The biggest secret I have found to moving is to stay calm, my stomach always used to churn every time my husband would say: “Let’s look at moving to London, Perth, Colorado….” I would have this rush in the pit of my stomach and wonder how we were going to cope with the challenge.
Now, I take it one step at a time. What do we do first, what do we need to know before we make the decision, how does the family feel about a new culture, different schools, a new home and most importantly new friends.
So, where do we start? Usually with the most important questions, why are we moving and do we really want to change from our comfort zone, once you have been able to answer these questions and you have more positives about leaving than staying (and the answer to this could be as simple as being offered a job in a new country), then you need to start researching the place you are moving to.
Questions start surfacing such as will we fit in and be happy in a new country, what is the education like, medical facilities, culture, politics, housing, work conditions, transport and entertainment? How many expats like ourselves will be living there, will our life be normal or will we have to adjust too extremely, and are we happy to do this?
This is where I start searching the internet, www.wikipedia.com is a great site to get an overall overview on any country in the world and it will cover all the basic factual information for you, including geographical location, population, historical background, religion, culture, education, economic situation and political info.
On getting a basic understanding of a country, I would then start looking at government sites and gathering information about the ease of moving to this country. What is required from a governmental legal perspective, including visa’s, whether a spouse can work on entry, how long a spouse needs to wait before starting to work, what legal rights do you have in the country, can you take your pets with and how does this work, what furniture can you take with (some countries do not allow wooden furniture into a country if it has not been treated) these government sites will cover any and all questions of this nature for you.
Finally and probably more importantly are the forums and blogs you can find, where expats can inform you of what to expect and you can ask any question and expect an honest answer. These sites can come across with mixed emotions from people who are enjoying the move and loving the country to those who hate every minute of their stay. The relevant question to ask here is why….why are they enjoying or hating it and then make your own decision?
The above would be the questions that I would want answered, as the spouse that stays at home and cares for the children, however bread winner wants a different question answered. They want to know what they should be earning in the new country and this is where xpatulator.com can be relevant to you. Xpatulator gives you the answers you are looking for dependant on the questions you answer in the Cost of Living Calculator. It will determine what your salary in the new country should be to maintain your standard of living, and at the end of the day as the spouse that stays at home you need to know these answers as well.
Why, you may ask? Because $200 000 may sound like a fabulous salary, however if your cost of living in the country you are moving too is extremely high, it may not cover your costs on a monthly basis. With the calculator, you can determine whether or not you will be able to afford to live in the new country. The calculator will work out the salary you should be earning if you have to cover all costs, or if your company will cover some of those costs for you. They also cover the Negative Cost of Living and Negative Hardship. What are these you ask with horror? Negative Cost of Living refers to a location that has a lower cost of living than the country you are living in and selecting to use this will result in a proportional decrease in the salary required e.g. if you had to move from London to Zimbabwe you will find the cost of living will be lower (negative difference). Negative Hardship refers to less hardship in the new location e.g. if you had to move from Zimbabwe to London you will find that your quality of living will be easier (negative difference).
So before you disregard the importance of what you need to earn when moving to a new country, take all aspects into account. At the end of the day what you will earn, will determine the school, home, medical facilities and entertainment you will be able to afford. So the secret to moving from one country to another, may be your emotional stability and happiness in the new location, however this is often determined by how much money is sitting in your bank account.
About The Author: Steven Coleman runs the most comprehensive international relocation calculator available, an internet service that is used primarily to calculate expatriate salary levels for international assignments, which can be found at http://www.xpatulator.com
This article may be freely copied as long as reference is made to http://www.xpatulator.com/
Thursday, December 3, 2009
Expatriate Pay Philosophy
Organisations spend insufficient time creating a well designed expatriate remuneration strategy and policy. This is dangerous given that the highest employee turnover is at the beginning and end of international assignments, indicating a lack of integration of expatriate pay philosophy with the broader organisational pay philosophy.
The remuneration of expatriates often tends to be a rushed last minute decision due to urgent operational requirements. The resulting implications often only arise after the expatriate arrives in the host country, and when the assignment comes to an end. For example, the post assignment position back in the home country pays less than the expatriate earned on assignment.
Inconsistent treatment of expatriates quickly leads to unhappy expatriates. Once an organisation has more than 1 or 2 expatriates in the field it becomes vital to have a defendable expatriate pay philosophy in place. This philosophy should clearly convey the organisation's remuneration principles regarding expatriate assignments. An expatriate assignment pay philosophy is intended to provide guidance in the consistent and equitable treatment of all expatriates and forms the basis of the organisation's expatriate pay policy.
Most large global organisations have over time established a clear policy for remunerating expatriates. This is often a legacy policy, where past practice has become policy. However expatriate pay is a complex area of remuneration with complex issues such as volatile exchange rates, weak and strong currencies, constantly changing differences in cost of living between countries, different tax regimes, as well as the reality that there are attractive and not so attractive countries to work and live in. This is an area where a clear philosophy and an aligned practical policy are required to ensure attraction, fairness, equity, motivation and retention.
Firstly let's deal with what makes an employee an expatriate. In my view an expatriate is a person working in a foreign country, where they are not permanently resident, on an assignment of typically not more than 3-5 years but is a citizen from another country. There are as many different expatriate pay practices as there are organisations employing expatriates. However we can identify at least four broad approaches to expatriate pay that has emerged as the dominant philosophies underlying expatriate pay.
Salary Build-Up (SBU)
The Salary Build-Up approach uses the current market related home salary as the base for calculating the expatriate package. Home in this case is the country where the employee permanently resides or is a citizen. The purpose of the build-up approach is to maintain internal equity between countries and to equalise the impact of differences between country tax rates. This ensures that expatriates neither lose nor gain as a result of tax treatment in the host country.
The Salary Build-Up approach typically involves deducting hypothetical tax in the home country, and builds on top of the home salary with an international premium (to compensate for hardship experienced), cost living index and the exchange rate to calculate a total net (i.e. after tax) assignment package.
The net assignment package is then "grossed up" in the host country for local tax and other statutory and non-statutory deductions to ensure the net pay assignment package is paid to the expatriate.
Salary Purchasing Power Parity (SPPP)
The Salary Purchasing Power Parity approach uses the principle of putting all expatriates within the organisation on an equal footing regardless of nationality and geographical location. The purpose of the SPPP approach is to ensure parity in the level of the purchasing power of the salary of expatriates doing the same job at the same level in different parts of the world, taking hardship, cost of living, and exchange rate differences into account.
