In a recent report released by global mobility expert ECA International (ECA), the United Kingdom has once again claimed the title of the most expensive location in the world to send employees on expatriate assignments.
The data reveals that businesses paid an average of £351,992 last year for annual expatriate pay and benefits packages, marking an 11 percent increase of £33,887 from the previous year.
The rising costs of staff benefits were identified as a significant driver behind this surge, making up more than half of the overall increase. Expenses related to accommodation, international schools, and cars were among the common contributors to the higher benefit allowances.
In contrast, the average salary for middle management positions in the UK experienced a more modest increase of 5 percent, reaching £63,250 per annum in 2022, compared to £60,252 in 2021.
What needs to be taken into account?
ECA International’s annual MyExpatriate Market Pay Survey is designed to assist companies in benchmarking their staff relocation packages against the global market. The survey considers three main elements: benefit allowances, cash salary, and tax treatment, providing valuable insights for businesses navigating the complexities of expatriate assignments.
According to Oliver Browne, the Remuneration and Policy Surveys Manager at ECA International, the soaring cost of benefits is a major factor in the UK’s retention of its expensive status for the second consecutive year. Additionally, fluctuations in exchange rates have also contributed to widening the gap with the second-place holder, Japan.
Which other countries rank highly?
Switzerland clinched the position of the second most expensive country in Europe for expatriate pay and benefits packages. The average cost for businesses to send an employee to Switzerland amounted to £212,880 (CHF 259,395) per year. Switzerland’s salaries were the highest in Europe and second-highest globally, with an average annual salary of £77,760.
Browne highlighted that while Swiss salaries are relatively high, so are the everyday living costs in most Swiss cities. Nevertheless, the combination of high salaries and low taxes makes Switzerland a relatively affordable location for staff relocation compared to the UK.
Italy emerged as a more competitive option for staff relocation within Europe. Despite experiencing 4 percent and 7 percent increases in salaries and benefits costs, respectively, the lower taxes in Italy led to a mere 1 percent increase in the overall cost of sending a middle manager, amounting to £147,145 (EUR 175,090).
The strength of the US dollar has propelled the United States into the global top ten most expensive locations to relocate staff. While there was a slight decrease of 0.4 percent in salaries, the total package cost rose by 6 percent to £217,417 (USD 272,770). Higher housing costs were cited as a significant contributor to the overall increase in the cost of benefits for expatriates in the USA.
For expatriate middle managers, Saudi Arabia boasts the highest salaries globally, reaching an average of £83,763 (SAR 394,083), even after experiencing a 3 percent decrease compared to the previous year. Browne explained that while the Middle East may not top the overall rankings, it offers incredibly generous expatriate salaries to attract talent, particularly in Saudi Arabia. The cost of benefits ranks lower in comparison, and the lack of personal tax makes overall package costs more affordable for businesses.
The report also revealed that the pay gap between the UK and Japan has widened, with Japan claiming the second-place spot globally. Although Japan saw a 5 percent increase in local currency terms for expat pay and benefits packages, the weak Japanese yen resulted in a cheaper overall package when converted to GBP, costing £295,062.
As companies continue to navigate the complexities of international assignments and manage the costs associated with expatriate packages, ECA International’s data provides valuable insights for effective decision-making in the global mobility landscape.
Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.
