Feeling lighter?

Expatriate pay packages have always been in the spotlight. Where they were once lavish, often attracting the ire of local employees, they are now becoming more modest. But there are still a number of benefits that separate them from the compensation setups of local employees in Asia.

Emma Charnock, Regional Director of Hays Banking in Asia says expatriate packages used to reflect their importance in the internal learning and capacity building of a local organisation. “Expats traditionally brought to a company a wealth of experience and an excellent education from abroad,” she says. “They were valued for their insights and remunerated accordingly.”

Today’s employers see expatriate and local workers bringing the same value to their companies – due to their often equal exposure to good education and overseas experience. Hence,the gap between local and expatriate pay packages is slowly shrinking.

Employers have also been keen to cut costs, particularly during the recent economic downturn. This has led to more flexible pay structures emerging. These types of compensation and benefits packages are tailor-made to what the expatriate employee needs and hence, helps employers cut down on unnecessary components, in turn saving costs.

“There is a growing trend towards partial expatriate or local packages – the so-called ‘local plus’ packages,” Phil Stanley, Managing Director, ORC Worldwide (Asia Pacific) told HRM.

He says employers now pay expatriates according to the salary levels, structure, and administrative guidelines of the host location, rather than where the expatriate has come from. On top of that, they provide additional expatriate-type benefits, including housing, dependent education and sometimes transportation.

Compensation structures

Hewlett Packard (HP) says its relocation package for workers coming to Singapore is aimed at managing the needs and expectations of those foreign staff. At present, the company provides a “menu-driven” package to give each worker the most flexible relocation options.

“Some of the mandatory provisions of our relocation package are immigration and tax,” Gazle Tacazon, Mobility Lead, HP, says. “Added to this, there are additional provisions which include housing, transportation, shipment, and home leave.

“The most popular component being availed to expatriates is housing for single employees and education for employees with families,” he added.

Relocation packages within Daimler include allowances for housing, school, insurance, transport, return tickets back home, and also assistance with career opportunities for an expatriate’s spouse. Once again, the company tailors each package to the individual. For example, employees who are single receive a housing allowance but those who have children can be provided with school fees instead.

Daimler doesn’t just look at its expatriate assignment packages as talent attraction or retention tools. They also help to assimilate expatriates into the wider local community. “I think you do not have to attract and retain,” Michael-Joerg Ivan, Senior Manager, HR, Daimler Southeast Asia, says. “The question is more how to localise expatriates – this is the bigger challenge.”

Keeping the kids in school

Familial reasons tend to be high on the list of reasons an expatriate worker would prematurely terminate an employment contract. Problems that an expatriate’s family may face include those regarding unfamiliar transportation, housing, food, healthcare, and, importantly, different education systems.

It is therefore in an organisation’s best interests to keep their expatriate staff’s family happy by solving some of these problems before they happen. And one of the main strategies organisations use to do this is through sound dependant education allowance strategies.

In April last year, the American Chamber of Commerce in Singapore created a “Select Committee of International Schools” (SCIS) to focus on one of the greatest issues facing its members today – ensuring their children have access to international-standard schools.

In one of its first moves, SCIS conducted a survey on the demand for international schools. It found that children’s education rates highly on parents’ agendas and that 69% of employers report that their expatriates use an international school for their kids’ enrolment.

Local Singapore schools are rarely an option for most two- to three-year expatriate families, as they will often need to stay with the home country curriculum. Expatriate parents also say the system can be confusing and school calendars do not align with most other national holidays for Western countries. 79% of parents told SCIS they would not be willing to enrol their children in a local school, even if no immediate slots were available at an international school.

The current mix of international schools has both a quality and brand value that attracts expatriates. However, more expatriates are paying for schools (and housing) themselves, so school cost is an important factor.

Although the SCIS survey reveals that 93% of employers feel access to an international school-of-choice was an important factor in the workers accepting expatriate assignments, another piece of research has found that less than half (46%) of the employers in Singapore provide such funding. “Perhaps because of the more permanent nature of expatriates on local-plus terms, companies are less willing to contribute towards school expenses,” Stanley said.

HP is one of the large minority. It covers the transportation, textbook expenses, and tuition fees of all its expatriates’ children. The company also helps to expedite enrolment and other logistics.

Gazle says expatriate staff are free to choose any international school they prefer. “Generally, the trend is for these staff to choose residence locations near their children’s schools.”

Daimler’s Ivan says his company also maintains funding for education in its expatriate packages “School fees allowance and access to international schools is extremely important to expatriate staff with families.”

International schools in Singapore

According to the Economic Development Board (EDB), Singapore has 45 Foreign School Systems presently accepting enrolments. They offer a broad range of curricula, from the internationally-recognised International Baccalaureate (IB) programme to the country-specific curricula of the Japanese, Australian, American or British school systems. These schools also teach a range of age groups, from kindergarten to Grade 12.

The only problem can be securing a place. Demand for these schools is already at an all-time high and SCIS predicts it will get stronger still over the next three years. It says another 2000 school places are urgently needed.

While the numbers are in its favour, United World College of South East Asia (UWCSEA) is certainly working to bring that demand to its attendance sheet. The school has a good track record in terms of academic achievements, and it also offers a variety of service programmes, environmental awareness initiatives, expeditions and activities for its students. The IB-school is one of only three non-profit international education providers in Singapore.

UWCSEA is currently expanding its enrolment capacity, from the current 400 students at the East campus to 1200 students at two campuses by August next year. Joy Stevenson, Director of Communications, UWCSEA, says the expansion is a natural reaction to the expected influx of expatriate families over the coming years.

“Demand for a UWCSEA education remains strong,” she said. “That is one reason why we decided to open a second campus.”