This approach is typically used by global organisations that have a large number of expatriates, who move from one international assignment to another and compete globally for skills. Organisations using the SPPP approach typically establish a single global pay scale which is often by default that of the global headquarters country. The expatriate's salary is calculated by adding calculated additional amounts for the hardship, cost of living, and exchange rate differential between the global headquarters (home) and the host country.
The assignment package is then taxed in the host country and other statutory and non-statutory deductions made to arrive at the net pay assignment package paid to the expatriate.
Cost of Living Allowance (COLA)
The Cost of Living Allowance approach uses the principle of retaining the expatriate's home salary and paying an additional separate allowance, primarily for cost of living, but also for hardship based on the differences between the home location and the host location. The purpose of the COLA is to ensure parity in the level of the purchasing power of expatriates doing the same job at the same level in different parts of the world, taking hardship, cost of living, and exchange rate differences into account by paying a cost of allowance to compensate for the differences. At the end of the assignment the COLA falls away.
This approach is typically used by global international organisations that have a large number of expatriates, who move from one international assignment to another and compete globally for skills. Organisations using the COLA approach typically have country level pay scales. The expatriate's COLA is calculated by adding calculated additional amounts for the hardship, cost of living, and exchange rate differential between the home country and the host country.
The assignment package is then taxed in the host country and other statutory and non-statutory deductions made to arrive at the net pay assignment package paid to the expatriate.
Local Market (LM)
The Local Market approach uses the principle of applying the local (i.e. host country) expatriate market pay rates. In many organisations the policy is to use the better of the Build-Up or the Local Market approaches, to ensure that the assignment package is equitable and competitive in the host market.
Due to the need for market data, the Local Market approach is typically only used where a strong local and / or expatriate market exists in the host country, and reliable salary surveys exist that accurately report the level of market salary for different positions. For example, take an organisation sending an expatriate from an economically poor, relatively low salary market country, to a city such as New York. It is likely that having used the home base salary as the basis of the calculation, that the resulting total assignment package will be significantly lower than the New York Salary Market. This would occur even after adding an international premium (to compensate for hardship experienced), and a cost living amount (to compensate for the higher cost of living in New York) as well as applying the exchange rate. The reason is that the market level of home base salary in an economically poor country is so much lower than the equivalent market salary in New York.
The Local Market approach is typically used in high economic growth and high cost of living countries where demand for skills is high and there are a large number of expatriates comprising many nationalities such as the United Arab Emirates, Hong Kong or Singapore.
In conclusion it is important to ask questions about your current expatriate pay philosophy. Does your current expatriate pay philosophy drive the desired behaviour? Is the current policy and practice aligned to organisational objectives? Does the current policy work for or against the organisation achieving its global objectives?
We recommend a regular review of organisational expatriate pay philosophy in light of what the organisation seeks to achieve and where it operates geographically, whilst ensuring integration with the other pay related strategies of the organisation.
About The Author: Steven Coleman runs the most comprehensive international relocation calculator available, an internet service that is used primarily to calculate expatriate salary levels for international assignments, which can be found at http://www.xpatulator.com
This article may be freely copied as long as reference is made to http://www.xpatulator.com/
The remuneration of expatriates often tends to be a rushed last minute decision due to urgent operational requirements. The resulting implications often only arise after the expatriate arrives in the host country, and when the assignment comes to an end. For example, the post assignment position back in the home country pays less than the expatriate earned on assignment.
Inconsistent treatment of expatriates quickly leads to unhappy expatriates. Once an organisation has more than 1 or 2 expatriates in the field it becomes vital to have a defendable expatriate pay philosophy in place. This philosophy should clearly convey the organisation's remuneration principles regarding expatriate assignments. An expatriate assignment pay philosophy is intended to provide guidance in the consistent and equitable treatment of all expatriates and forms the basis of the organisation's expatriate pay policy.
Most large global organisations have over time established a clear policy for remunerating expatriates. This is often a legacy policy, where past practice has become policy. However expatriate pay is a complex area of remuneration with complex issues such as volatile exchange rates, weak and strong currencies, constantly changing differences in cost of living between countries, different tax regimes, as well as the reality that there are attractive and not so attractive countries to work and live in. This is an area where a clear philosophy and an aligned practical policy are required to ensure attraction, fairness, equity, motivation and retention.
Firstly let's deal with what makes an employee an expatriate. In my view an expatriate is a person working in a foreign country, where they are not permanently resident, on an assignment of typically not more than 3-5 years but is a citizen from another country. There are as many different expatriate pay practices as there are organisations employing expatriates. However we can identify at least four broad approaches to expatriate pay that has emerged as the dominant philosophies underlying expatriate pay.
Salary Build-Up (SBU)
The Salary Build-Up approach uses the current market related home salary as the base for calculating the expatriate package. Home in this case is the country where the employee permanently resides or is a citizen. The purpose of the build-up approach is to maintain internal equity between countries and to equalise the impact of differences between country tax rates. This ensures that expatriates neither lose nor gain as a result of tax treatment in the host country.
The Salary Build-Up approach typically involves deducting hypothetical tax in the home country, and builds on top of the home salary with an international premium (to compensate for hardship experienced), cost living index and the exchange rate to calculate a total net (i.e. after tax) assignment package.
The net assignment package is then "grossed up" in the host country for local tax and other statutory and non-statutory deductions to ensure the net pay assignment package is paid to the expatriate.
Salary Purchasing Power Parity (SPPP)
The Salary Purchasing Power Parity approach uses the principle of putting all expatriates within the organisation on an equal footing regardless of nationality and geographical location. The purpose of the SPPP approach is to ensure parity in the level of the purchasing power of the salary of expatriates doing the same job at the same level in different parts of the world, taking hardship, cost of living, and exchange rate differences into account.
This approach is typically used by global organisations that have a large number of expatriates, who move from one international assignment to another and compete globally for skills. Organisations using the SPPP approach typically establish a single global pay scale which is often by default that of the global headquarters country. The expatriate's salary is calculated by adding calculated additional amounts for the hardship, cost of living, and exchange rate differential between the global headquarters (home) and the host country.
