Are Expat Packages a Thing of the Past?
Updated: Jul 11, 2019
Years ago, when many western multinationals were establishing their footprint in Asia, the expat package was a fairly standard expectation for senior communications executives relocating to the region. Fast forward to the present day, and the number of these contracts on offer is dwindling. Organisations looking to establish a more sustainable and sensible approach to their employee contracts recognise it’s no longer feasible to give the types of benefits they have done in the past.
Housing, school fees, a car and driver: historically, these benefits were introduced to ensure that expats relocating to Asia could expect a standard of living akin to what they had in their home countries. The compensation was usually in recognition of what was classed as a “hardship posting”. Full expat packages are still offered for such postings but the way companies grade markets is not always consistent. For example, some organisations class Dubai as a hardship posting because of the sand pollution and neighbouring war zones, whereas others would see it as anything but! In Asia, it’s usually postings in emerging markets, such as Indonesia, Vietnam and the Philippines, that would still command a generous expat package. That said, these are evolving markets and what is considered a hardship posting today might not be considered one tomorrow; that’s an important consideration when weighing up such a package.
Communications is also evolving as a discipline across Asia. Once a nascent profession, it is now well established in most markets, and with local talent no longer in such short supply, there is less need to relocate people. Moreover, in an effort to redress the balance between expats and local staff, many businesses have made a commitment to localise their employee base. So while there are still lucrative opportunities for expats, there is also more competition from homegrown talent.
“If you’re being offered an expat contract, think long and hard; bear in mind that you may have to localise at some point, and have a contingency plan in place for when, or if, that happens.”
Changes to the business environment have also contributed to the decline of lavish expat benefits. The fallout from the global financial crisis and geopolitical instability are just a couple of factors at play here, and who’s to say what other issues will arise over the course of the next few years. As companies look to balance the need to attract the right talent with the need to be cost effective, the handsomely compensated expat is in danger of becoming something of a sitting duck. My advice if you have such a package: enjoy it while you’ve got it, but save for the future and avoid getting into a scenario where you become reliant on the benefits. If you’re being offered an expat contract, think long and hard; bear in mind that you may have to localise at some point, and have a contingency plan in place for when, or if, that happens. Given that changes to the business environment can occur without warning, it would be prudent when negotiating any package, to focus on fixed-term compensation, as opposed to additional benefits – which can be taken away.
As much as I’d advocate steering away from getting hooked on an expat contract, this doesn’t discount the fact that there can still be challenges for expats living and working abroad, so it remains important to negotiate benefits specific to your posting. China, for example, is no longer considered a hardship posting by many organisations, thus removing the justification for fully-fledged expat packages – but it is still very challenging for a foreigner to obtain car insurance. Typically, a car and driver are benefits reserved for expat packages, however in this instance it is an essential benefit to go about your daily life, rather than a simple nice to have. So do your homework beforehand; identify these sorts of issues ahead of time and put yourself in a strong position to negotiate a package that ensures your smooth transition abroad.
By Hannah Park (Consultant, Asia Pacific)