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 £2,998 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 ex-pat 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’s 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.
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