The assignment package is then taxed in the host country and other statutory and non-statutory deductions made to arrive at the net pay assignment package paid to the expatriate.
Cost of Living Allowance (COLA)
The Cost of Living Allowance approach uses the principle of retaining the expatriate's home salary and paying an additional separate allowance, primarily for cost of living, but also for hardship based on the differences between the home location and the host location. The purpose of the COLA is to ensure parity in the level of the purchasing power of expatriates doing the same job at the same level in different parts of the world, taking hardship, cost of living, and exchange rate differences into account by paying a cost of allowance to compensate for the differences. At the end of the assignment the COLA falls away.
This approach is typically used by global international organisations that have a large number of expatriates, who move from one international assignment to another and compete globally for skills. Organisations using the COLA approach typically have country level pay scales. The expatriate's COLA is calculated by adding calculated additional amounts for the hardship, cost of living, and exchange rate differential between the home country and the host country.
The assignment package is then taxed in the host country and other statutory and non-statutory deductions made to arrive at the net pay assignment package paid to the expatriate.
Local Market (LM)
The Local Market approach uses the principle of applying the local (i.e. host country) expatriate market pay rates. In many organisations the policy is to use the better of the Build-Up or the Local Market approaches, to ensure that the assignment package is equitable and competitive in the host market.
Due to the need for market data, the Local Market approach is typically only used where a strong local and / or expatriate market exists in the host country, and reliable salary surveys exist that accurately report the level of market salary for different positions. For example, take an organisation sending an expatriate from an economically poor, relatively low salary market country, to a city such as New York. It is likely that having used the home base salary as the basis of the calculation, that the resulting total assignment package will be significantly lower than the New York Salary Market. This would occur even after adding an international premium (to compensate for hardship experienced), and a cost living amount (to compensate for the higher cost of living in New York) as well as applying the exchange rate. The reason is that the market level of home base salary in an economically poor country is so much lower than the equivalent market salary in New York.
The Local Market approach is typically used in high economic growth and high cost of living countries where demand for skills is high and there are a large number of expatriates comprising many nationalities such as the United Arab Emirates, Hong Kong or Singapore.
In conclusion it is important to ask questions about your current expatriate pay philosophy. Does your current expatriate pay philosophy drive the desired behaviour? Is the current policy and practice aligned to organisational objectives? Does the current policy work for or against the organisation achieving its global objectives?
We recommend a regular review of organisational expatriate pay philosophy in light of what the organisation seeks to achieve and where it operates geographically, whilst ensuring integration with the other pay related strategies of the organisation.
About The Author: Steven Coleman runs the most comprehensive international relocation calculator available, an internet service that is used primarily to calculate expatriate salary levels for international assignments, which can be found at http://www.xpatulator.com
This article may be freely copied as long as reference is made to http://www.xpatulator.com/
Expatriate Salary Purchasing Power Parity
The core strategy driving expatriate pay programs globally is the principle of protecting an employees’ domestic income and spending power, irrespective of global location. How to achieve this has been an issue many organizations spend considerable time on.
Exchange rates are volatile as they are based on short-term factors and are subject to substantial distortions from speculative movements and government interventions. In the short term, exchange rates, even when averaged over a period of time such as a year, are not a good measure of the comparative value of a salary in relation to its comparative international purchasing power. In the short to medium term at least, apparent changes in the comparative level of remuneration between one country and another may be principally a function of changes in the exchange rate.
In response to this Steven Coleman developed an on-line tool to calculate the salary purchasing power parities (SPPP's) for every country in the world. In simple terms the salary purchasing power parity is the rate of salary purchasing power that equalizes the purchasing power of different currencies, given the relative cost of the same basket of goods at the exchange rate versus one US Dollar. This means that a given salary, when converted into different currencies at the SPPP rates, will buy the same basket of goods and services in all countries.
The basket of goods and services used in SPPP calculations is derived on an International basis and includes certain items often excluded from expatriate cost of living data (most notably housing costs), however any or all of the 13 basket groups can be included or excluded from a calculation. SPPP's provide a reasonably good picture of the differences in standards of living for individual’s resident and paid in different countries.
Internationally comparable data are crucial to forming sustainable expatriate pay policies and monitoring progress. Market exchange rates give misleading comparisons because they do not reflect salary purchasing power differences. Salary Purchasing Power Parities account for price differences between countries and so measure real quantities.
By establishing salary purchasing power equivalence, where one dollar salary purchases the same quantity of goods and services in all countries, SPPP conversions allow cross-country comparisons of salary levels free of salary survey market and exchange rate distortions.
About The Author: Steven Coleman runs the most comprehensive international relocation calculator available, an internet service that is used primarily to calculate expatriate salary levels for international assignments, which can be found at http://www.xpatulator.com
This article may be freely copied as long as reference is made to http://www.xpatulator.com/
Exchange rates are volatile as they are based on short-term factors and are subject to substantial distortions from speculative movements and government interventions. In the short term, exchange rates, even when averaged over a period of time such as a year, are not a good measure of the comparative value of a salary in relation to its comparative international purchasing power. In the short to medium term at least, apparent changes in the comparative level of remuneration between one country and another may be principally a function of changes in the exchange rate.
In response to this Steven Coleman developed an on-line tool to calculate the salary purchasing power parities (SPPP's) for every country in the world. In simple terms the salary purchasing power parity is the rate of salary purchasing power that equalizes the purchasing power of different currencies, given the relative cost of the same basket of goods at the exchange rate versus one US Dollar. This means that a given salary, when converted into different currencies at the SPPP rates, will buy the same basket of goods and services in all countries.
The basket of goods and services used in SPPP calculations is derived on an International basis and includes certain items often excluded from expatriate cost of living data (most notably housing costs), however any or all of the 13 basket groups can be included or excluded from a calculation. SPPP's provide a reasonably good picture of the differences in standards of living for individual’s resident and paid in different countries.
Internationally comparable data are crucial to forming sustainable expatriate pay policies and monitoring progress. Market exchange rates give misleading comparisons because they do not reflect salary purchasing power differences. Salary Purchasing Power Parities account for price differences between countries and so measure real quantities.
By establishing salary purchasing power equivalence, where one dollar salary purchases the same quantity of goods and services in all countries, SPPP conversions allow cross-country comparisons of salary levels free of salary survey market and exchange rate distortions.
