Asia’s expanding markets offer a multitude of financial opportunities – and challenges – for international investors. One such challenge is finding the requisite skills from within the local labor pool to appropriately and adequately fill open positions. Thus, many companies look outside the country or region to source candidates. But staffing these open positions with foreign talent can prove to be an expensive proposition, especially if traditional expatriate perquisites are part of the pay plan. The present uncertain economy has employers busy looking for cost-effective expatriate compensation options. Participants in two surveys by ORC Worldwide – Local-Plus Packages in Hong Kong and Singapore and Survey on Local-Plus Packages for Expatriates in China – report a growing trend toward expatriate “light” or “local-plus” packages.
“These alternative packages often base the assignee’s salary on host-country pay structures,” said Phil Stanley, managing director of ORC Worldwide’s Asia-Pacific region, “but then tack on a few expatriate-type benefits, such as some form of housing assistance and possibly an allowance to partially cover children’s education.” But employers in different Asian locations address the situation in various ways, depending on the local market and other factors.
“For example, while the idea of a local-plus approach in China is popular, and employers are discussing it,” explained Stanley, “in actuality, the concept is still very much a work-in-progress for most companies. Employers determine much of what they offer on a case-by-case basis. Due to the talent shortages and living challenges in China, we found that most often the local-plus offering is merely a reshuffling of the traditional expatriate assignment package elements.”
When it comes to places like Hong Kong and Singapore, the practice varies. Two-thirds of companies operating in Singapore use local-plus packages for certain situations, compared with half the companies in Hong Kong. “The lower prevalence in Hong Kong may be due to a higher percentage of companies simply offering a pure local package to some expatriates due to higher salary levels and lower tax in Hong Kong,” explained Stanley. “When a local-plus package is provided, it is likely to be limited to a local salary and include a cash allowance for housing assistance and placement in the local pension plan – but no other ‘plus’ elements.”
ORC Worldwide is a human resource consulting company, providing clients with global solutions to HR management and compensation concerns through customized consulting, information analysis, and unique peer network forums allowing common-interest groups of HR executives and specialists to share information and experience. ORC, whose roots trace back 75 years, serves large and mid-size companies, not-for-profits, and non-government organizations around the world. Headquartered in New York, ORC has offices in Chicago, Dallas, Dubai, London, Los Angeles, Melbourne, Munich, New York, Paris, Sacramento, San Francisco, Singapore, Tokyo, Washington, D.C. and Wellington.