,” said Quane.
Malaysia, meanwhile, offers the region’s lowest total expatriate pay packages – with packages falling by 13 per cent in USD terms since 2012, falling behind Sri Lanka and Pakistan in the process. The average cost of a total expatriate package in Malaysia now lies at just over USD 168 000.
Japan has most expensive expat packages
Japan is home to Asia’s most expensive expatriate packages, according to the latest MyExpatriate Market Pay survey published annually by ECA International.
On average, a package for an expatriate Middle Manager there is worth US$367,500. The total package has risen by a significant amount from last year’s total, by around 12 per cent, with the yen strengthening against the US dollar in the survey period.
Following Japan is Mainland China. A total package for an expatriate Middle Manager in China is worth around HK$2,191,900 (US$282,500) on average.
The significance of tax on the total cost of expatriate packages
Companies also need to be aware of the tax element of the package. This can considerably increase assignment costs, as in the case of India, where nearly half of the total expatriate package is consumed by tax. India has the third highest total expatriate pay packages in the region, at US$277,900. When tax is excluded, India falls out of the regional top 10 locations. When choosing an expatriate pay approach, companies need to be clear about the reasons behind the assignment so that their choice reinforces this.
Expatriate pay packages in Hong Kong have fallen to a five-year low, falling by two per cent since 2012 in USD terms. However, they are still the fourth highest in the Asia Pacific region. The value of a typical expatriate package for Middle Managers in Hong Kong is around US$265 500. “Traditionally, Hong Kong has offered more lucrative packages for expatriates than China’s major cities,” Lee Quane, Regional director – Asia, ECA International. “However, in the past few years, rising cost of living and increased pollution in China made it more challenging to attract international talent and so packages continue to rise in local terms,” stated Quane. “On the other hand, due to the yuan weakening against the dollar over this period, expatriate packages have declined in USD terms from last year’s totals. As a result, China remains attractive for foreign companies that need to send expatriates to the region as, although costs are rising in local currency, they have fallen in USD terms since our previous survey.”
Once again, the United Kingdom has the highest global expatriate packages among the top 40 financial hub countries*. The cost to companies of a typical total expatriate pay package for Middle Managers in the UK is around USD 390 000 per year on average.
When considering the cost of an expatriate package companies need to factor in three main elements: the cash salary, benefits – such as accommodation, international schools, utilities or cars – and tax. To assist companies relocating staff with benchmarking their packages against the market, ECA conducts its annual MyExpatriate Market Pay Survey of pay levels for expatriates around the world, including benefits, allowances, salary calculation methods and tax treatment.
The total cost of expatriate packages in the UK, in US dollars, has fallen by 9% in the past year. 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 GBP 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. 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.”
Countries like Qatar, 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. The highest middle manager expatriate 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.
ECA’s MyExpatriate Market Pay Survey looks at pay levels for expatriates around the world, including information on benefits, allowances, salary calculation methods and tax treatment. The results, free to participants, enable companies to benchmark their expatriates’ actual salaries against the market. More than 320 companies took part in the survey covering 170 countries and over 10 000 international assignees.