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By ExpatBriefing.com Editorial
28 May, 2014
A survey on the costs of sending middle managers on expatriate assignments has found that Japan continues to be the most expensive posting in the Asia-Pacific region, due to high living costs and tax rates.
The latest ECA MyExpatriate Market Pay Survey includes input from nearly 300 companies, covering 163 countries and more than 10,000 expatriate assignees. The survey compares packages for expatriates around the world, including information on benefits (such as accommodation, international schools, utilities or cars), allowances, salary calculation methods, and tax treatment.
It was found that the overall package for expatriate middle managers in Japan is, on average, about USD379,000 per year. However, deprecation of the yen means that in US dollar terms the overall cost of expat packages in the country is now 10 percent less than it was a year ago.
Second place goes to Australia, followed by India, tier-one cities in China, and Hong Kong, and Singapore. The survey highlights that the cost of benefits in second-tier Chinese cities, such as Chongqing or Xiamen, is significantly less than for tier-one cities, such as Beijing or Shanghai. Excluding tier-one cities would give China a ranking of just 14th in the region.
Lee Quane, ECA's Regional Director, explained that, although India has a low cost of living, half of the total expatriate package there is consumed by tax. Also, it is often the case that greater incentives are needed to attract talented employees to locations where the infrastructure and amenities may be of a lower standard.
Quane also noted the difference between companies that choose to pay expats on the same pay system as local staff, and those that calculate a rate based on the employee's salary in their home country. He said that the former still provide benefits beyond what local employees would receive, but that they are nevertheless more likely to offer an overall "leaner" benefits package. He also warned that companies need to consider currency rate fluctuations when designing their policies.
ECA advises that in designing expatriate remuneration policies, companies need to take into account various factors: whether equity with the expatriate's home or host country peers is more desirable; salary levels and typical benefits in both the home and host locations; and how generous the business needs to be in order to encourage talent to accept an international posting. Companies' decisions can trigger debates about equity, especially when a company manages assignees in many different markets.
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