About The Author: Steven Coleman runs the most comprehensive international relocation calculator available, an internet service that is used primarily to calculate expatriate salary levels for international assignments, which can be found at http://www.xpatulator.com
This article may be freely copied as long as reference is made to http://www.xpatulator.com/
Moving to a new Country, How to cope
Having experienced a couple of country moves I can give you a few tips. Everything I wrote before on researching the country on websites, joining blogs and finding out whether your salary is going to cover your cost of living, are all relevant. What I want to do is take you through the process of moving. If you are being hired by a company who are going to help you move, life is going to be a lot easier. If however, you are going to be doing this on your own you need to prepare yourself for a little work. Firstly, find out what you need from a documentation point of view to get into the new country. 1. Do you need a visa, which type of visa will you need (working, spousal, minor children, etc) for each member of the family and start preparing the documentation for them. 2. Documents could include Unabridged birth certificates, ID documents, Passports, Passport Photos, Marriage Certificate, each country has its own requirements. Some countries require a police / criminal clearance. Find out either from the government website or the embassy in your country as to what you need, or alternatively find an agency that can do it all for you. An agency will let you know what you need to get and can assist you in obtaining the relevant documents. Secondly, what will you need to do when you get to the new country. 1. You will need to find a place to stay in the interim, open a bank account, organise a post box, transport, etc, so you need to find out what you need to have to do these. Do you need to keep certified copies of your passport or bank statements, etc? 2. Will you need to go through medicals for any reason, do you need to take any medical records with you? 3. How do you set up your medical aid, life insurance, buy or rent a property, get a phone installed??? Once again if you are moving with a company all of this will be a lot easier, as you will always have someone to facilitate you with the processes, but moving to a foreign country where everything is different could take its toll. Sometimes the best advice is just to ask.
Thirdly, prepare yourself for the move. 1. Start planning, make a list of everything you need to do. 2. Our list consisted of the following: a. Plan the day you are going to fly out and book the tickets, this date will determine all the below dates. First ensure that you have all documentation required before booking your tickets. b. List all accounts that need to be paid or cancelled and the dates that this needs to be completed by e.g. Medical Aid, Security company, Car insurance, Telephone account, Internet account, Post box, Clothing accounts, etc. c. Decide what to do with your bank account, and all the cards attached to it. Do you want to keep your account open and keep all the cards, or just keep 1 card? Remember the bank charges that you will need to pay monthly and that you will have 2 sets of bank accounts if you do keep it open. However, it could be worthwhile so that you have money available and cards that you can use. d. What are you going to do with your car/s, house, other assets, furniture, even down to your clothes - if you are going to sell them start planning what to sell, how much for and how you need to go about doing this, with deadline dates. Alternatively you can store your belongings. e. If you require to give someone power of attorney to sell anything or do any other legal work for you, decide on who you would want to do this for you and how to go about doing it. Your bank can normally assist you in this process. f. Decide what you want to do with your Life policies, Retirement annuities, or any other policy or investment you have made, your broker can help you with these decisions. g. When are you going to tell everyone about this decision you have made, do you have to resign from a job before you go and when do you need to let them know, plan your decision carefully as you don't want to leave with any problems. h. Do you employ anyone, start planning how to tell them you are leaving, what they need to be paid, is there a retrenchment package attached, write referral letters, do you need to write letters to any government departments to inform them of the change in status of your employee and leave with everyone happy. i. If you are taking any personal belongings with you start getting quotes from removal companies and make a decision on who to go with. Get at least 5 quotes to be objective and ensure you are comfortable with the service, and get referrals. j. Are you taking animals with you? If so do the same as above. Find out whether there are any special requirements you need to take into account when taking your animals with you. Do you need to keep them in quarantine and if so for how long, what documentation do you need to get for them and vaccinations? k. Organise someone to take you to the airport. l. Check on how you are all feeling, how are the kids doing and how do they feel about the move. Talk about it and let the kids know what is happening. m. Have a farewell party for all of you, the kids and their friends and you and your friends. There needs to be some form of closure, and it will make you feel just how special all the people in your life are and how special you are to them. n. Remember to keep contact details close at hand of everyone that is important to you. o. See if you can find a personal relocator in the country you are moving too, they can be of great help too.
I hope this helps in the process required to relocate. It can be daunting and unsettling, or an adventure, you need to decide how to perceive the move. In my next article, I will write about settling in and the processes you need to go through to do this.
This article may be freely copied as long as reference is made to http://www.xpatulator.com/
Thirdly, prepare yourself for the move. 1. Start planning, make a list of everything you need to do. 2. Our list consisted of the following: a. Plan the day you are going to fly out and book the tickets, this date will determine all the below dates. First ensure that you have all documentation required before booking your tickets. b. List all accounts that need to be paid or cancelled and the dates that this needs to be completed by e.g. Medical Aid, Security company, Car insurance, Telephone account, Internet account, Post box, Clothing accounts, etc. c. Decide what to do with your bank account, and all the cards attached to it. Do you want to keep your account open and keep all the cards, or just keep 1 card? Remember the bank charges that you will need to pay monthly and that you will have 2 sets of bank accounts if you do keep it open. However, it could be worthwhile so that you have money available and cards that you can use. d. What are you going to do with your car/s, house, other assets, furniture, even down to your clothes - if you are going to sell them start planning what to sell, how much for and how you need to go about doing this, with deadline dates. Alternatively you can store your belongings. e. If you require to give someone power of attorney to sell anything or do any other legal work for you, decide on who you would want to do this for you and how to go about doing it. Your bank can normally assist you in this process. f. Decide what you want to do with your Life policies, Retirement annuities, or any other policy or investment you have made, your broker can help you with these decisions. g. When are you going to tell everyone about this decision you have made, do you have to resign from a job before you go and when do you need to let them know, plan your decision carefully as you don't want to leave with any problems. h. Do you employ anyone, start planning how to tell them you are leaving, what they need to be paid, is there a retrenchment package attached, write referral letters, do you need to write letters to any government departments to inform them of the change in status of your employee and leave with everyone happy. i. If you are taking any personal belongings with you start getting quotes from removal companies and make a decision on who to go with. Get at least 5 quotes to be objective and ensure you are comfortable with the service, and get referrals. j. Are you taking animals with you? If so do the same as above. Find out whether there are any special requirements you need to take into account when taking your animals with you. Do you need to keep them in quarantine and if so for how long, what documentation do you need to get for them and vaccinations? k. Organise someone to take you to the airport. l. Check on how you are all feeling, how are the kids doing and how do they feel about the move. Talk about it and let the kids know what is happening. m. Have a farewell party for all of you, the kids and their friends and you and your friends. There needs to be some form of closure, and it will make you feel just how special all the people in your life are and how special you are to them. n. Remember to keep contact details close at hand of everyone that is important to you. o. See if you can find a personal relocator in the country you are moving too, they can be of great help too.
