The UK is the most expensive place to relocate workers globally, with expatriate pay and benefits packages costing employers an average of £351,992 in 2022.
According to new data from global mobility company ECA International (ECA) this figure rose by 11%, by £3,887 from the previous year.
The research found that benefits including accommodation, cars and international schools accounted for more than half of the uplift, while salaries only increased by an average of £3,998 or 5% yearly from 2021 to around £63,250 for middle managers.
ECA’s MyExpatriate Market Pay Survey for expatriates around the world looked at three key elements: benefit allowances, cash salary and tax treatment. It discovered Japan was the second most expensive country in terms of expatriate costs, with pay and benefits expenses growing by 5% in local currency terms. However, when converted into British pounds the package was found to be cheaper than the previous year at £295,062, due to the weak Japanese yen.
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.”
The study also showed that Switzerland is the second most expensive European country for expat pay and benefits, at an average of £212,880 per year. With annual salaries higher than anywhere else in Europe, they are also the second highest in the world at £77,760, just behind the Saudi Arabian average of £83,763.
Browne added: “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.”
In Italy, relocation packages only rose by 1%, the lowest increase in Europe. They were found to be more attractive due to lower taxes, despite salary and benefits costs growing by 4% and 7% respectively.
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.”
The US rose seven places in the rankings into the global top 10 most expensive countries to relocate employees, with total package costs rising by 6% to £217,417, due to the strong dollar.
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.”