- Average annual cost of sending an expat to the UK is now £351 992, up by 11% on last year
- UK salaries rose by just 5% (£2 998), and represent only 18% of the total expatriate package
- Salaries in Switzerland are the highest in Europe (£77 760), more than £14 500 higher than in the UK, and beaten only by Saudi Arabia globally (£83 763)
The UK is the most expensive location in the world to send employees, with expatriate annual pay and benefits packages costing businesses on average £351 992 last year, up £33 887 or 11% from the previous year, according to latest data from global mobility expert, ECA International (ECA). Rising costs of staff benefits common for expatriates, such as accommodation, international schools or cars, made up more than half of the increase, while the average salary increased by only £3 291 per annum or 5% since 2021, to £63 250 for a middle management position.
Assisting companies to benchmark their staff relocation packages against the market,
ECA conducts its annual MyExpatriate Market Pay Survey for expatriates around the world, considering three main elements: benefit allowances, cash salary and tax treatment.
Oliver Browne, Remuneration and Policy Surveys Manager at ECA International, said: “The rising cost of benefits is a key factor behind the UK retaining its status as the most expensive country in the world to send expatriates for the second year running, but exchange rates changes have also helped widen the gap with second placed Japan. Soaring rents drove a 15% increase in the overall cost of benefits, contributing to the cost of benefits for expatriates in the UK ranking highest globally for the second year running. Meanwhile, salary costs rose by 5% since 2021, bringing the UK’s salary ranking down three places from last year to land in 28th place worldwide.”
Swiss salaries hang onto top position in Europe
Switzerland ranks as the second most expensive country in Europe for expat pay and benefits packages, amounting to £212 880 (CHF 259 395) per year on average. Salaries in Switzerland are the highest in Europe and the second highest globally, at £77 760 per annum.
Browne said: "Swiss salaries are consistently towards the higher end of the scale but so are everyday costs in most Swiss cities. Despite the higher prices, high salaries in the country mean locals are still well-off compared to their European counterparts. Furthermore, due to low taxes and businesses needing to pay less for employee benefits, it is still comparatively cheaper to relocate workers to Switzerland compared to the UK."
Lower tax in Italy makes it more competitive for staff relocation
Despite 4% and 7% increases in salaries and benefits costs respectively, lower taxes mean the cost of sending a middle manager to Italy only increased by 1% to £147 145 (EUR 175 090), the lowest percentage increase in Europe.
Browne explained: “The income tax brackets in Italy changed for the 2022 tax year, resulting in a 17% decrease in the tax payable on a typical expatriate package. This offset the increases in salary and benefits costs, making it a cheaper location to send expatriates relative to other European nations.”
Strength of the US dollar sees USA rise seven places
The strength of the US dollar has pushed the United States up the rankings into the global top ten most expensive locations to relocate staff. Despite a slight fall in salaries of 0.4%, the total package cost has risen by 6% to £217 417 (USD 272 770).
Browne said: "Because many expatriates are paid some or all of their salary in other currencies, the strong dollar caused the average expatriate salary in the USA to fall. However, higher housing costs contributed to a 10% increase in the cost of benefits, meaning companies will have found it more expensive to relocate staff to the United States in 2022."
Salaries in Saudi Arabia are the highest in the world
Despite a 3% decrease compared to the previous year, the salary for expat middle managers in Saudi Arabia is now £83 763 (SAR 394 083) on average; the highest in the world and £20 513 higher than in the UK.
“While they may not top the overall rankings, expatriate salaries in the Middle East tend to be incredibly generous as a way of encouraging people to relocate there, with the highest salaries being in Saudi Arabia. However, the cost of benefits ranks lower and combined with the lack of personal tax, overall package costs are more affordable,” said Browne. “This is in contrast to the UK, where the bulk of the package cost is due to tax and benefits rather than salary.”
Expatriate pay gap widens between the UK and Japan
In second place globally, Japan pay and benefits packages for expats saw a 5% increase in local currency terms. However, due to the weak Japanese yen, when converted to GBP for comparison purposes, the overall package is actually cheaper than last year, costing £295 062, and widening the gap between the top two most expensive locations in the world.
Notes to Editors
The list of countries used in the rankings is based on countries which have cities appearing in the top 40 of The Global Financial Centres Index (GFCI). The GFCI has been produced since 2007 by commercial think-tank the Z/Yen Group in order to examine the major financial centres globally in terms of competitiveness. It draws on data from the United Nations, World Bank and EIU as well as over 29 000 financial centre assessments from an online questionnaire.
About ECA International
ECA International is the market-leading provider of knowledge, information and technology that enables businesses to manage their international reward programmes.
Partnering with thousands of clients on every continent, we provide a fully integrated suite of quality data, specialist software, consultancy and training. Our unparalleled insights guide clients as they mobilise their most valuable resource: people.
We make the complex world of international mobility simple, providing clients with the expertise and support they need to make the right decisions – every time.
ECA International: Mobility solutions for a world that’s constantly moving.
About 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, free for participants, enable companies to benchmark their expatriates' actual salaries against the market. More than 340 companies took part in the survey covering over 140 countries and over 10 000 international assignees.
Figures used in this release were collected in the later stages of 2022 and refer to a 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 companies in our survey 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 clothing, 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 employee taxes 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 covers 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’s value (2 000 cc), depreciated over five years.
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