I hope this helps in the process required to relocate. It can be daunting and unsettling, or an adventure, you need to decide how to perceive the move. In my next article, I will write about settling in and the processes you need to go through to do this.
This article may be freely copied as long as reference is made to http://www.xpatulator.com/
Expat Kids, not just cost of living
Is being an expat all about attitude, and if so, does this have an immense influence on expat children and how they perceive their situation in this new environment?
If as adults we have doubts about settling in a new country, how do you think our children are feeling?
The inevitable question is “Do we leave our comfort zone?”
Do we disrupt our lives, move away from everything we know and love, our home comforts, family and friends. And finally do we tear our children away from all the above? Inevitably they have the same concerns as we do….
In their minds they are asking questions like, can I adapt, will I be happy, will I make new friends, will I be accepted, will I be good enough and to top it all off they are leaving all their friends behind, just like you are.
With these questions in mind and after much research on the topic there were a few points that stood out for me on the expat child these are discussed below:
1. Attitude
Your attitude as the adult and parent is going to greatly influence how your children settle in the country and accept the move.
We can decide whether to be positive or negative about becoming expats. The more positive parent results in a well adjusted child who looks at the glass half full, finds the positive in every situation and tries to adjust as much as you do.
The positives of living in a new and different environment, so outweigh the negatives. We can start with that fantastical dream of living abroad (the “Out of Africa” experience or exotic India thoughts), this is an adventure for you and them and it needs to be embraced as such.
Perhaps it is the benefit of a better environment, climate, economic situation, better job opportunities and prospects, a better political situation, safer country, etc etc, the reason you have left your country of origin is “your” positive and this positive must be lived every day by the family.
What you and your family are achieving can be what your peers back home can only dream of ever achieving one day. Your attitude back when you were deciding to take this adventure, was one of hope and opportunity, of adventure, of new beginnings and this is how this dream needs to be lived.
Trudie remembers: We saw this move as a wonderful opportunity to expose our children to the world and maybe broaden their horizons.
I was 36 weeks pregnant when we arrived and I was stressed beyond mention. Adjusting to this part of the world was the hardest for me. I gave up a whole support system at home to have a baby in a strange country and had to cope on my own- with just my husband by my side. For Matthew (8) coming to this part of the world is associated with so many wonderful things-he got to be with Dad again (as Dad was always away when we lived at home). He finally got a sibling that we had been praying so hard for. And he got to go to a new school, make new friends and take up a combat sport-For Matthew life was grand.
Shirley says she hated where we moved to with a passion. It was cold, wet, and windy, the people were not as friendly as I thought they would be and it was a really hard and lonely time for at least a year. My first six months I told my husband that I could not handle this place and wanted to go home, but the thought of the crime back home and the safety of my children was more important for me and that was an absolute put off. I really wanted my children to be able to come and go as they wanted and not always worry about whether they would be safe. It took me a long time to stop hugging my handbag to my chest, to stop looking over my shoulder to see if I was been followed or whether someone was going to snatch my bag, to stop locking all my car doors and putting my handbag under my seat. That became a plus in my book and I had to really work hard to change my attitude and that is what I did. I still miss my family and my friends, but I have made new friends here and it helps a lot. I don’t worry about locking my car door anymore or worrying about whether my bag is going to be snatched etc, it makes life simpler and therefore I just carry on with life and hope and pray for the best. With my attitude change, my children have become so much happier and that is what counts.
Each of these parents has had a positive attitude towards their circumstances, even if it did not start off as positive eventually expat parents realize that only their positive experiences can result in their children having a positive attitude too.
2. Being Open minded:
In every case of becoming an expat, the circumstances you are going to experience are going to be different, even if you move within the USA, if you have not been brought up in the culture it is going to be an adjustment. Parents need to be open minded about a culture, to allow their children to be open minded about it too.
Denise remembers first moving to the Middle East: We found the people drove like maniacs and we would raise our arms like the Lemurs – King Julien and Maurice in the movie Madagascar and say “Look at me, look at me, I am a crazy driver” and all roll around laughing. Eventually our kids were mimicking us and believed that all Middle Eastern people drove like crazy people, as they associated crazy driving being due to where we were. We had to correct them on that and say, eventually everyone that lives here drives badly, it is just how it is here and somehow you adjust.
Monique feels that being an expat parent really depends on a lot of things, like where you are being posted - Most of my postings have been to central African countries where food and medical care can be scarce, this can be stressful with younger kids and as a parent you need to be open minded and be prepared to adjust and change your way of thinking and learn many new skills, like administering medical aid, sometimes going as far as doing your own stitches on a screaming kid without pain killers.
3. The right Schooling
We can so easily make the wrong school choice for our children (even in our own countries), but when moving to a culturally different country this could be what either develops your child into having a positive attitude or not.
Let your child go to a school that will suite his/her personality. Will they develop better in a smaller or bigger school, a social / sporty or academic school, what is the vision of the school for the students, check, check and double check if your child will suite the style of the school. Perhaps home schooling is another option to look into. Children need to thrive and will do so if the school appropriately develops their strengths. Send them to a school where they teach in your child’s home language and have children around them with similar cultural backgrounds e.g. sending a Christian child to a Muslim school or vice versa, may create boundaries for that child. Sometimes you do not have an option e.g. there is only 1 school available, but then get involved with the school and teach your child about cultural diversity. It is not “bad” to let your child go to a different school to learn about the new culture or language, but make sure that the child has the type of personality that can cope with this diverse education, else in the long term it may be damaging to their growth. Look at all the options and if your child is old enough, discuss the options with them and let them help make the decision. Educating your child is not an option, they need to be educated but they can help decide where they will be happiest. Remember your child is not you! Where you may cope, he or she may not, his / her strengths are different to yours and respect that they are their own individuals.
