With an estimated 3.4 million Australians now living and working overseas, more and more of Australia’s expatriate workforce are choosing not to return home but instead, to remain in their adopted country or work in another city in the region
With an estimated 3.4 million Australians now living and working overseas, more and more of Australia’s expatriate workforce are choosing not to return home but instead, to remain in their adopted country or work in another city in the region.
With host countries standing to benefit from continuous access to expat skills, this trend may have a long-term impact on home countries, including Australia as many highly skilled and influential workers drift to overseas markets.
The ‘push’ and ‘pull’ factors of overseas postings have been well documented from career opportunities and financial rewards to lifestyle choices and family. Globalisation remains as one of the most dominant factors. Today, in a job market dominated by multinational corporations, expatriate positions still ‘pull’ younger employees looking to acquire international experience that will enhance their career prospects. Alternatively, they attract employees seeking a career that provides lifestyle options not readily found at home. And for others, the incentive remains purely financial.
The size of the Australian market means that corporate revenues can only support flat organisation structures that are thinly resourced in terms of people, budgets, and the ability to make big market moves. Returning from a big market, such as the US or UK is often likened to being a big fish in a small pond. The market cannot sustain a lot of big fish and the pond starts to feel very small. Although staying overseas may mean that an expat is only currently a small fish in a big pond, the upside potential to a big fish in a big pond is far greater.
In some instances, job opportunities to come home to may be limited, particularly if a company has poor succession planning processes or the job market in the home country is weak.
Depending on the country an expat resides in and the remuneration package, it may make no financial sense to come home. Personal income tax can be one such incentive – paying 47 cents in the dollar on a PAYE system hardly compares with a 15 per cent top rate, payable once a year. Indirect taxes such as GST may be lower or non-existent. While living overseas, often there is a housing allowance to cover all, or at least most, of an expat’s housing rental. This can provide an incentive to fast-track the reduction of a mortgage of a property in the home country. If there is access to cheaper housing loans from overseas banking institutions, the incentive is even greater. Also, having school-age children educated in overseas private schools at the company’s expense can be an added incentive to stay rather than return home where parents might have to personally pay private school fees.
Frequent business travel in the region staying at luxury hotels and enjoying the perks of a jetset lifestyle holds great appeal to some. Others are seduced by the personal travel opportunities when residing in a country in which dream holiday destinations are a short or cheap flight away and can be travelled in a long weekend away. In Asia, most expats are given access to private clubs – many of which resemble hotel resorts, which provide networking and social interaction among luxury facilities. Some expats find their social lives are fuller and more rewarding in this environment than if they were to stay at home.
From defining the duration of an overseas posting to salary and career development incentives, there are many ways the HR manager can entice employees back home.
Many companies now restrict an expat assignment to two or a maximum three years with a contractual agreement that the expat must return. Past experiences have shown that the longer an expat is away, the likelihood of them wanting to stay increases due to several factors including new social network and financial advantages.
Companies with sophisticated remuneration packages will structure pay with a tax equalisation process. If it’s more advantageous to be on the tax system of the foreign country, an expat’s salary package will be levelled out with what they would receive at home. In other words, there is no tax advantage in not returning home.
Some companies have a policy to post employees to various regions to reach a certain level in the organisation. This policy ensures that leaders within the organisation have a working knowledge and ability to operate on a truly global basis. For those looking to fast-track their careers, completing one expat assignment and then moving on to the next is a guaranteed method of progressing their career.
One key enticement is the opportunity to return to a challenging role. The criteria for a successful expat posting means having a challenging role and using general management and entrepreneurial skills.
Increasingly the expat posting requires a transition plan before the assignment is undertaken. In a three-year posting for example, the first six months may be more weighted towards learning local customs and business issues. In the final 6–12 months of the posting, there may be a requirement for the expat to have transitioned the role into the hands of a capable and local successor, effectively putting them out of a job and increasing the incentive to come home.
by Jacqueline Allen, regional marketing manager, DBM Asia Pacific
