New York – Asia’s expanding markets offer many financial opportunities—and challenges—for international investors. One such challenge is finding the requisite skills from within the local labour pool to adequately fill open positions. Thus, many companies look outside the country or region to source candidates.

But employing foreign talent can prove to be expensive, especially if traditional expat perquisites are part of the pay plan. The present uncertain economy has employers looking for cost-effective expat compensation options. Participants in two surveys by ORC Worldwide report a growing trend toward expat ‘light’ or ‘local-plus’ packages.

“These alternative packages often base the assignee’s salary on host-country pay structures,” explained 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.

The local-plus approach is popular in China, for example, but still a work-in-progress for most companies. Employers determine much of what they offer on a case-by-case basis and "most often the local-plus offering is merely a reshuffling of the traditional expatriate assignment package elements.”

In 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.

A local-plus package in Hong Kong is likely to be limited to a local salary with a cash allowance for housing assistance and placement in the local pension plan—but no other ‘plus’ elements. Employers in Singapore are more likely to pay rent directly to the landlord rather than provide a cash housing allowance (due to more favourable tax treatment), provide tax preparation help for the first year, cover some dependent education and provide a cash allowance for pension if the employee is ineligible to participate in the government pension fund.

ORC Worldwide / Expatica

ORC Worldwide is an HR consulting company, providing clients with global solutions to HR management and compensation concerns through customised consulting, information analysis, and unique peer network forums allowing common-interest groups of HR executives and specialists to share information and experience. For more information about the survey, please visit orcworldwide.com or contact orc.singapore@orcww.com.