Expatriates in Japan receive the highest net take-home pay in the region. ECA's MyExpatriate Market Pay Survey shows that the average net take-home pay for a middle manager on assignment to Japan is US$98,000. Expatriates at the same job level in Hong Kong receive almost US$80,000.
Expatriate salaries in Hong Kong lag behind certain others in south-east Asia. The city is ranked tenth in the region, reveals the study.
"Expatriate market rates are influenced by a number of factors that don't affect local market rates," says Lee Quane, ECA's Regional Director, Asia. "For example, changes in cost of living indices and location (hardship) ratings, typically used when calculating an expatriate salary, will affect the levels of salaries awarded to expatriates in the country, in addition potentially to more traditional market influences."
Japan is followed by South Korea, Taiwan and Laos.
"Despite local salaries in Laos being low, net salaries for expatriates are the fourth highest in the region, owing to the fact that companies typically provide location allowances in order to attract employees to accept assignments in this location," explains Quane.
Expatriates in mainland China, India and Vietnam receive the lowest net take-home pay.
Value of benefits is highest in Hong Kong
Although net-to-net salary comparisons provide a clear picture of the cash sum received by employees in different locations, many expatriates will receive a benefits package on top of their basic salary to cover costs such as accommodation, education, utilities and cars. This can affect the overall value of the package considerably – and its cost to the company.
In Hong Kong, for example, the value of the benefits provided to assignees is the highest in the region, usually worth more than the assignee's net take-home pay. When typical benefit provision is factored in, expatriate packages in Hong Kong are actually the second highest within the region, after Japan and ahead of Singapore.
"A constant issue for companies operating globally is the need to strike a balance between cost effective assignments and attracting the right talent," says Quane. "The high cost of employing expatriates in Japan may partly explain why fewer companies assign staff to Tokyo versus Hong Kong and Shanghai. In Hong Kong, the limited availability of accommodation for expatriates and international school places is putting pressure on companies who cover these costs. However, these benefits can have a big impact on the attractiveness of the package for the assignee, particularly in a competitive market."
"A variety of approaches can be taken to work out a remuneration package that favours both the company and employee," continues Quane. "Understanding and being able to benchmark the many varying elements of the package facilitates this."
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