Most expensive countries for expat packages revealed
The most expensive country for expat packages in the world’s top 40 financial hubs has been revealed as the UK, according to a survey.
ECA International says this is the second year running that the UK has topped its charts, with the average cost to an employer paying an expat middle manager adding up to $390,000 a year.In second place is Japan, with an expat’s package costing employers $328,796 – down on 2015’s figure because of a weaker yen.
The survey looked at factors including salary and tax, as well as benefits such as accommodation, utilities and international schools.
ECA’s manager of remuneration services, Mark Harrison, said: “The cost of expat packages in the UK, in US dollars, has dropped by 9% over the past year, mainly because of the weakening pound which makes the UK comparatively cheaper. Typical middle manager expat salaries have also fallen in local currency, they are down by £1,500 over the past year.”
He said that depending on how an employer put the package together, the cost of providing benefits can dwarf the salary. This is the case for packages for expats moving to the UK, Hong Kong and the US.
The third most expensive location for expat packages is mainland China, which has overtaken France and Brazil, with packages now costing $290,000. This constitutes a rise of 5% over the last year and the biggest rise in the Asia Pacific region.
However, the same survey reveals that salaries for middle managers in Chinese cities have fallen by 4% over the past months.
The cost of sending expats to Australia has also fallen. Australia is now in sixth place despite rises in salary, tax and benefits. This fall is down to currency devaluation.
The ECA report highlights that sending expats to developing countries is not always a cheap option, since despite having a low cost of living, the expat package may still not be cheap, since employers need to provide greater incentives to attract talent.
Also, employers need to be more aware of the tax element for any package and the survey points to India as a case in point where nearly half of the package for an expat moving there is taken up by tax.
Other countries in the top 10 include Hong Kong in fourth place, Turkey in fifth and Argentina in seventh. France takes the eighth position, the US is ninth and Switzerland is 10th.
London is now too expensive
Meanwhile, a separate report says that London is now becoming too expensive for job competition, living and housing costs. It recommends that expats wanting to move to the UK should look other towns and cities.
That’s the view of recruitment firm Glassdoor, who say that Cambridge tops their list of best places to work, followed by Milton Keynes, Nottingham and Leeds.
British expats in France offered hope after Brexit
British citizens living in France have been told they are welcome to remain when the UK leaves the European Union by President François Hollande.
He is the first leader in Europe to give a public undertaking that expat Brits have a future in his country.
However, he reiterated his stance that the UK government should not be expecting to access the single market without having free movement.
In a press conference, he said that French people living in the UK would continue to work and live there.
Expats in Saudi Arabia prevented from buying property
A ruling that prevents expats in Saudi Arabia from owning property in three holy cities has been reiterated by the Shoura Council.
The council says non-Saudis cannot buy real estate, property or locations within Riyadh, Madinah and Makkah.
Non-Saudis are being defined as those who do not have Saudi nationality. This includes non-Saudi companies, as well as Saudi firms with foreign shareholders.
The Shoura has called for any violations of the ruling to be severely punished and said the decision will preserve the Kingdom’s investment environment and prevent harm to the holy cities.
Expats in UAE and Qatar buying more property abroad
Meanwhile, demand from people in the UAE and Qatar wanting to buy property in the UK is rocketing.
One sharia-compliant bank says its equivalent of mortgages, which are known as home purchase plans, have risen in demand by 141% since they began targeting the market in 2013.
The Al Rayan Bank says British expats in particular are leading the demand for buying property and interest in other GCC countries is also growing including Oman, Kuwait, Bahrain and Saudi Arabia.
The bank offers expats a buy to let purchase plan so they can buy an investment property in the UK or a ‘holiday home’ purchase plan so they can buy a property for their return visits.
Also, Liquid Expat Mortgages says it has seen a big rise from expats looking to take advantage of the weakening pound.
The overseas property loan specialist is based in the UK and says that expats in the UAE and Hong Kong have been moved to convert their overseas income and savings because of the weaker pound.
The pound’s performance against the US dollar means an expat using dollars to buy a UK property would save 10% compared to prices before the Brexit vote.
Chinese expats flock to the US
Over the last 10 years the numbers of expats from China working in America has rocketed as they join firms that have been taken over by Chinese investors.
In 2015, the US granted 10,258 L-series visas to Chinese expats and their families – a fourfold increase since 2005.
A partner with a leading immigration firm, Bernard Wolfsdorf, said: “There’s been a huge surge as Chinese firms are investing heavily in America and bringing in key employees and executives.”
Chinese companies spent $17 billion in 2015 on 120 deals and investments. This year looks to be a record breaker too with $29.4 billion already spent, according to Dealogic.
