Wednesday, November 26, 2008

November 2008 - International Cost of Living Comparison - Global Trends

The ongoing impact of the credit crisis, slowing global economies, falling house prices, global stock market and exchange rate volatility, together with the US dollar strengthening against most currencies are all factors contributing to a major change in the global cost of living rankings.

The International Cost of Living Comparison comprises indexes for each of 276 global locations. The indexes are calculated using the prices for specific quantities of the same goods and services in each location, based on expatriate spending patterns across 13 broad categories (Basket Groups).

The latest international cost of living ranking, together with the overall cost of living index as at 24 November 2008 is as follows:

Rank Location (Overall Cost of Living Index New York=100)


1. Japan, Tokyo (126.03)
2. Norway, Oslo (123.74)
3. Denmark, Copenhagen (121.11)
4. Switzerland, Geneva (119.59)
5. Brazil, Brasilia (118.53)
6. United Kingdom, London (118.23)
7. Greenland, Nuuk (117.14)
8. Switzerland, Zurich (116.18)
9. Hungary, Budapest (114.36)
10. Russia, Moscow (113.41)
11. Nigeria, Lagos (112.69)
12. Ireland, Dublin (112.65)
13. New Caledonia, Noumea (112.43)
14. France, Paris (112.38)
15. Chad, N'Djamena (111.3)
16. Italy, Milan (111.19)
17. Cameroon, Douala (111.06)
18. Liechtenstein, Vaduz (110.89)
19. San Marino, San Marino (110.78)
20. Monaco, Monaco (109.83)
21. Czech Republic, Prague (109.81)
22. Austria, Vienna (109.68)
23. Slovakia, Bratislava (109.31)
24. Isle of Man, Douglas (108.97)
25. Poland, Warsaw (107.63)
26. Bermuda, Hamilton (107.53)
27. Italy, Rome (107.29)
28. Finland, Helsinki (107.07)
29. Australia, Sydney (106.52)
30. USA, San Francisco Calif (104.53)
31. Cote D'Ivoire, Abidjan (104.4)
32. Venezuela, Caracas (104.02)
33. China, Hong Kong (103.43)
34. United Arab Emirates, Dubai (103.36)
35. Croatia, Zagreb (103.29)
36. Angola, Luanda (103.27)
37. Belgium, Brussels (103.19)
38. Netherlands, Amsterdam (102.33)
39. Jersey, Saint Helier (102.24)
40. Papua New Guinea, Port Moresby (102.22)
41. Korea Republic of, Seoul (101.94)
42. Iceland, ReykjavĂ­k (101.66)
43. Ukraine, Kiev (101.2)
44. Guernsey, St Peter Port (100.68)
45. Qatar, Doha (100.64)
46. Central African Republic, Bangui (100.58)
47. Spain, Madrid (100.26)
48. USA, San Jose Calif (100.13)
49. Falkland Islands, Stanley (100)
50. USA, New York NY (100)
51. Sweden, Stockholm (99.76)
52. USA, Boston Mass (99.63)
53. Cameroon, Yaounde (98.84)
54. Mali, Bamako (98.74)
55. Benin, Cotonou (98.6)
56. Germany, Berlin (98.18)
57. Micronesia, Palikir (97.98)
58. Gabon, Libreville (97.77)
59. Canada, Toronto (97.39)
60. Germany, Bonn (96.38)
61. Vatican City, Vatican City (96.23)
62. Australia, Melbourne (95.88)
63. Australia, Canberra (95.88)
64. Estonia, Tallinn (95.08)
65. Turkey, Ankara (94.87)
66. Singapore, Singapore (94.6)
67. Guinea-Bissau, Bissau (94.24)
68. USA, Los Angeles Calif (93.93)
69. Palau, Melekeok (93.85)
70. Luxembourg, Luxembourg (93.77)
71. Canada, Vancouver (93.48)
72. Portugal, Lisbon (92.84)
73. Australia, Perth (92.82)
