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International mobility: what are the trends?
An increasing amount of expat employees no longer necessarily benefit from generous compensation packages. A 2014 Cartus study also revealed that assignment and relocation cost control was named top challenge by 75% of international mobility managers. Thus, international assignment conditions and pay methods tend to become more and more diverse.
A growing number of short-term assignments
Short-term expatriation is on the rise, notably because businesses are looking to increase flexibility and cut costs. According to the Managing Variety in International Mobility survey, which was conducted by ECA International, 60% of companies expect to see a rise in the number of short-term assignments abroad.
More and more “split family” situations
Going on an 8 month-long assignment in Johannesburg without being accompanied by your spouse and children, working in Berlin all week and returning to your family in the UK every weekend: this type of organization of international mobility is becoming increasingly common. In 2014, only 74% (14% less than in 2012) of employers always allowed employees to be accompanied by family members during long-term assignments. When the employee leaves alone, mobility management is much simpler and less costly. In some cases, the idea is to avoid exposing families to certain safety risks.
A larger variety of expat pay policies
Less and less employees get a full expat package when leaving on an international assignment. Traditionally, expat workers would receive a salary based on home-country pay rates. A more or less large amount of allowances, bonuses (hardship bonus, Cost of Living Allowance…) and benefits would also be included in the compensation package. Benefits could include: free housing, international schools for children, a company car, health insurance and airline tickets to visit relatives in the home country.
Increasingly, international mobility managers are required to meet the challenge of attracting and retaining talent while limiting the cost of expatriation. Expat packages tend to be lightened and more and more local contracts are signed. In some cases, depending on the country of assignment, the employer chooses to calculate expat salaries based on the host-country pay levels. Today, a growing number of companies wish to adapt pay policies to each international candidate profile and country of assignment.
Local plus contracts: the new norm?
According to ECA International, more and more companies employing expats - particularly those whose headquarters are located in Asia - are deciding to use the local plus contracts. This pay method is a sort of compromise between local contracts and full expat packages: the salary is based on local pay rates but additional benefits are offered (including the payment of all or part of housing costs). However, the local plus method is rather inadequate if the assignment takes place in a country where salaries are much lower than in the employee’s home country. To remain attractive, employees must preferably keep a buying power similar to the one they had before before expatriation.
To find out more about international mobility management:
Take a look at the ECA International website.