Liz seriously recommends sending your kids to a similar type size of school as your kids are leaving - We went from a gorgeous little school to a private huge, pressure pressure school, the main focus was on the academics but not a holistic school. WORSE mistake, Nick went from a happy outgoing little boy to vomiting every day and getting nauseous when we drove past the school. NIGHTMARE the school offered no support only interested in bums in seats and $ in the bank.
Well it was sooo bad we contemplated going back to the country we had just come from (not home by the way), but gave a smaller school a go. Nick had counseling from the trauma, and is back to his old happy self ..... so my friends don’t get caught up in the hype but go with your gut feel.
4. Immerse your family in the new language, culture, religion and country.
Locals in any country love it when you speak to them in their own language (try it out sometime). And it can be quite fun, especially if you get it wrong and they help you to correct your words, you develop a relationship with the people from the country and they will become so helpful towards you and you will enjoy getting to know them too. While learning the new language immerse this in the culture, religion and history of the country, go to museums, take tours and do a bit of what the locals would do, be it coffee in cafes in Greece or Paris, to Dhow or camel rides in the desert, or participate in some of the festivals they celebrate. Make it fun, tell your kids stories about the culture and history, make it educational at the same time. Imagine the stories your children will be able to tell their friends back at home of their adventures and travels around the globe. They will always thank you for these experiences, as long as you are being positive and allowing your children to have fun.
Denise emphasizes that they take the children to museums, on safaris, to cultural villages, and encourage them to try the local food (even if it looks distasteful) as it may just surprise the taste buds. Mostly we want them to learn the local language so that they can know what is being said and communicate with their peers. Who knows they may well live here when they are older.
5. Be Encouraging
Encourage your child to take part in different activities, such as those mentioned above. Let them learn that they can overcome any challenge thrown their way, encourage and support them with whatever decisions they make. They are likely to develop a belief that they can achieve anything that life may throw at them as long as they are positive and set their minds to it. They will learn to embrace challenges head on, rather than being too afraid and shying away from these situations. They have been placed in a foreign environment and what better way to start learning to deal with challenges in life? And if you can encourage them to make decisions for themselves, whether good or bad, it is better than not being able to make any decisions as they get older.
Trudie agrees: I love the freedom that we have here, that we don’t have to worry that something will happen to my child if he goes to the bookshop by himself or to the bathroom. I got that chip off my shoulder and let my child become independent with confidence. We encourage him to be more independent now.
Denise remembers growing up very protected from the outside world. As an 18 year old, when I left home I had no worldly experience and could not make any decisions in life. It has been hard to unlearn that and start making decisions you feel are right for you. I want my children to be unafraid of making decisions in life, whether they are good or not, they must be courageous enough to try.
6. Flexibility and stability
Be flexible in your daily life and know that life is not to be taken too seriously, focus on opportunities to have fun and learn in the process. Your children will take a page from your book and learn to be flexible in their own lives. There is always somewhere new to go and people to meet. It is good to have surprises and not know what is coming next or which country you may move or travel to and experience. It is an adventure, so take advantage of the opportunity.
Maintaining stable relationships and a stable environment for your children is essential because one of the most difficult things for the expat child is building long-lasting friendships and not seeing the home they are living in as home. So create this environment for them, a stable yet flexible home.
Denise says, The feeling of not knowing what's coming next is can be quite stressful at times, and I often have that sick feeling in my stomach about where life is going to take us next, I want my children to have flexibility and be ok with wherever they land up. So I try and show that I am excited so that my kids will grow up not being apprehensive like I am. Life is for the living, so we must live.
Trudie: This is definitely not home and never will be, but I’m not really sure that matters, as long as they know home is somewhere.
7. Communicating with others
Remember as the parent the way you interact with people as an expat will determine how your child will interact and accept people from different backgrounds. As an expat you are going to encounter, not only the new local culture and people, but people from all walks of life, from countries they may never have heard of. Your children need to be encouraged to embrace people from all walks of life, and not to be prejudiced of any.
Shirley: The people in the country we moved to were not very friendly, so I battled to settle and make friends, it took me at least a year. The kids felt the same, but it was easier for Natalie she has a more casual personality. She made friends really quickly but I think it was more of the case that she was a foreigner and the young kids in school really take to outside people. With Marco it was more difficult, he is shy and much quieter and they played none of the sports he used to play at home. It definitely took him longer, but he now has a handful of really good friends, it did make it more difficult for him to settle though.
8. Communicating with your children
It is so important to constantly communicate with your children. Did you involve them in the decision to move?
Denise: When my husband came back from his interview and said he had been offered the position, we told the kids about the country and focused on the positive aspects of moving, eventually our son asked whether we could please move there and of course his sister always agrees with him, so that was easy. We were very excited that he was so excited.
It is very important to consider your child’s opinions and constantly talk to your kids about how they are feeling. Listen to your children, really listen! We have also set each of the kids up on gmail, and they sometimes email us and let us know how they feel (even though we are not talking, they are still communicating with us on their feelings).
Trudie constantly communicated with her son - During our alone time I constantly reassured Matthew that dad will be with us soon, and when Dad did not come back to our home country, but to our expat spot and we had to go there Matthew was the first to jump at the idea. We also constantly talk about the fact that we will move again- this is not home yet- we will be here for a couple of years - we wanted Matthew to be prepared for that and use it to motivate him-work harder at school etc.
Monique discusses everything with her kids and emphasizes never hiding the truth from them: They have learnt a lot and I would not change what we have done, they have really experienced life to the fullest, doing things most kids their age dream about.
9. Personality, age and attachment types
Your child’s personality, age and how they attach themselves to you is also going to determine how well they settle. If they are still babies, it is going to be a lot easier
Denise finds her daughter who is 6, remembers those people who were closest to her, but often gets peripheral people mixed up. She remembers experiences through our home videos. Our son at 8 remembers a lot more about home and took longer to settle and make friends. If we go down to the pool, Jess will attach herself to any of the children their and start playing, Sean will shy away and take longer to be comfortable to mingle, but once the mingling starts he is just fine.
Teenage years are even tougher. If your child is shy and attaches themselves to you for support, then settling will be harder. The child with an assertive, outgoing personality is going to find it a lot easier to get along in the new environment. You need to take this all into account in helping them to settle. For the shy child, make play dates for them, even if you invite the parent for tea with the child tagging along as company for your child, be sly if you need to. Get your kids out their, join clubs, take them to different socials, help them find their feet and new friends. In the long run, it is going to make your life easier if your children have friends and settle down.