The US State Department has already announced that the number of Chinese expats it will accept for some types of visa will come to an end as they have hit their annual quotas – including the visa that allows people with ‘extraordinary abilities’ the chance to work in America.
America has also closed its immigrant investor program which grants residency to foreign investors who invest at least $500,000 in the country.
US expats targeted for retirement investment
US expats working and living in Asia are facing fewer choices in investment products to help them plan for their retirement.
Now Old Mutual International says one of the main reasons is the complexity of America’s tax system which limits expats access to various retirement savings schemes, including 401K, and the imposition of capital gains on Americans living abroad.
The firm has now created a pension vehicle that can be used to invest in equities, corporate bonds and cash among many other investment opportunities.
A spokesman for the firm said: “We are focused on expats who are frequent movers, high net worth and ultra-high net worth.”
He added that the Malta-domiciled product was not aimed at ‘retail-type’ business.
While international pensions are not a new product, Old Mutual says its wrapped product is the first that is designed specifically to deal with the tax liabilities being faced by US expats.
The firm says there are around 85,000 US expats living in Hong Kong alone where, according to one representative of the firm, pension products are dominated by British advisers who understand the UK tax system and its impact on British expats but not many can navigate the US tax system comfortably.
Also, Old Mutual says that foreign investment firms and banks have been impacted by the Foreign Account Tax Compliance Act (FATCA) since these institutions are reluctant to deal with US citizens because of having to comply with the law, which brings an administrative burden.
Qatar struggles as expats leave
As Qatar’s economy suffers, thousands of expat professionals have left the country, and many businesses are struggling as a result.
News agency Reuters reports that hotels are reducing room prices, shopping mall owners are dropping rents to boost tenancies, and restaurants and shops are closing through lack of trade.
The fall in oil prices has seen employers there lay off thousands of expats on high salaries over the last two years, though the population in Qatar has remained steady at 2.5 million people.
As well-paid professionals leave, the number of labourers who are now working on large infrastructure projects is growing, but they do not have the spending power to make up for the drop in high spenders leaving.
The best paid execs in Japan are expats
A survey by Forbes business magazine has revealed that eight of the top 10 best paid executives in Japan are foreign expats.
Taking top spot with a salary of $102 million is Indian Nikesh Arora of SoftBank. Americans take up second and third places: Joseph DePinto at Seven & i Holdings and Ronald Fisher at SoftBank.
One reason given for the rise of expats and their large pay packages is that Japanese employees are generally paid more based on length of service as they work through the ranks rather than having performance related pay.
In addition, bosses at Japanese firms generally have more job security, but this creates a static environment which many are reluctant to change, say critics. However, this looks like it might be changing now as Japanese firms abandon its pay practices in a bid to lure foreign talent.
In addition, the Japanese government has brought in a change to corporate governance rules in a bid to make the country’s businesses more diverse and transparent so there will be more opportunities for expats and for female employees.
Kenyan NGOs urged to employ more locals
It’s been a popular destination for expats working for NGOs, but now Kenya’s NGO Council says rules regarding employment of locals need to be enforced.
While the law says that NGOs must have a good reason for hiring an expat, they must also show that someone local is being trained for that position.
Now the administration manager of the NGO Council, Fred Olendo, says: “The law is not new and the government has never been demanding of it.”
He says the council will now revoke an organisation’s license if they can’t prove they are attempting to hire local people and trying to bridge the pay gap between expat staff and Kenyans.
This will mean work permits will not be handed to expats if their employer cannot identify a Kenyan who will eventually take over the position.
The council says it’s also scrutinising volunteer programmes, since the rules dictate that the number of local people hired must match the number of foreign volunteers.
The pay gap between locals and expats is also being criticised and with 12,000 expats living in Kenya and working on issues ranging from conservation to human rights, the move could have a significant impact.
Oman e-visas denied to young female expats
A recent Expat Focus story gave details of the new e-visa system for people visiting Oman, but it appears that the new scheme has already hit trouble.
Apparently, young female expats travelling to and from the country have been denied an e-visa because there is a parent accompaniment rule that they are breaking.
Indeed, the UAE government portal makes clear that the online e-visa system is not available to women aged under 23 unless they have a parent travelling with them.
Now growing numbers of young expats in Oman say they are missing out on business opportunities and conferences because of the rule.
The alternative is for the female expats to get a pre-arranged visa but this involves a five-day wait – effectively curtailing any chance of attending a short notice business meeting or trip.
The ruling covers all young female expats except those who are citizens of 46 countries, including the European Union, or if those countries have a treaty with the UAE.
The same rule applies to young men under the age of 21.
In other news…
The UK’s citizenship test has often been a source of amusement. Now videos made by international relocation firm MoveHub reveal Brits’ lack of knowledge about their country.