Bloomberg Law for HR Professionals is a complete, one-stop resource, continuously updated, providing HR professionals with fast answers to a wide range of domestic and international human resources...
By Rick Vollmar
May 14—The average annual pay-and-benefit package offered middle managers posted to the U.K. is $430,000, the highest among the 23 countries with cities appearing in the top 40 of the Global Financial Centers Index, according to ECA International, a provider of systems for the management and assignment of international employees. The cost of posting an expatriate to the U.S. ranked ninth in the ECA listing at an average $273,000 a year.
ECA's MyExpatriate Market Pay Survey is conducted annually and examines benefits, allowances, salary calculation methods and the tax treatment of compensation and benefits.
“When considering expatriate package costs, companies need to factor in three main elements: the cash salary, benefits—such as accommodation, international schools, utilities or cars—and tax,” ECA's manager of remuneration services Mark Harrison was quoted in a May 13 press release. “Depending on how the package is put together, the cost of providing benefits can be considerable, even dwarfing the cash salary element. This is the case for the U.K. as well as Hong Kong and Singapore. However, while the tax component of the package is small in Hong Kong and Singapore, it has a huge impact on overall costs when relocating someone to the U.K.”
“In the U.S., the most costly element of the package is benefits provision, while the base net cash salary is low relative to many other countries in the list,” Harrison said. “For example, that part of the package is lower than it is for China and Brazil. In order to incentivize employees to accept an assignment to these countries, companies will often grant additional allowances on top of the base salary that aren’t necessary when sending staff to the U.S.”
According to ECA, the most common approach to structuring an expatriate compensation package is to adjust an employee's home-country salary for differences in the cost of living, although employers are now more frequently choosing to take the host country local salary as the starting point, particularly when relocating employees to a host country with similar or higher pay levels and economic development compared to the home country.
“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 said. “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.”
To contact the reporter on this story: email@example.com
More than 320 companies took part in ECA's 2015 survey, accounting together for over 10,000 international assignees in 167 countries. Data were collected in the second half of 2014.
Additional information is available at www.eca-international.com or from Josephine Woolley at firstname.lastname@example.org. Additional information on the Global Financial Centres Index is available at http://www.zyen.com/research/gfci.html.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)