BT : More expatriates here paid local rates

Business Times - 19 May 2010

More expatriates here paid local rates

By TEH SHI NING

EXPATRIATE pay packages could shrink as more multinational companies in Singapore benchmark them against local and foreign rates instead of salaries back home, according to a survey by HR consultancy ECA International.

Just over a fifth of expats said that they were on packages based on the Singapore market - either local rates or what other expats here get. This was six percentage points up from the 15 per cent who accepted what the consultancy calls 'host-based compensation' a year ago.

The Singapore specific results were released yesterday, but come from ECA International's latest poll of 200 companies with 8,000 expatriates worldwide in Q3 last year.

Hong Kong registered a similar spike in the proportion of companies choosing to benchmark expat pay locally, from 16 per cent to 25 per cent. This compared with the Asian average of 8 per cent and global average of 11 per cent.

Lee Quane, Hong Kong-based Asia regional director of ECA International, thinks that more companies are choosing local benchmarks to decide expat pay, partly to cut costs in the downturn but also because they now assign workers to Singapore on longer-term contracts.

'With the strong growth in Asia, the expansion needs of companies are longer-term and tend to require more foreign staff to be posted here on a permanent basis,' he said.

Expat contracts here are now longer also because the need for expats is now driven less by the quality of Singapore's workforce and more by the tight labour market companies face, Mr Quane said.

The latest survey also found that net local salaries in Singapore are about 80 per cent of those of expats, which means that any adjustment would not be too drastic.

But, 'home-based compensation' remains the dominant expat pay model. Some 60 per cent of expats here accepted pay packages tied to rates back home, and Mr Quane does not expect more than a quarter of expat pay packages to be Singapore-based even in the long run.

The pay packages measured in the survey include any cost of living, hardship and relocation allowances but exclude additional benefits such as housing and children's education, though Mr Quane said that these have fallen over the years too.

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