74. Germany, Frankfurt (92.81)
75. Azerbaijan, Baku (92.76)
76. Gibraltar, Gibraltar (92.33)
77. Comores, Moroni (92.04)
78. USA, Washington DC (91.8)
79. USA, Philadelphia Pa (91.49)
80. Nauru, Yaren (91.16)
81. Kazakhstan, Almaty (90.99)
82. Bahrain, Manama (90.82)
83. USA, San Diego Calif (90.7)
84. Bahamas, Nassau (90.63)
85. Togo, Lome (90.11)
86. Taiwan, Taipei (90.07)
87. Haiti, Port-au-Prince (90)
88. Senegal, Dakar (89.57)
89. Saint Helena, Jamestown (89.26)
90. USA, Baltimore Md (89.25)
91. United Kingdom, Glasgow (88.88)
92. Djibouti, Djibouti (88.45)
93. Niger, Niamey (88.38)
94. Zambia, Lusaka (88.36)
95. USA, Seattle Wash (88.3)
96. Andorra, Andorra la Vella (88.13)
97. Vietnam, Hanoi (88.03)
98. Tonga, Nuku'Alofa (87.34)
99. Gambia, Banjul (87.23)
100.United Arab Emirates, Abu Dhabi (87.16)
101.Cayman Islands, George Town (86.81)
102.Sudan, Khartoum (86.64)
103.Greece, Athens (86.59)
104.Barbados, Bridgetown (86.5)
105.USA, Portland Ore (86.1)
106.Sierra Leone, Freetown (85.92)
107.Equatorial Guinea, Malabo (85.89)
108.USA, Chicago Ill (85.73)
109.Romania, Bucharest (85.55)
110.USA, Miami Fla (85.54)
111.Marshall Islands, Majuro (85.41)
112.Cyprus, Nicosia (85.26)
113.Malta, Velletta (84.99)
114.Moldova, Chisinau (84.89)
115.Ghana, Accra (84.89)
116.United Kingdom, Birmingham (84.76)
117.Canada, Montreal (84.37)
118.Algeria, Algiers (84.01)
119.Israel, Jerusalem (83.82)
120.Australia, Brisbane (83.29)
121.Burkina Faso, Ouagadougou (82.92)
122.Lebanon, Beirut (82.74)
123.Jordan, Amman (82.41)
124.Guinea, Conakry (82.16)
125.Jamaica, Kingston (82.11)
126.Philippines, Manila (82.07)
127.Georgia Republic of, Tbilisi (82.03)
128.Congo Democratic Rep, Kinshasa (81.84)
129.Seychelles, Victoria (81.78)
130.Indonesia, Jakarta (81.76)
131.USA, Las Vegas Nev (81.75)
132.Lithuania, Vilnius (81.67)
133.Vanuatu, Port Vila (81.35)
134.Grenada, Saint George's (81.23)
135.Trinidad and Tobago, Port-of-Spain (81.13)
136.Mozambique, Maputo (80.82)
137.New Zealand, Auckland (80.71)
138.Samoa, Apia (80.64)
139.Congo, Brazzaville (80.14)
140.Armenia, Yerevan (80.13)
141.Albania, Tirana (80.1)
142.Martinique, Fort-de-France (80.09)
143.Latvia, Riga (79.92)
144.Thailand, Bangkok (79.86)
145.Sao Tome and Principe, Sao Tome (79.79)
146.USA, Denver Colo (79.74)
147.China, Beijing (79.73)
148.Fiji, Suva (78.99)
149.Slovenia, Ljubljana (78.85)
150.Canada, Ottawa (78.82)
151.Tuvalu, Funafuti (78.78)
152.Myanmar, Yangon (78.51)
153.Puerto Rico, San Juan (78.49)
154.Kenya, Nairobi (78.4)
155.USA, Phoenix Ariz (78.26)
156.Mauritius, Port Louis (78.25)
157.Madagascar, Antananarivo (78.24)
158.USA, Tampa Fla (78.22)
159.Serbia, Belgrade (78.13)
160.Kiribati, South Tarawa (78.06)
161.Guam, Hagatna (77.8)
162.Brunei, Bandar Seri Begawan (77.72)
163.Uruguay, Montevideo (77.41)
164.Colombia, Bogota (77.23)
165.USA, Atlanta GA (76.99)
166.Morocco, Rabat (76.93)
167.USA, Milwaukee Wis (76.77)
168.Paraguay, Asuncion (76.49)
169.Mexico, Mexico City (76.13)
170.USA, Columbus Ohio (76.06)
171.India, Mumbai (76.04)
172.Tanzania, Dar es Salaam (76)
173.Solomon Islands, Honiara (75.93)
174.USA, Cleveland Ohio (75.84)
175.USA, Detroit Mich (75.74)