Kids must not focus on the things they are missing out on at home, but rather on what they are experiencing right now (which they would have missed out on had they stayed at home). If they are down and feeling depressed, get busy! Have fun!
Shirley remembers not worrying about Natalie (she was 13) I thought she would adapt easier than Marco (15 ½), which was the case in the end.
Marco could not play the sports he was really good, he found it really hard to settle into the boy school we sent him to as he had been at a private mixed school. I think that this really was a hard period for him and I really worried and felt sorry for him. He also found it really hard to make friends at the beginning, but that changed after a couple of months and he has now made some really strong and trustworthy friends.
He has adapted and I think he is now more at ease with his life and I do not think that he really misses our home country.
Natalie was more adaptable and is more like the locals … she even has a different accent to everyone. She made friends really quickly but I think it was more of the case that she was a foreigner and the young kids in school really take to such a person. Natalie is also easier going than Marco, so I think she found it easier, but she also missed her friends terribly. She still does and always looks forward to going back and meeting up with everyone. She did tell me that it is peer pressure that she is under and to be able to blend into the group, you try really hard to do what they do because if not, then you are not good enough. We were encouraging of everything they did and gave them the space they needed to grow. We let them be independent, which we could not do at home. They have flourished and have very independent, strong and self assured personalities now.
10. Family traditions, original culture and language
It is important to keep your countries traditions going within the family, remember everyone at home is growing up with those traditions and if you are going back to live there, keep those traditions alive within your own family.
Well where we come from we don’t have any dress codes but two things that are close to our hearts, are sport and food, says Trudie. We always watch all and every major sporting event from cricket to rugby with our kids. Where they can see the intensity and passion we have towards sport. The food part is very easy for me, my children get traditional food over and over, on a weekly basis.
It also helps to create new little family traditions while maintaining your own value system and beliefs. As Denise remembers: At home we have full time maids, so in our new country we created traditions of cooking, cleaning and a family dinner every night. One of our traditions is to find out the best thing that happened to each person during the day. To reminisce on the good points. We also have a bell which we ring if you have done something particularly note worthy, such as getting a certificate at school or doing something nice for a stranger, it can be nearly anything special.
Some last thoughts:
Trudie : no matter where you are, make sure your religion is number 1 (even when your friends don’t believe and tease you). Culture does not define you, you do. (Stand by your values and morals even if it’s hard). Every moment we have together counts –let’s spend it together in a remarkable way. At the end we are all experts and our children are therefore the same as us adults.
Denise: Try and always be yourself around people, don’t try and be someone else or the person you think they want you to be. Living abroad changes your perspective on life, you meet people that are worse off than you and live in poverty and people who are wealthy beyond belief, people who have few moral beliefs and those who are overly so – this life gives you perspective on so many topics – world politics, thinking globally, it is the different angle and understanding of others that allows you to have more empathy.
You can contribute more to conversations with all the added experience you have gained compared to most people in the world.
Much of the research I encountered showed that – expat kids grow up to be diversity-embracing, intelligent, savvy, articulate, interesting, adults. As their parents we are giving them a chance of a lifetime, a life-altering, enriching experience.
This article may be freely copied as long as reference is made to http://www.xpatulator.com/
If as adults we have doubts about settling in a new country, how do you think our children are feeling?
The inevitable question is “Do we leave our comfort zone?”
Do we disrupt our lives, move away from everything we know and love, our home comforts, family and friends. And finally do we tear our children away from all the above? Inevitably they have the same concerns as we do….
In their minds they are asking questions like, can I adapt, will I be happy, will I make new friends, will I be accepted, will I be good enough and to top it all off they are leaving all their friends behind, just like you are.
With these questions in mind and after much research on the topic there were a few points that stood out for me on the expat child these are discussed below:
1. Attitude
Your attitude as the adult and parent is going to greatly influence how your children settle in the country and accept the move.
We can decide whether to be positive or negative about becoming expats. The more positive parent results in a well adjusted child who looks at the glass half full, finds the positive in every situation and tries to adjust as much as you do.
The positives of living in a new and different environment, so outweigh the negatives. We can start with that fantastical dream of living abroad (the “Out of Africa” experience or exotic India thoughts), this is an adventure for you and them and it needs to be embraced as such.
Perhaps it is the benefit of a better environment, climate, economic situation, better job opportunities and prospects, a better political situation, safer country, etc etc, the reason you have left your country of origin is “your” positive and this positive must be lived every day by the family.
What you and your family are achieving can be what your peers back home can only dream of ever achieving one day. Your attitude back when you were deciding to take this adventure, was one of hope and opportunity, of adventure, of new beginnings and this is how this dream needs to be lived.
Trudie remembers: We saw this move as a wonderful opportunity to expose our children to the world and maybe broaden their horizons.
I was 36 weeks pregnant when we arrived and I was stressed beyond mention. Adjusting to this part of the world was the hardest for me. I gave up a whole support system at home to have a baby in a strange country and had to cope on my own- with just my husband by my side. For Matthew (8) coming to this part of the world is associated with so many wonderful things-he got to be with Dad again (as Dad was always away when we lived at home). He finally got a sibling that we had been praying so hard for. And he got to go to a new school, make new friends and take up a combat sport-For Matthew life was grand.
Shirley says she hated where we moved to with a passion. It was cold, wet, and windy, the people were not as friendly as I thought they would be and it was a really hard and lonely time for at least a year. My first six months I told my husband that I could not handle this place and wanted to go home, but the thought of the crime back home and the safety of my children was more important for me and that was an absolute put off. I really wanted my children to be able to come and go as they wanted and not always worry about whether they would be safe. It took me a long time to stop hugging my handbag to my chest, to stop looking over my shoulder to see if I was been followed or whether someone was going to snatch my bag, to stop locking all my car doors and putting my handbag under my seat. That became a plus in my book and I had to really work hard to change my attitude and that is what I did. I still miss my family and my friends, but I have made new friends here and it helps a lot. I don’t worry about locking my car door anymore or worrying about whether my bag is going to be snatched etc, it makes life simpler and therefore I just carry on with life and hope and pray for the best. With my attitude change, my children have become so much happier and that is what counts.
