No stranger to expatriates, Singapore has had its share of foreign employees over the years. Here’s a look at the expatriate population today, and what your compensation packages must cover.
In the 1970s, most foreign employees calling Singapore home were involved in the energy industry. Compensation packages, by today’s standards, were “fat” big houses, live in maids, club memberships, private schools, cars, and cost of living differentials upwards of 10 15%.
By the 1980s, a shift had begun to take place in the industry. It was driven in part by Singapore’s push for technology related industries and Indonesia’s insistence that expats live and work in the energy fields of the Java Sea. This caused a mass exodus of expatriates, especially Americans, who had been living in Singapore and working in Indonesia. US energy companies found it more cost effective to fly oil field workers from the US to Indonesian drilling sites for “30 days on and 30 days off ” rather than establish residences in Indonesia. Thus, computer engineers replaced oil field workers, and flats and condominium complexes replaced the big houses. Younger professionals with younger families no longer needed club facilities, since these services were available in the new complexes. And cost of living differentials began to shrink.
In the 1990s, Singapore’s push to become an Asian financial center has drawn expatriates with a financial background — bankers, analysts, stock brokers and portfolio managers. Soon, service sector professionals will accompany these individuals, in support of the high tech, chemical and manufacturing facilities established during the 1980s.
The founding of a Science and Technology Park by Singapore authorities has laid the groundwork for even further change. A growing interest in high tech, non labor intensive industry will guide foreign investment, influencing the influx of future expatriates. Members of the scientific community will replace the current banking, service, and marketing professionals.
This constant evolution in the kind of expatriate found in Singapore dictates the type of compensation and benefits packages human resource managers administer. In Singapore today, the major compensation issues of housing and transportation affect every expatriate. Education is an issue only if there are school age children involved in the move. Taxation, or more commonly, the equalization of tax plans, is best left to professionals in the tax field. Suffice it to say, the majority of American expatriates are protected or equalized to a US tax base.
The most critical factor in managing expatriates in Singapore is the data necessary to make informed decisions and these data change daily.
Most expatriates in Singapore choose to live in districts 9, 10 and 11, due to the infrastructure necessary to meet daily living needs. The “district” is similar to our zip code designations, and districts 9, 10 and 11 refer to the geographical area in the center of the island. The majority of expats live in flats (apartments) ranging in size from 2000 to 3000 square feet; the remaining 5% choose a bungalow (house with a yard) ranging in size from 2500 to 4000 square feet.
Most flats are in condominium complexes that include such facilities as swimming pools, tennis courts, a play area, and 24 hour security. They also offer the convenience of expatriate neighbors, and are typically located near a small shopping complex, so expats need not go far for daily staples.
In fact, expatriate spouses need not go out at all if they use the services of a provisioner. This is the daily grocer who “rings” in the morning for the grocery order and delivers it to the door in the afternoon. The provisioner will also stop off at the dry cleaners, pick up and return videos, and restock the bar.
Because of the concentration of expatriates in proximity to schools and the main Orchard Road shopping area (districts 9, 10, and 11), rental prices in these areas remain high. The boom time of the early 1980s saw the construction of new properties in the $3217-$4504 range. The recession of 1985, saw these same properties bottom out at $1,287-$2574. In today’s market, new properties range from $3,681-$5, 791. Older properties are constantly being renovated to keep up with new complexes, which are coming on line at the rate of one per month. Properties continue to command top dollar due to the ever increasing foreign population.
Nationality usually dictates educational choices for expatriate children. American, British, Dutch, Japanese, Australian and Canadian communities provide their own schools, with curriculum similar to that found in their home countries. The Overseas Family School, The Christian School, and The International School fill special needs for nationalities too few in number to staff their own school, or who have specific interests.
A traditional school calendar and curriculum in most of these schools allows a third-country kid (TCK) to make an easier transition back into the home country and culture. Additionally, children celebrate home country customs, cultural activities and holidays to help them maintain their home country identity. They may also participate in some local holidays to learn about the host country’s culture, which produces a well rounded, international experience.
Educational costs, however, can be quite staggering. For example, an average one-year term at The Overseas Family School runs as high as $14,000, excluding the cost of uniforms, books, or transportation expenses, which are usually paid for by the employer.
Automobiles can cost three to four times the average purchase price of a comparably sized car in America, so most employers provide financial assistance to their employees. Methods vary, but employers commonly purchase or lease a car, or offer expatriates an interest free loan.
Employees and employers generally negotiate vehicle operating expenses, such as parking, daily license fees, road taxes, gasoline and maintenance.In lieu of assistance acquiring a car, employers typically provide a transportation allowance. How, where, and on what this allowance is spent is at the employee’s discretion.
Goods and Appliances
Secondary issues, such as durable goods, appliances, furniture, domestics, medical provisos and COLAs vary from company to company. Generally, expatriates receive allowances for furniture and appliances based on figures provided by third party sources, who investigate the cost of items normally required to maintain a home. Increasingly, employers are not allowing expats to ship their personal goods. Instead, they either purchase or lease replacement items for employees to use during assignment. When the assignment ends, the items are returned to the lessor or sold.
Keeping Employees “Whole”
The underlying philosophy of all compensation and benefits packages is to keep employees “whole,” so that they neither gain nor lose by accepting an international assignment. Although their lifestyles change, most expats to Singapore say it doesn’t necessarily affect the quality of their life. Admittedly, it is difficult to place a dollar value on intangibles, such as closeness to family and the spouse’s career development, which expats often sacrifice in such a move. But for expats with an open mind, an assignment to Singapore offers a wealth of opportunities.