176.Liberia, Monrovia (75.63)
177.USA, Austin Tex (75.57)
178.USA, Dallas Tex (75.47)
179.USA, Jacksonville Fla (75.47)
180.Australia, Adelaide (75.39)
181.Kuwait, Kuwait City (75.22)
182.Bulgaria, Sofia (75.14)
183.Saudi Arabia, Riyadh (75.08)
184.USA, Pittsburgh Penn (74.54)
185.Timor-Leste, Dili (74.29)
186.Iran, Tehran (74.24)
187.USA, Indianapolis Ind (74.13)
188.USA, Fort Worth Tex (73.64)
189.Somalia, Mogadishu (73.49)
190.Maldives, Male (73.48)
191.USA, Charlotte NC (73.47)
192.USA, Houston Tex (73.36)
193.Chile, Santiago (73.01)
194.Mauritania, Nouakchott (72.99)
195.Botswana, Gaberone (72.86)
196.Cape Verde, Praia (72.81)
197.USA, El Paso Tex (72.61)
198.Uganda, Kampala (72.25)
199.Afghanistan, Kabul (72.13)
200.Antigua and Barbuda, Saint John's (72.04)
201.USA, St Louis MO (71.93)
202.Malaysia, Kuala Lumpur (71.82)
203.Peru, Lima (71.7)
204.Korea Democratic Republic of, Pyongyang (71.62)
205.Kosovo, Pristina (71.55)
206.India, New Delhi (71.4)
207.Belarus, Minsk (71.28)
208.Malawi, Lilongwe (71.24)
209.Saint Kitts and Nevis, Basseterre (71.07)
210.USA, Memphis Tenn (71.02)
211.India, Chennai (70.76)
212.Kyrgyzstan, Bishkek (70.29)
213.Burundi, Bujumbura (70.07)
214.Macedonia, Skopje (70.02)
215.USA, San Antonio Tex (70.02)
216.Guatemala, Guatemala City (69.74)
217.Honduras, Tegucigalpa (69.57)
218.Saint Vincent and the Grenadines, Kingstown (69.5)
219.Canada, Calgary (69.46)
220.India, Calcutta (69.31)
221.India, Hyderabad (68.85)
222.Dominica, Roseau (68.79)
223.Rwanda, Kigali (68.75)
224.Panama, Panama City (68.58)
225.Guyana, Georgetown (68.58)
226.China, Shanghai (68.48)
227.Syria, Damascus (67.99)
228.Montenegro, Podgorica (67.75)
229.Laos, Vientiane (67.43)
230.Ethiopia, Addis Ababa (66.87)
231.Cuba, Havana (66.61)
232.Belize, Belmopan (66.33)
233.Nicaragua, Managua (65.89)
234.Nepal, Kathmandu (65.67)
235.Dominican Republic, Santo Domingo (64.93)
236.Tunisia, Tunis (64.87)
237.Suriname, Paramaribo (64.75)
238.India, Bangalore (64.56)
239.South Africa, Johannesburg (64.51)
240.Costa Rica, San Jose (64.47)
241.Egypt, Cairo (64.18)
242.El Salvador, San Salvador (63.34)
243.Swaziland, Mbabane (63.11)
244.Mongolia, Ulaanbaatar (62.85)
245.South Africa, Pretoria (62.71)
246.Oman, Muscat (61.61)
247.Saint Lucia, Castries (61.2)
248.Pakistan, Lahore (59.48)
249.Tajikistan, Dushanbe (59.25)
250.South Africa, Cape Town (58.99)
251.Namibia, Windhoek (58.89)
252.Sri Lanka, Colombo (58.51)
253.Pakistan, Islamabad (58.33)
254.Iraq, Baghdad (58.25)
255.Pakistan, Karachi (57.72)
256.Lesotho, Maseru (57.49)
257.Argentina, Buenos Aires (57.46)
258.Bangladesh, Dhaka (57.03)
259.Bhutan, Thimphu (56.78)
260.Bolivia, La Paz (56.66)
261.China, Macao (56.41)
262.South Africa, Durban (56.07)
263.Bosnia and Herzegovina, Sarajevo (54.35)
264.Ecuador, Quito (53.83)
265.Uzbekistan, Tashkent (53.03)
266.Libya, Tripoli (52.74)
267.China, Shenzhen (51.65)
268.Eritrea, Asmara (50.72)
269.China, Dalian (50.54)
270.China, Wuhan (49.93)
271.China, Guangzhou (47.28)
272.Cambodia, Phnom Penh (45.65)
273.Yemen, Sanaa (45.6)
274.Turkmenistan, Ashgabat (38.77)
275.China, Tianjin (29.5)
276.Zimbabwe, Harare (17.12)

