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