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Local finance professionals in Singapore think expats enjoy lavish benefits; they don’t

Expat deal

Your employer is offshoring jobs and your manager is constantly talking of cost-control, but meanwhile your expat colleagues are being lavished with expensive benefits – their accommodation and schooling costs all paid for by the company.

The above scenario is a common enough perception in Singapore. More than two thirds (69%) of local finance professionals there think their international counterparts are receiving expat benefits packages, according to a recent eFinancialCareers survey of more than 1,000 finance professionals – both local and foreign – in the city state.

The research also reveals, however, that the perception is far from reality: an overwhelming 83% of overseas finance professionals in Singapore say they have never been employed on an expat package.

Headhunters say that expat packages (on-going allowances, mainly covering schooling and housing) have been restricted to a small minority of senior, mainly C-suite roles since the financial crisis. “Before then far more bankers were on expat packages, but they have converted to local deals now,” says Rahul Sen, a director at search firm Sheffield Haworth in Singapore.

So why the misperception?

Many firms in Singapore chose not to communicate their tough stance on expat packages in case it made them appear less attractive to potential overseas candidates, says Nicholas Wells, managing director of search firm Webber Chase in Singapore.

“It’s also a legacy issue from when almost all foreigners were on expat packages, thus the current mindset among some locals is that these allowances are still attracting foreigners to Singapore,” says Christina Ng, executive director at LMA Recruitment in Singapore.

Most employers do still cover some one-off relocation expenses, such as one-way family plane tickets, household removal costs, visa sponsorship and a short stint in a serviced apartment. “Singaporeans may not be aware that these benefits are just for the first month, so they might think that permanent expat allowances are still in force,” says Gary Lai, managing director, Southeast Asia, at recruiters Charterhouse Partnership in Singapore.

It’s also common for foreign finance professionals to spend a large proportion of their income renting condominium apartments in expensive central parts of Singapore, which, according to Lai, can create the misperception that they are receiving housing allowances.

Why expat packages are almost extinct  

The beginning of the end for expat packages was triggered by cost controls brought in by financial institutions during the 2008 global financial crisis. But other factors have contributed to their demise.

As Singapore’s economy and job market weathered the crisis comparatively well, applications from recession-ravaged Western countries increased and employers realised that removing expat benefits would not affect their hiring. “Singapore isn’t seen as a ‘hardship’ emerging market where expat packages are needed as a recruitment tool, but rather as an attractive place to live and kick start an Asia-based career,” says Angela Kuek, director of search firm The Meyer Consulting Group in Singapore.

Despite high living costs – which have seen Singapore move up global cost-comparison city rankings from the Economist Intelligent Unit and Mercer – employers point to the country’s low tax rates as another reason why expat deals are unnecessary. “Foreign professionals working here often take home more money than they did in the West, even on local packages,” adds Lai from Charterhouse.

Expat packages are also becoming more politically contentious. The eFinancialCareers survey found that 55% of Singaporeans believe that foreigners are receiving preferential treatment in the workplace. And the Singapore government has reacted to growing public concern about the high level of foreign nationals working in the country by tightening its work-permit procedures from next month.

Meanwhile, 62% of Singaporean financial services professionals think that expat packages cause “friction in the office”. “Morale is affected as Singaporeans perceive that foreigners have higher total compensation while performing the same tasks as them. This invites gossip and office politics,” says Ng from LMA.

Elsewhere in Asia

Like their counterparts in Singapore, financial institutions in Hong Kong have been cutting back expat packages since the financial crisis. “There’s still a perception that expats receive packages – many locals think expats won’t accept a relocation otherwise,” says Marlene Chan, a managing consultant at search firm Capital People in Hong Kong. “But given the recent market downturn, many expats are actually willing to take a local package just to land the job.”

In mainland China, expat deals at global banks are slowly declining as more local employees rise through the ranks, says Alistair Ramsbottom, managing director of Shanghai search firm The Blacklock Group. But in an emerging market like China they are still needed to attract and retain senior foreign financial professionals tasked with leading new projects, most of whom stay in China for two to three years.

“For those who decide to stay longer and settle down, it would be surprising if they maintain a long-term expat status. Some may even switch to ‘half-pat’ or reduced packages,” says Ramsbottom.

