Have you been offered an international career opportunity? Congratulations!
I’m very excited for you, and there must be tons of questions and planning that’s jumbled in your mind right now.
Let’s talk about an important topic – salary.
Your salary as an expat is negotiable, just like your salary as a local.
Only now, the basis of your salary negotiation involves a host country – the location where you are transferring to.
Let me guide you how to approach a salary negotiation for your move abroad.
How to Negotiate Your Expat Salary
1. Reasearch
As a starting point, you’d want to retain the lifestyle currently afforded by your current salary.
You have to research to get an idea how much it would cost to maintain the same standard of living in your host country (destination).
Numbeo Cost of Living Comparison is a very helpful reference.
Select your Home City and Host City
The tool will give you a rough estimate how much more (or less) salary you would need to maintain your current standard of living.
- If you are not offered any assistance by your company toward rental payments, then take the Consumer Prices Including Rent %
- But if you are entitled to some housing benefit, then you could benchmark with Consumer Prices (without rent) %
These are the upper and lower ranges you could take as reference when reviewing your employer’s salary offer.
2. Calculate
After research, calculate the minimum salary equivalent you’d need so that you would not be significantly worse-off by moving to your host country.
In Numbeo,
Input your current salary.
You can do this by clicking the “Change the amount in this calculation” button.
3. Compare: Home vs Host Country Salary
When you have a grasp of your current net pay, and an estimate of your expat salary offer (host country net pay), then you can have an informed comparison of your salary situation.
Remember to incorporate taxes! (See Tips below)
4. Comunicate
For your personal reference,
- Outline the cost/benefit comparison of your salary and total package.
- Identify the Top 3 most important factors you need, to satisfy your conditions of working abroad.
- Do you need more compensation?
- Do you need more support towards accommodation? Children’s tuition?
- Do you need more support towards relocation and setting-up/settling down?
- Identify the Bottom 3 least important factors you need, that was offered to you.
When you’re ready, communicate to your HR/Manager your requests and reasoning.
Negotiate for the total package.
Keep in mind the cost to yourself, cost to the company, and cost to your family.
- Showcase the justifications for why you need the support and incentives you’re asking for, and how it benefits the organization.
Share your research if it helps to convey your overall message.
5. Review
Review the final offer and decide if it’s worth it.
Tip #1: Don’t forget about taxes!
When calculating your salary, think about net pay (after taxes).
Rent, taxes, and daily expenses affects your total net pay.
If you’re coming from a low tax location (eg Singapore, Hong Kong, Dubai etc), the higher tax rate of your host country might take you by surprise.
Factor-in taxes when calculating your net pay position.
Also be mindful of other mandatory salary deductions like social security, pension, medical contributions that some countries might have (eg US, UK).
I find PWC Wordwide Tax Summaries very helpful
Tip #2: Negotiate for Allowances
If increasing base salary is challenging for your employer, you could ask if they can offer allowances instead.
Expat cash allowances are for a limited period while you’re on-assignment.
It is less costly to an employer to provide you cash allowances instead of increasing your base salary, because these allowances will have an end date. It will also not inflate your bonus.
Tip #3: Consider the Total Package
It’s not always all about the salary.
Think about:
- Vacation Days
- Performance Bonus
- Promotion Opportunity
- Equity
Similar to how new hires could receive Sign-in Bonus to accept a new offer, Expats could be offered a Foreign Service Incentive (FSI). FSI is meant to attract employees to accept an assignment abroad.
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