About The Author: Steven Coleman runs the most comprehensive international cost of living website available www.xpatulator.com an internet service that provides free cost of living and hardship information for 276 global locations to registered users. The premium content calculators allow you to customise your own cost of living index by choosing your own basket groups.
http://www.xpatulator.com/

Sunday, November 16, 2008

Moving to a new Country, How to cope

A while ago I wrote about moving countries, where to find information and what questions you should be asking yourself. Having experienced a couple of country moves I can give you a few tips.

Everything I wrote before on researching the country on websites, joining blogs and finding out whether your salary is going to cover your cost of living, are all relevant. What I want to do is take you through the process of moving. If you are being hired by a company who are going to help you move, life is going to be a lot easier.

If however, you are going to be doing this on your own you need to prepare yourself for a little work. Firstly, find out what you need from a documentation point of view to get into the new country.
1. Do you need a visa, which type of visa will you need (working, spousal, minor children, etc) for each member of the family and start preparing the documentation for them.
2. Documents could include Unabridged birth certificates, ID documents, Passports, Passport Photos, Marriage Certificate, each country has its own requirements. Some countries require a police / criminal clearance. Find out either from the government website or the embassy in your country as to what you need, or alternatively find an agency that can do it all for you. An agency will let you know what you need to get and can assist you in obtaining the relevant documents.

Secondly, what will you need to do when you get to the new country.
1. You will need to find a place to stay in the interim, open a bank account, organise a post box, transport, etc, so you need to find out what you need to have to do these. Do you need to keep certified copies of your passport or bank statements, etc?
2. Will you need to go through medicals for any reason, do you need to take any medical records with you? 3. How do you set up your medical aid, life insurance, buy or rent a property, get a phone installed??? Once again if you are moving with a company all of this will be a lot easier, as you will always have someone to facilitate you with the processes, but moving to a foreign country where everything is different could take its toll. Sometimes the best advice is just to ask.

