Despite borders reopening and the economy back on track, the way to recovery is a long and hard one for businesses around the world. It does not seem like we will be seeing the end of the health crisis anytime soon either. Businesses are reviewing their priorities and their expenses. Is this the end of the Golden package for expats?
The uncertain future of the expat package
Expatriation allowance, housing, company car, smartphone and computer equipment, driver, health insurance, household help, childcare, help with moving and administrative formalities, school fees, bonuses... The expatriation package is this set of benefits granted to the future expatriate. While these benefits may be advantageous for some (directors and other high-level positions), they are rather a compensation for others. The expatriation adventure could also mean a decrease in earnings, especially if the expatriate leaves with his or her spouse who is not working. There are additional losses of income if there are children involved: school fees, childcare, etc. The various financial crises have changed the situation. The bursting of the Japanese speculative bubble at the end of the 90's, the American crisis of 2008-2009 leading to a global crisis, the Spanish real estate and banking crisis of the 2010's, the Greek debt crisis at the same period... and the current pandemic, which is plunging the world into a recession not seen since the 1930s. That's a lot. Far too much for even the largest companies.
This is a reminder that countries are interdependent. The bankruptcy of Lehaman Brothers sealed the fate of the United States and precipitated the fate of Greece. Other countries follow. The crises follow one another, but they do not completely disappear. Greece bears the scars of its near-bankruptcy. In many countries, Covid has only aggravated already tense situations. It is undeniably hard, in these situations, to offer expats benefits one can barely afford. In September 2020, the Journal of International Management examined the fate of the expatriation package in a study entitled "Sustainable expatriate compensation in an uncertain environment". For Jane F. Maley, Miriam Moeller and Alina F. Ting, authors of the study, the conclusion is clear: even if expatriation offers many advantages for multinationals, it is far too costly.
Does the end of expat packages mean the end of expatriation?
Why leave? The most radical answer and conclude: "The prosperous era of expatriation packages for all is over. This is the end of expats." Their main argument: the Covid-19 and all the changes it has brought about, especially concerning the relationship to work. Telecommuting and the proliferation of digital nomads would have caused the need for foreign labor to drop. With unemployment on the rise, states would rather rely on locals, especially young graduates during the pandemic. There is no shortage of local talent, and it costs less than expatriates. Expatriation costs, however, have jumped. Japan is the most expensive destination, with an estimated package of $405,685. The United Kingdom comes second ($404,405), followed by India ($318,596), China ($285,804) and Hong Kong ($279,399). At the same time, the cost of living has also risen.
For others, one should not be too radical especially with the growing need for foreign labour. Quebec's 2022 immigration plan is unequivocal. In Israel, the Minister of Innovation has extended a helping hand to skilled foreigners in the new technology sector. Israeli start-ups would not find enough potential locally. Same problem in Finland, but in more sectors: industry, health, agriculture, social services... Switzerland also welcomes foreign talent. The same open love letter for Thailand, which promises easier formalities for expatriates. A few months ago, the Harvard Business Review magazine published a study on the benefits of expatriation. Human experience, improved creativity, opening the field of professional possibilities and making you more tolerant. However, everyone agrees on one point. Covid-19 buries a certain vision of expatriation, that of expatriation packages - especially "golden packages" - super bonuses with various bonuses, doubling of salaries, interest in kind. From now on, these packages could only concern a tiny fraction of expatriates: senior managers and directors who have no other interest in immigrating to a particular country than the financial advantage. But for the vast majority, it is the end of the era of "business-class globetrotters whose careers essentially consist of shuttling between Bombay, Abu Dhabi and Lagos." (The Economist).
The new reality of expatriation
Instead of the expatriation package, we now prefer qualitative advantages: training on the culture of the host country, language learning... The expatriation candidates themselves are looking for something more tangible. The pandemic has weakened incomes, not dreams. Because the closing of borders has traumatized the world, travelers are becoming even more wanderlust. To leave, not to be richer, but to live better, to reconnect with others and with themselves. More than a simple departure for work, expatriation is a life project. Traveling is part of a life path that allows the expatriate to take a new look at his environment and himself.
