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LIFE&FAMILY
128
June15
International HR Journal
defines a local-plus package
as one that compensates an employee according to the
salary levels, structure and administrative guidelines of
the host location, as well as providing themwith limited
“expatriate-type” benefits such as transportation,
housing and dependants’ education, in recognition
of the employee’s “foreign” status.
here, on local terms and conditions, and forgoing many of
the benefits and allowances they once might have recieved.
Why do expats agree to localise? For many, it’s a
deliberate decision taken in the best interests of the family,
especially when faced with a company policy that requires the
localisation of an expat who wishes to stay on in Singapore
at the end of an assignment contract. KPMG’s
2013 Global
Assignment Policies and Practices Report
estimates that
approximately 30 percent of companies have such policies
in place.
Localisation often makes sense for families who appreciate
Singapore as a safe environment to raise children, and a
convenient base for expats in a regional role requiring constant
business travel. Others have no choice. As the international
labour market hots up, and the need for international work
experience becomes essential for “lifetime employability”
and “external marketability”, many expats and their families
are here on local terms because one or both spouses need
Singapore or Asia on their CV.
Whatever the reasons, localised expats live a different life
to their full-package peers. For starters, they fund everything
out of their own pockets: school fees, rent, car, utilities,
and trips home to see family and friends. This often means
forgoing the luxuries other expats may easily afford, including
expensive restaurants, flashy holidays, and even drycleaning
and imported groceries. Their savings may take a dip, their
children may attend local schools, or they may decide to rent
a more affordable home further from the city. Many localised
families also have two parents working in paid employment,
often more out of necessity than desire.
The norm rather than the exception
Not surprisingly, more than three-quarters of companies
globally (including those with Singapore subsidiary offices)
have some form of localisation policy. In 2014, more than half
were transferring employees to localised conditions, up from
46 percent in 2013, according to a study of mobility trends
by Brookfield Global Relocation Services. The main driver is
the need to reduce expenses for international assignments
in response to difficult economic conditions.
But this doesn’t mean that all expats go willingly into
localisation, or that companies necessarily reap the benefits.
A recent study published in
Journal of World Business
found
that localisation has many unforeseen opportunity costs for
companies, the biggest being the loss of talent to competitors.
Localised expats are free to job-hop and look for better
employment deals, because of reduced financial ties binding
them to their employers.
To counter the avalanche of lost talent and employee
resistance to localisation, about 27 per cent of companies
use “local-plus” packages over a transfer period of up to two
years. This softens the blow of localisation, giving expats time
to manage their finances and adjust their spending habits.
Companies are also savvy in knowing whom they can
localise. Typically, younger employees climbing the corporate
ladder need less enticement than senior employees in their
What to consider
Localisation is viewed as a permanent one-way transfer,
where the company has no obligation to provide or to
assist with repatriation to a home country or to re-assign
an expat to another international location. It is entirely the
employee’s responsibility to organise and fund any such move.
Localisation means that expats are not supported or
valued by a company in the same way as full-package
expats, typically receiving no training and fewer perks,
and having a lower status overall. This can leave an expat
feeling in limbo, neither a true local nor a real expat. A
hierarchical pecking order tends to exist too, and many
localised expats feel like lower-order employees, especially
in cases where their expat colleagues are more handsomely
rewarded for doing exactly the same job.
Localisation occurs in two ways. An increasing number
of expats relocate to Singapore as localised employees
from the start, with just a base salary and no perks or
benefits. Others arrive on a full package and later switch to
localised employment. Some companies do this by winding
back benefits incrementally over a one- or two-year period as
outlined in the employment contract, but the majority of
companies tend to localise almost immediately, giving their
expat employees little time to plan and budget ahead.
late 40s and early 50s who are more likely to be drawn to a
large package with benefits.
The big picture
An obvious downside of localisation is the negative impact
on the household budget. Conversely, many localised expats
love this way of life. The biggest benefit is the freedom to own
their careers, to relocate when it suits them rather than the
company, to job-hop into better opportunities at will, and to
decide when and how to spend their salary.
Either way, it’s clear that localisation is here to stay.
It helps companies maximise talent management while
containing costs – a strategy that is likely to dominate the
expat employment scene for years to come. What remains
important for expats is to leverage the opportunities that
localised employment brings, and to keep in mind that short-
term financial pain can often bring long-term international
career gain.