UK ‘most expensive place to send expats’

Despite the fall in the value of sterling against the dollar since the EU referendum, the UK remains the most expensive country in which to assign expatriates, according to new research.

The UK is still the most expensive nation in which to assign expatriates, according to an annual survey of 40 financial hub countries. This is despite the fall in the value of sterling against the dollar since the EU referendum. ECA International’s latest MyExpatriate Market Pay survey takes into account companies’ costs for expat packages, including salaries, benefits such as accommodation, international schools, utilities and personal transport, and local taxes.This year’s survey found that the fall in the value of sterling against the dollar had resulted in its becoming cheaper in 2017 to send expats to the UK, with the cost of a typical package for a middle manager dropping to $384,400 a year.Steven Kilfedder, production manager at ECA, said, “The total cost of expatriate packages in the UK, in US dollars, has fallen by 11 per cent in the past couple of years. This is mainly due to a weakened pound against the US dollar making the UK comparatively cheaper. In local terms, typical middle manager expatriate salaries have increased by 3 per cent over this period.”However, the report says that the UK’s rates of personal taxation – among the world’s highest – inflate the cost of expatriate assignments, along with the high cost of benefits, such as accommodation and utilities.“The tax element is the most expensive component of an expatriate package in the UK by a considerable margin. Once tax is removed, the UK falls out of the global top five most expensive locations in the world. The cost of providing benefits is also considerable, at around double the salary element due to high expatriate rental accommodation prices,” said Mr Kilfedder.

Further study findings

In Europe, France is sixth in the global rankings this year, with the cost to companies of a typical expatriate package for middle managers now $264,500. The total has fallen in France by 16 per cent in dollar terms over the past two years because of the euro’s decline.Expatriate packages for middle managers in Germany are the lowest out of all ranked European countries. The combination of comparatively low salary, benefits and tax all contribute to Germany ranking 23rd, with the total cost of an expatriate package for middle managers standing at $202,800, falling by 15 per cent over the past two years, again because of the euro’s fall.In the Americas, the cost of an expatriate package has increased by 2 per cent in the US since ECA’s last survey, with the nation rising in the rankings to eighth place. The cost of a typical package for middle managers is now $257,400.“In the US, the costliest element of the package is the benefits provision, the fifth highest in our global rankings. To incentivise employees to accept an assignment to some countries, companies will often grant additional allowances on top of the base salary that aren’t necessary when sending staff to the US,” said Mr Kilfedder.“In Hong Kong, for example, dangerous levels of air pollution, combined with high international school fees and accommodation costs, mean that companies have traditionally offered generous expatriate packages to attract highly sought-after talent.”
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In Asia Pacific, Japan is home to Asia’s most expensive expatriate packages, second only to the UK on a global scale. On average, a package for an expatriate middle manager there is worth $367,500. The total package has risen by around 12 per cent over the year, with the yen strengthening against the dollar in the survey period.Expatriate pay packages in Hong Kong have fallen to a five-year low, falling by 2 per cent since 2012, though they remain the fifth highest in the rankings. The value of a typical expatriate package for middle managers in Hong Kong is around $265,500.A package for an expat middle manager in China averages about $282,500. The cost has declined in dollar terms from last year because of the yuan weakening against the dollar.“China remains attractive for foreign companies sending expatriates here. Although costs are rising in local currency, they have fallen in dollar terms since our previous survey,” stated Lee Quane, ECA’s Asian regional director.In the Middle East, countries such as Qatar, the United Arab Emirates (UAE) and Saudi Arabia sit near the bottom of the global rankings. Even though the highest middle manager expatriate salaries are found in Saudi Arabia and the UAE, employees pay no tax on their salaries or benefits in these countries. Thus, the total cost is low by international standards, with both sitting in the cheapest six locations in the global rankings.The cost of expatriate packages is $172,800 in Saudi Arabia and $188,400 in the UAE. Qatar has the lowest assignment costs, at $160,200.For related news and features, visit our HR section.Access hundreds of global services and suppliers in our Online Directory  Get access to our free Global Mobility Toolkit

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