Thirdly, prepare yourself for the move.
1. Start planning, make a list of everything you need to do.
2. Our list consisted of the following:
a. Plan the day you are going to fly out and book the tickets, this date will determine all the below dates. First ensure that you have all documentation required before booking your tickets.
b. List all accounts that need to be paid or cancelled and the dates that this needs to be completed by e.g. Medical Aid, Security company, Car insurance, Telephone account, Internet account, Post box, Clothing accounts, etc.
c. Decide what to do with your bank account, and all the cards attached to it. Do you want to keep your account open and keep all the cards, or just keep 1 card? Remember the bank charges that you will need to pay monthly and that you will have 2 sets of bank accounts if you do keep it open. However, it could be worthwhile so that you have money available and cards that you can use.
d. What are you going to do with your car/s, house, other assets, furniture, even down to your clothes - if you are going to sell them start planning what to sell, how much for and how you need to go about doing this, with deadline dates. Alternatively you can store your belongings.
e. If you require to give someone power of attorney to sell anything or do any other legal work for you, decide on who you would want to do this for you and how to go about doing it. Your bank can normally assist you in this process.
f. Decide what you want to do with your Life policies, Retirement annuities, or any other policy or investment you have made, your broker can help you with these decisions.
g. When are you going to tell everyone about this decision you have made, do you have to resign from a job before you go and when do you need to let them know, plan your decision carefully as you don't want to leave with any problems.
h. Do you employ anyone, start planning how to tell them you are leaving, what they need to be paid, is there a retrenchment package attached, write referral letters, do you need to write letters to any government departments to inform them of the change in status of your employee and leave with everyone happy.
i. If you are taking any personal belongings with you start getting quotes from removal companies and make a decision on who to go with. Get at least 5 quotes to be objective and ensure you are comfortable with the service, and get referrals.
j. Are you taking animals with you? If so do the same as above. Find out whether there are any special requirements you need to take into account when taking your animals with you. Do you need to keep them in quarantine and if so for how long, what documentation do you need to get for them and vaccinations?
k. Organise someone to take you to the airport.
l. Check on how you are all feeling, how are the kids doing and how do they feel about the move. Talk about it and let the kids know what is happening.
m. Have a farewell party for all of you, the kids and their friends and you and your friends. There needs to be some form of closure, and it will make you feel just how special all the people in your life are and how special you are to them.
n. Remember to keep contact details close at hand of everyone that is important to you.
o. See if you can find a personal relocator in the country you are moving too, they can be of great help too. I hope this helps in the process required to relocate. It can be daunting and unsettling, or an adventure, you need to decide how to perceive the move. In my next article, I will write about settling in and the processes you need to go through to do this.

xpatulator.com

Monday, September 8, 2008

The positives and negatives of moving internationally

Read on to see what I believe are the positives and negatives on moving around the world.


From a person that moves globally I believe the following are positive reasons to keep in mind:

1. You are able to live in a country with a different culture and if you embrace the culture and enjoy every aspect of it, you will enjoy your stay;

2. It is very interesting to see how different countries work, from government departments through to shops and even the traffic rules;

3. You get to explore a completely new environment and travel without it costing you a fortune;

4. You make new friends from all over the world, as an expat you will become part of an expat community and this community will tell you where to go, travel and visit;

5. Then there is the local community and if you are working with locals, they will do the same thing, tell you where to go to experience the local community;

6. Usually you get to earn a better salary than in your country of origin, so save save save;

7. It is also not unusual, when accepting a job through an overseas company that many of the normal day to day expenses are paid for, such as accommodation, transport, medical and schooling; and many others that are taken care of;

8. If you have children they will have the opportunity of getting an international schooling and become global citizens of the world;

9. Many people are never given the opportunity to move around the world, this is such a wonderful opportunity to teach your children how to cope in different situations, travel and cope in airports, embrace other cultures and generally survive a different lifestyle;

10. You learn to take baby steps, accept how things work or don’t, not to sweat the small stuff and become accepting of situations, people and places iow to chill. All of the above can teach you a lot about yourself.


What about the negatives….it is so normal for us humans to always potentially look at the negative side before we look at the positives and we tend to always find so many more negatives. So here is my list…but with positives to go with them:

1. Packing your entire life to move or store, probably the worst part of moving, you need to decide what to keep or sell or give away or throw away; positively it’s a great opportunity to get rid of junk!

