HK Expats Losing Out in Asia Salary Stakes

According to the market pay survey by human resources consultancy ECA International, expatriate salaries in Hong Kong lag behind certain others in Southeast Asia. The city is ranked tenth in the region.

The survey shows that expatriates in Japan receive the highest net take-home pay in the region, followed by South Korea and Taiwan. The average pay for a middle manager on assignment to Japan is US$98,000. Expatriates at the same job level in Hong Kong receive US$80,000.

“Expatriate market rates are influenced by a number of factors that don’t affect local market rates,” said Lee Quane, ECA’s Regional Director, Asia. “For example, changes in cost of living indices and location (hardship) ratings will affect the levels of salaries awarded to expatriates in the country, in addition potentially to more traditional market influences.”

In terms of the value of the benefits provided to assignees, Hong Kong is the highest in the region, usually worth more than the assignee’s net take-home pay. When typical benefit provision is factored in, expatriate packages in Hong Kong are actually the second highest within the region, after Japan and ahead of Singapore.

“A constant issue for companies operating globally is the need to strike a balance between cost effective assignments and attracting the right talent,” says Quane. “The high cost of employing expatriates in Japan may partly explain why fewer companies assign staff to Tokyo versus Hong Kong and Shanghai. In Hong Kong, the limited availability of accommodation for expatriates and international school places is putting pressure on companies who cover these costs. However, these benefits can have a big impact on the attractiveness of the package for the assignee, particularly in a competitive market.”

Gross salaries are not sufficient to enable accurate benchmarking. International assignees in India receive the lowest net take-home pay within the region, but when high tax rates and benefit costs are taken into consideration it is second only to Japan in terms of average gross salaries. “Employers may struggle to persuade employees to take up assignments to high-tax locations. Our research shows that 80% of companies apply a tax equalisation approach whereby employees effectively pay the same amount of tax as they would have paid if they had remained at home,” Quane added.

The survey interviewed 234 companies covering 119 countries and over 10,000 international assignees.

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