How has the crisis affected expat packages?

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Published on 2022-06-22 at 07:00 by Mikki Beru
Repeated economic crises, including the Covid pandemic, plunged the world into one of the worst recessions in its history. This caused major upheavals in work structures and the rise of remote work and digital nomadism. So, where do expat packages stand amid all this?

In the post-pandemic era, it looks like expat packages and their range of benefits are part of the past. Only a few professionals are lucky enough to bag such work contracts.

Pandemic effects on expat packages

A decade ago, expats used to move abroad for work on a more or less long-term contract, that is, five to six years. Today, the duration of these contracts has been reduced to three years maximum, although most of them are on one or two years. Usually, expat packages are financial and material benefits negotiated during the expatriation contract, and they are supposed to compensate for losses due to the move. In addition, they are expected to improve the daily life of the expatriate through financial bonuses, housing, moving and installation assistance, car, financial assistance for the spouse, childcare, health allowance, etc.

In the 1990s, the American economy exceptionally expanded, although less than in previous growth cycles (1980s and 1960s). The country's economic stability and prosperity attracted a lot of expatriates. Today, Asia is also going through a delicate period with the burst of the financial bubble. Therefore, expats have to reconsider their moving abroad plans and the lifestyle they are seeking abroad. Also, fewer companies are keen on international transfers, which are deemed too expensive.

What should you expect from expat packages?

Some expats, especially those with high profiles, still manage to negotiate expat packages. Large multinationals consider this an asset and thus do their best to attract global talent and expand their activities. That being said, countries like the United Arab Emirates (UAE) have a significant demand for highly skilled foreign professionals, and this usually involves attractive packages. For example, in addition to their salary, expats can expect that companies take care of costs such as healthcare, transport, housing, company car, childcare, and even school fees when they move with children, Internet and phone packages, etc. However, this mostly applies to high positions like directors, financial directors, HRM, doctors (surgeon, professor...), investors, business creators, etc.

While the basic salary might seem lower compared to other countries, expat packages provide compensation. For example, an IT manager earns an average of 360,000 Emirati dirhams per year ($98,000), which is lower than the United States (about $166,000 annually). However, the salary of IT directors in the UAE rose by almost 18% in the past 5 years. Expat packages tend to boost these salaries a little more, especially in large groups of companies where money is not really an issue. So directors and other senior positions stand greater chances to negotiate their expat package compared to other expats. Whether they are moving with their family or not, most expats are no longer entitled to such benefits. But that doesn't mean you should not give it a try. If you're lucky enough, you might be able to convince some company that you're the perfect fit for them and thus bag a golden package.

Tips for negotiating your expat package

Calculate all your income, your expenses (including taxes), and your remaining living expenses. Check with your bank whether you can receive income from any freelance job in your expat country. Plan an emergency budget as well, in case things don't go as planned. Basically, you would have to reason as an entrepreneur assessing their turnover and expenses before deciding on their action plan and cash flow.

Compare your salary with the average wage in your host country. Dubai, for example, is cheaper than London, Tokyo, or Paris. But while accommodation is as expensive as in other large cities, you will be entitled to many tax benefits. Conversely, New York is an expensive city with high incomes, but the cost of living is high, and so is tax.

Learn about the types of contracts available in your expat country. Today most companies are in favor of local contracts, especially since the Covid pandemic, as it doesn't involve a lot of expenses. But it all depends on the law, the cost of living and the living standards in the host country. Keep in mind that large groups of companies are usually more familiar with this process and that most of them are currently offering standard packages. So you might have more leeway in a start-up or an SME (small and medium-sized enterprise).

Take the time to read your contract, ask questions, and discuss these with the employer. Is the position the same as the one you hold? What will be your specific missions? Will you have cross-cultural training?

Show your employer that you have enough knowledge on expat packages and negotiate all the benefits you would like to have. Don't let yourself be intimidated, as you have surely been selected for a reason. Mention the impact of this move on your family and see whether your spouse can also have any benefits. Keep in mind that all this should be presented as a benefit to the business. Discuss not only your salary but also taxation, working conditions, your work plan, etc.

Include a clause about your return and anticipate a possible breach of contract in the host country. Be sure you are aware of its impacts on your position in your country of origin.

Pay attention to details, and don't be hasty.