2. Unpacking, ditto to the above….

3. Leaving your family and friends behind which under any situation is difficult; positively the world is such a small place now that between email, blogs and skype they are always only a pc away. Plus with air travel it is easy to get home very very quickly;

4. The language differences can result in misunderstandings and things not getting done in the way you would have done them in your own country, positively this teaches us patience and English is a fairly universal language;

5. You will have to go through all the processes of getting Visa’s, Residence Permits, sometimes even going through medicals, driving tests, finger printing, etc (depending on the country you are going to) which can be incredibly frustrating, but this is the way that the country you are moving to can keep tabs on who is coming and going from their country. Positively, it should make you feel safer knowing that they are checking on who is entering, that these people are responsible citizens of the world and have no criminal records, etc.

6. It will be hard for the family to settle, everything is different and unusual if you have gone to a culture very different from your own, even if it is similar it is still different; talk to the family, let everyone express how they are feeling, be understanding of each others’ moods and positively it gets the family talking;

7. New routines, a new school, a new office, new friends; and all of these take time; but all the above have the word new in so that is positive….

8. Moving countries is one of the top 3 most stressful situations a person can be in, but how you handle it will result in how well your health copes with the move; remember to always think about (perhaps even list) the reasons you made the decision to move (make sure it is a decision that has been made by the family) and hang on to all those positives, you are going to hit rough patches and you are going to need all your positive lists to get through certain stages and times of the move.

So not too bad, I love being a citizen of the world, I love knowing that I have gone through this process, that I can do it, that I can be positive, that I can meet some fantastic people that are different to me, that life is bigger than just my small little world….

If you are thinking about moving, think of the positives and negatives that it will create in your life and if you can cope especially with the negatives, go for it! Have an adventure!

Go to www.xpatulator.com if you want to calculate the salary you could earn in the new country you are looking at moving to. Good Luck!

Tuesday, August 26, 2008

My Thoughts On Expatriate Pay Philosophy

In my observation organisations spend insufficient time creating and reviewing their approach to expatriate pay. This is dangerous given that the highest employee turnover is at the beginning and end of international assignments, indicating a lack of integration of expatriate pay philosophy with the broader organisational pay philosophy.

The remuneration of expatriates often tends to be a rushed last minute decision due to urgent operational requirements. The resulting implications often only arise after the expatriate arrives in the host country, and when the assignment comes to an end. For example, the post assignment position back in the home country pays less than the expatriate earned on assignment.

Inconsistent treatment of expatriates quickly leads to unhappy expatriates. Once an organisation has more than 1 or 2 expatriates in the field it becomes vital to have a defendable expatriate pay philosophy in place. This philosophy should clearly convey the organisation’s remuneration principles regarding expatriate assignments. An expatriate assignment pay philosophy is intended to provide guidance in the consistent and equitable treatment of all expatriates and forms the basis of the organisation’s expatriate pay policy.

Most large global organisations have over time established a clear policy for remunerating expatriates. This is often a legacy policy, where past practice has become policy. However expatriate pay is a complex area of remuneration with complex issues such as volatile exchange rates, weak and strong currencies, constantly changing differences in cost of living between countries, different tax regimes, as well as the reality that there are attractive and not so attractive countries to work and live in. This is an area where a clear philosophy and an aligned practical policy are required to ensure attraction, fairness, equity, motivation and retention.

Firstly let’s deal with what makes an employee an expatriate. In my view an expatriate is a person working in a foreign country, where they are not permanently resident, on an assignment of typically not more than 3-5 years but is a citizen from another country. There are as many different expatriate pay practices as there are organisations employing expatriates. However we can identify at least four broad approaches to expatriate pay that has emerged as the dominant philosophies underlying expatriate pay.

Salary Build-Up (SBU)
The Salary Build-Up approach uses the current market related home salary as the base for calculating the expatriate package. Home in this case is the country where the employee permanently resides or is a citizen. The purpose of the build-up approach is to maintain internal equity between countries and to equalise the impact of differences between country tax rates. This ensures that expatriates neither lose nor gain as a result of tax treatment in the host country.

The Salary Build-Up approach typically involves deducting hypothetical tax in the home country, and builds on top of the home salary with an international premium (to compensate for hardship experienced), cost living index and the exchange rate to calculate a total net (i.e. after tax) assignment package.