Chinese staff are generally accepting of expat deals because they see the necessity of importing skills to help expand China’s nascent financial sector, while recognising the recent efforts of foreign banks to promote more locals into managerial roles, he adds.

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Comments (9)

Comments
  1. First, you need to define “expat terms”. I would say that at least 80% of foreigners working in Singapore (more so than Hong Kong) are on terms more favourable than their local counterpart in the same position.

  2. I am an ex-pat living in Singapore. I paid for all my transfer costs to live in Singapore, flights, removalist and shipping costs, employment pass application – everything paid by me.
    I do not get any allowances for living here. I do not get any allowances for housing or cars.
    I do not get any extra pay at all for working for my company in Singapore.

    I have a good salary – which is the same as my salary in Australia. No more.
    And in terms of my peers in Singapore doing the same job – they get paid the same as me.

    The fact is that ex-pat packages are almost dead because local talent has picked up the skills that ex-pats used to provide – which was the whole point of ex-pats – to transfer skills.

    Yes there are a few – very few – who still enjoy a fat cat package – but they are dying out.

  3. The article is correct in saying that there are much fewer ‘full’ expat packages these days and that most pre-crisis expats have localised their contracts if they have not left Singapore.

    However, it is deceptive to exclude the fact that a significant proportion of these so-called localised packages effectively include monetised translations of their previous expat benefits. All in all, the foreigners are still earning more, all else being equal.

    How do I know? I had one of them.

  4. We have to define who is an expat first. Any foreigner is an expat? Then with the large amount of unskilled workers or semi-skilled staff, then yes, more than 80% of them should be getting local packages. But then, are those the ones that locals think of when they think ‘expats’?

  5. This is rubbish. I have been with 6 MNC in singapore, in 3 different industries. Every single expat got a much better package than a local in the same or similar position. There is disparity not just in benefits and salaries but also in leave. It is disgusting in Singapore because there is a very high proportion of Expats. Expats in general referrs to white guy in an office in Asia regardless of skill set or education level.

  6. Expats are hired because they provide a skill just like any other worker. If they cost more to comparable local talent they would not be hired for obvious reasons. Singapore’s stance is like trying to force EPL clubs to pick locals over foreign players, or trial six locals first and prove they aren’t up for the task first. Let’s see how they would perform in the Champions League if that were the case!? International business is just that. You get who you need and pay accordingly. Medalling by government can reduce competitiveness and leave both local and foreigner without jobs if it goes too far. With a 1.9% unemployment rate the current stance is quite ridiculous IMO.

  7. I am a Singaporean. Expats in my company get more benefit in terms of salary, leaves, local expense reimbursement. Also once a year free overseas travel to entire family members. Even for local medical insurance expats and their family is on a higher benefit range than locals. Locals are entitled for 14 days AL and expat 28 days. For expats claims reimbursement no questions asked even if it is personal. I feel like I must work in Singapore as a expat. If for same job local is paid SGD 5K per month and expat is paid 2.5 times more. In this scenario, being local is not good. Hope this will get reversed.

  8. The plain truth is that a lot of the high end careers in Marina Bay Financial and elsewhere have been created by western MNCs and banks offshoring roles and whole departments to Singapore. This requires highly skilled expertise, in the shape of expats to come over to Singapore, from for example London, so that whole departments can be offshored here. Without them the department could not move. They often have years and years of varied experience in mature banking markets in Europe/North America. YOU CANNOT GET THEIR SKILLS AND EXPERIENCE LEVEL LOCALLY. They have to be paid over and above the locals because they are worth more. If you did not pay them a lot they would not come here, the department would not be offshored, and, guess what, no jobs for locals would be created. If truth be told Singapore is still a ‘process’ location, in other words, local workers are used to perform processes that are already in place elsewhere. The processes often do not require high level personnel, but getting the department to successfully transfer here and work to a high level does.

  9. All boil down to what industries u are in ! I am working (expat) working in a 3rd world country /Indo for more than 13 years now (since 2002) & if the perks/terms is nothing better than yr own country, I wl not venture to Indo. There must be some sort of different & feel the “kick” in yr wallet. Sacrifices is the biggest hurdles expat must know overcome. Expat in Spore, they are easy life as most s’porean can help out in term of languages etc.

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