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Expatriate pay packages in Singapore overtaken by those in the Philippines and Thailand

27 Sep 2012

  • Expatriate pay packages in Singapore are the eighth highest in Asia, down from last year’s sixth position
  • 'Cheaper' locations like the Philippines and Thailand have climbed up the ranking
  • India ranks second after Japan

Expatriate packages in Singapore have fallen from sixth to eighth highest in Asia, reveals a survey by ECA International, the world’s leader in the development and provision of solutions for the management and assignment of employees around the world. According to ECA’s latest MyExpatriate Market Pay Survey the overall package for expatriate middle managers in Singapore is US$204,000 on average.
While expatriate salaries can be calculated in a number of ways a total expatriate compensation package usually comprises three elements: cash salary, benefits and tax. In many cases, along with traditional market forces, an expatriate salary will also be affected by factors that typically have no impact on local market rates. These include allowances that compensate for changes in cost of living and the adjustment that an assignee has to make in living and working in a new location. Most benefits packages cover costs like accommodation, children’s education, utilities and cars and these can have a significant impact on the entire package.
While Singapore has fallen in the ranking, expatriate packages in the Philippines and Thailand are now higher. Within Asia they are in fifth and sixth positions respectively.
"A major challenge companies operating globally often face is the need to strike a good balance between attracting the right talent while remaining cost effective, especially with the current economic climate," explains Lee Quane, ECA's Regional Director, Asia. "In the case of Singapore fewer incentives are required to send an employee there than a number of other locations in the region. In addition, local salary levels tend to be very similar to expatriate salaries. As a result, more companies here will use a pay system based on local market levels to which they add benefits rather than the more common approach of using an employee’s home salary as a starting point and then adjusting for cost of living, tax and other allowances."
"In contrast, in locations such as India, The Philippines and Thailand incentives and high rates of expatriate salary increases reflect companies' growing need to attract talent into these emerging markets. All these will push up the overall value of assignee packages and make the cost of pay packages for example in Singapore lower than so-called 'cheaper' locations."

Singapore vs Hong Kong

Total expatriate pay packages in Singapore remain lower than those typically awarded in Hong Kong. Within Asia, Hong Kong ranks fourth.
However, when the package is broken down the cash element is actually higher in Singapore than in Hong Kong. It is the value of the benefits element of the package that pushes up the cost of employing expatriates in Hong Kong.
"Hong Kong is a good example of how the different elements of assignee packages must be taken into account in order to draw accurate comparisons,” says Quane. “Accommodation and international school costs there are driving up the value of the benefits typically awarded to international assignees, to the extent that the benefits element is often greater than the assignee's net take-home pay."

Highest expatriate salary packages in Japan followed by India

Japan continues to top the list with expatriate salary and benefits packages remaining the highest in Asia. Cities in Japan have some of the world’s highest costs of living, and expatriate salaries are high because, to attract the right talent, employers need to ensure that an assignee’s purchasing power is maintained. The average total package for an expatriate middle manager in Japan is US$374,000.
More surprising for many is that pay packages in India are the second highest in Asia, ahead of locations which are generally seen as more expensive including South Korea, Hong Kong, Taiwan and Singapore.
"When we exclude the impact of tax and just look at the value of the cash salary and benefits, India falls from second to fifth position within Asia while Singapore moves up from eighth to fourth," says Quane. "Singapore has a comparatively low tax model compared with India where, the high rate of tax means that the total cost to the company ends up being higher."
Many companies will apply a tax equalisation approach to ensure that employees on assignment pay the same amount of tax as they would have in their home country.
"Companies also need to be aware of the tax implications of the benefits they provide, and the ways they provide them, since these can affect their tax liability considerably," added Quane.

Gross expatriate salary packages in Asia (US Dollars)

*Not all benefits values are available for these locations

ECA’s MyExpatriate Market Pay Survey

ECA’s MyExpatriate Market Pay Survey looks at pay levels for expatriates around the world, including information on benefits, allowances, salary calculation methods and tax treatment.
The results enable companies to benchmark their expatriates’ actual salaries against the market. More than 250 companies took part in the survey covering 143 countries and over 10,000 international assignees.
Notes to Editors
Figures used in this release were collected in the latter half of 2011. They refer to Middle Manager position based on 80 ECA Points. ECA Points is a job evaluation system that measures the influence, scope and responsibilities of a job.
There are a number of ways in which salary packages for expatriates may be calculated. The information provided by participant survey companies relates to home and host based salary systems as well as locally hired and localised expatriates and expatriates on indefinite contracts.
Certain types of allowances are specifically excluded from the analysis in the reports. These are one-off payments such as allowances for outfit, furniture, disturbance and relocation.
Benefits values are based on standard ECA assumptions* and have been derived from data in ECA’s accommodation and benefits reports to provide an estimate of the cost of providing these benefits. The actual costs or allowances paid to cover these benefits vary widely according to each company’s policy.
Tax figures used here refer to employees and do not take company contributions into account. For ease of comparison, it is assumed that cash allowances are paid to employees to cover the cost of any benefits provided.
*The accommodation figure is representative of the cost of housing two adults and one child. Utilities cover heat, light, water and telephone charges. Education assumes one child attending a local international school. The car figure covers annual running costs and is based on a standard car (2000 cc) depreciated over 5 years.  

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