The net assignment package is then “grossed up” in the host country for local tax and other statutory and non-statutory deductions to ensure the net pay assignment package is paid to the expatriate.

Salary Purchasing Power Parity (SPPP)
The Salary Purchasing Power Parity approach uses the principle of putting all expatriates within the organisation on an equal footing regardless of nationality and geographical location. The purpose of the SPPP approach is to ensure parity in the level of the purchasing power of the salary of expatriates doing the same job at the same level in different parts of the world, taking hardship, cost of living, and exchange rate differences into account.

This approach is typically used by global organisations that have a large number of expatriates, who move from one international assignment to another and compete globally for skills. Organisations using the SPPP approach typically establish a single global pay scale which is often by default that of the global headquarters country. The expatriate’s salary is calculated by adding calculated additional amounts for the hardship, cost of living, and exchange rate differential between the global headquarters (home) and the host country.

The assignment package is then taxed in the host country and other statutory and non-statutory deductions made to arrive at the net pay assignment package paid to the expatriate.

Cost of Living Allowance (COLA)
The Cost of Living Allowance approach uses the principle of retaining the expatriate’s home salary and paying an additional separate allowance, primarily for cost of living, but also for hardship based on the differences between the home location and the host location. The purpose of the COLA is to ensure parity in the level of the purchasing power of expatriates doing the same job at the same level in different parts of the world, taking hardship, cost of living, and exchange rate differences into account by paying a cost of allowance to compensate for the differences. At the end of the assignment the COLA falls away.

This approach is typically used by global international organisations that have a large number of expatriates, who move from one international assignment to another and compete globally for skills. Organisations using the COLA approach typically have country level pay scales. The expatriate’s COLA is calculated by adding calculated additional amounts for the hardship, cost of living, and exchange rate differential between the home country and the host country.

The assignment package is then taxed in the host country and other statutory and non-statutory deductions made to arrive at the net pay assignment package paid to the expatriate.

Local Market (LM)
The Local Market approach uses the principle of applying the local (i.e. host country) expatriate market pay rates. In many organisations the policy is to use the better of the Build-Up or the Local Market approaches, to ensure that the assignment package is equitable and competitive in the host market.

Due to the need for market data, the Local Market approach is typically only used where a strong local and / or expatriate market exists in the host country, and reliable salary surveys exist that accurately report the level of market salary for different positions. For example, take an organisation sending an expatriate from an economically poor, relatively low salary market country, to a city such as New York. It is likely that having used the home base salary as the basis of the calculation, that the resulting total assignment package will be significantly lower than the New York Salary Market. This would occur even after adding an international premium (to compensate for hardship experienced), and a cost living amount (to compensate for the higher cost of living in New York) as well as applying the exchange rate. The reason is that the market level of home base salary in an economically poor country is so much lower than the equivalent market salary in New York.

The Local Market approach is typically used in high economic growth and high cost of living countries where demand for skills is high and there are a large number of expatriates comprising many nationalities such as the United Arab Emirates, Hong Kong or Singapore.

In conclusion it is important to ask questions about your current expatriate pay philosophy. Does your current expatriate pay philosophy drive the desired behaviour? Is the current policy and practice aligned to organisational objectives? Does the current policy work for or against the organisation achieving its global objectives?

I recommend a regular review of organisational expatriate pay philosophy in light of what the organisation seeks to achieve and where it operates geographically, whilst ensuring integration with the other pay related strategies of the organisation.

Monday, August 25, 2008

The Secret to Successful International Relocation

The biggest secret I have found to moving is to stay calm, my stomach always used to churn every time we would say: “Let’s look at moving to London, Perth, Colorado….” I would have this rush in the pit of my stomach and wonder how we were going to cope with the challenge.

Now, I take it one step at a time. What do we do first, what do we need to know before we make the decision, how does the family feel about a new culture, different schools, a new home and most importantly new friends. So, where do we start?

Usually with the most important questions, why are we moving and do we really want to change from our comfort zone, once you have been able to answer these questions and you have more positives about leaving than staying (and the answer to this could be as simple as being offered a job in a new country), then you need to start researching the place you are moving to. Questions start surfacing such as will we fit in and be happy in a new country, what is the education like, medical facilities, culture, politics, housing, work conditions, transport and entertainment? How many expats like ourselves will be living there, will our life be normal or will we have to adjust too extremely, and are we happy to do this?

This is where I start searching the internet. Wikipedia is a great site to get an overall overview on any country in the world and it will cover all the basic factual information for you, including geographical location, population, historical background, religion, culture, education, economic situation and political info.

On getting a basic understanding of a country, I would then start looking at government sites and gathering information about the ease of moving to this country. What is required from a governmental legal perspective, including visa’s, whether a spouse can work on entry, how long a spouse needs to wait before starting to work, what legal rights do you have in the country, can you take your pets with and how does this work, what furniture can you take with (some countries do not allow wooden furniture into a country if it has not been treated) these government sites will cover any and all questions of this nature for you.

Finally and probably more importantly are the forums and blogs you can find, where expats can inform you of what to expect and you can ask any question and expect an honest answer. These sites can come across with mixed emotions from people who are enjoying the move and loving the country to those who hate every minute of their stay. The relevant question to ask here is why….why are they enjoying or hating it and then make your own decision?

The above would be the questions that the spouse that stays at home and cares for the children, however the bread winner wants a different question answered. They want to know what they should be earning in the new country and this is where an international cost of living salary calculator like Xpatulator can be relevant to you.

Xpatulator gives you the answers you are looking for dependant on the questions you answer in the Cost of Living Calculator. It will determine what your salary in the new country should be to maintain your standard of living. Why, you may ask? Because $100 000 may sound like a fabulous salary, however if your cost of living in the country you are moving too is extremely high, it may not cover your costs on a monthly basis. With the calculator, you can determine whether or not you will be able to afford to live in the new country. The calculator will work out the salary you should be earning if you have to cover all costs, or if your company will cover some of those costs for you. They also cover the Negative Cost of Living and Negative Hardship.

What are these you ask with horror? Negative Cost of Living refers to a location that has a lower cost of living than the country you are living in and selecting to use this will result in a proportional decrease in the salary required e.g. if you had to move from London to Zimbabwe you will find the cost of living will be lower (negative difference).

Negative Hardship refers to less hardship in the new location e.g. if you had to move from Zimbabwe to London you will find that your quality of living will be easier (negative difference).

So before you disregard the importance of what you need to earn when moving to a new country, take all aspects into account. At the end of the day what you will earn, will determine the school, home, medical facilities and entertainment you will be able to afford. So the secret to moving from one country to another, may be your emotional stability and happiness in the new location, however this is often determined by how much money is sitting in your bank account.

Thursday, August 21, 2008

Why are Expatriates paid differently to local people?

Most countries have a two tier Pay Market. The two distinct pay markets are typically an Expatriate Market and a Local Market.

The Expatriate Market is largely determined by the origin of each Expatriate. It is quite normal to have considerable differences between Expatriates doing exactly the same job, in the same country. These differences are largely caused by three factors:

  • The Cost of Living difference between the Home Country (country of origin) and Host Country (where they work)
  • The Relative Hardship difference between Home and Host Country. For example, ,moving to a country where more day to day hardship will be experienced, would normally result in more pay to compensate for the hardship.
  • The Exchange Rate difference between the Home and Host Country

On the other hand the Local Market is largely determined by local supply and demand for skills.

Depending on a number of factors, such as the availability of skills, rate of economic growth, and the type of economy, the percentage of expatriates versus locally employed people will vary.

Expatriate Pay is typically calculated by using the Expatriates salary in their Home Country as the start point and by calculating an appropriate salary in the Host Country using the Cost of Living difference, relative hardship, and exchange rate. This is either done using a company in-house policy or using an international relocation calculator.

Local Pay is typically determined by the prevailing market salary levels. These salary levels are typically reported in salary surveys run by independent Remuneration Consultancies.