Each of these parents has had a positive attitude towards their circumstances, even if it did not start off as positive eventually expat parents realize that only their positive experiences can result in their children having a positive attitude too.
2. Being Open minded:
In every case of becoming an expat, the circumstances you are going to experience are going to be different, even if you move within the USA, if you have not been brought up in the culture it is going to be an adjustment. Parents need to be open minded about a culture, to allow their children to be open minded about it too.
Denise remembers first moving to the Middle East: We found the people drove like maniacs and we would raise our arms like the Lemurs – King Julien and Maurice in the movie Madagascar and say “Look at me, look at me, I am a crazy driver” and all roll around laughing. Eventually our kids were mimicking us and believed that all Middle Eastern people drove like crazy people, as they associated crazy driving being due to where we were. We had to correct them on that and say, eventually everyone that lives here drives badly, it is just how it is here and somehow you adjust.
Monique feels that being an expat parent really depends on a lot of things, like where you are being posted - Most of my postings have been to central African countries where food and medical care can be scarce, this can be stressful with younger kids and as a parent you need to be open minded and be prepared to adjust and change your way of thinking and learn many new skills, like administering medical aid, sometimes going as far as doing your own stitches on a screaming kid without pain killers.
3. The right Schooling
We can so easily make the wrong school choice for our children (even in our own countries), but when moving to a culturally different country this could be what either develops your child into having a positive attitude or not.
Let your child go to a school that will suite his/her personality. Will they develop better in a smaller or bigger school, a social / sporty or academic school, what is the vision of the school for the students, check, check and double check if your child will suite the style of the school. Perhaps home schooling is another option to look into. Children need to thrive and will do so if the school appropriately develops their strengths. Send them to a school where they teach in your child’s home language and have children around them with similar cultural backgrounds e.g. sending a Christian child to a Muslim school or vice versa, may create boundaries for that child. Sometimes you do not have an option e.g. there is only 1 school available, but then get involved with the school and teach your child about cultural diversity. It is not “bad” to let your child go to a different school to learn about the new culture or language, but make sure that the child has the type of personality that can cope with this diverse education, else in the long term it may be damaging to their growth. Look at all the options and if your child is old enough, discuss the options with them and let them help make the decision. Educating your child is not an option, they need to be educated but they can help decide where they will be happiest. Remember your child is not you! Where you may cope, he or she may not, his / her strengths are different to yours and respect that they are their own individuals.
Liz seriously recommends sending your kids to a similar type size of school as your kids are leaving - We went from a gorgeous little school to a private huge, pressure pressure school, the main focus was on the academics but not a holistic school. WORSE mistake, Nick went from a happy outgoing little boy to vomiting every day and getting nauseous when we drove past the school. NIGHTMARE the school offered no support only interested in bums in seats and $ in the bank.
Well it was sooo bad we contemplated going back to the country we had just come from (not home by the way), but gave a smaller school a go. Nick had counseling from the trauma, and is back to his old happy self ..... so my friends don’t get caught up in the hype but go with your gut feel.
4. Immerse your family in the new language, culture, religion and country.
Locals in any country love it when you speak to them in their own language (try it out sometime). And it can be quite fun, especially if you get it wrong and they help you to correct your words, you develop a relationship with the people from the country and they will become so helpful towards you and you will enjoy getting to know them too. While learning the new language immerse this in the culture, religion and history of the country, go to museums, take tours and do a bit of what the locals would do, be it coffee in cafes in Greece or Paris, to Dhow or camel rides in the desert, or participate in some of the festivals they celebrate. Make it fun, tell your kids stories about the culture and history, make it educational at the same time. Imagine the stories your children will be able to tell their friends back at home of their adventures and travels around the globe. They will always thank you for these experiences, as long as you are being positive and allowing your children to have fun.
Denise emphasizes that they take the children to museums, on safaris, to cultural villages, and encourage them to try the local food (even if it looks distasteful) as it may just surprise the taste buds. Mostly we want them to learn the local language so that they can know what is being said and communicate with their peers. Who knows they may well live here when they are older.
5. Be Encouraging
Encourage your child to take part in different activities, such as those mentioned above. Let them learn that they can overcome any challenge thrown their way, encourage and support them with whatever decisions they make. They are likely to develop a belief that they can achieve anything that life may throw at them as long as they are positive and set their minds to it. They will learn to embrace challenges head on, rather than being too afraid and shying away from these situations. They have been placed in a foreign environment and what better way to start learning to deal with challenges in life? And if you can encourage them to make decisions for themselves, whether good or bad, it is better than not being able to make any decisions as they get older.
Trudie agrees: I love the freedom that we have here, that we don’t have to worry that something will happen to my child if he goes to the bookshop by himself or to the bathroom. I got that chip off my shoulder and let my child become independent with confidence. We encourage him to be more independent now.
Denise remembers growing up very protected from the outside world. As an 18 year old, when I left home I had no worldly experience and could not make any decisions in life. It has been hard to unlearn that and start making decisions you feel are right for you. I want my children to be unafraid of making decisions in life, whether they are good or not, they must be courageous enough to try.
6. Flexibility and stability
Be flexible in your daily life and know that life is not to be taken too seriously, focus on opportunities to have fun and learn in the process. Your children will take a page from your book and learn to be flexible in their own lives. There is always somewhere new to go and people to meet. It is good to have surprises and not know what is coming next or which country you may move or travel to and experience. It is an adventure, so take advantage of the opportunity.
Maintaining stable relationships and a stable environment for your children is essential because one of the most difficult things for the expat child is building long-lasting friendships and not seeing the home they are living in as home. So create this environment for them, a stable yet flexible home.
Denise says, The feeling of not knowing what's coming next is can be quite stressful at times, and I often have that sick feeling in my stomach about where life is going to take us next, I want my children to have flexibility and be ok with wherever they land up. So I try and show that I am excited so that my kids will grow up not being apprehensive like I am. Life is for the living, so we must live.
Trudie: This is definitely not home and never will be, but I’m not really sure that matters, as long as they know home is somewhere.
7. Communicating with others
Remember as the parent the way you interact with people as an expat will determine how your child will interact and accept people from different backgrounds. As an expat you are going to encounter, not only the new local culture and people, but people from all walks of life, from countries they may never have heard of. Your children need to be encouraged to embrace people from all walks of life, and not to be prejudiced of any.
Shirley: The people in the country we moved to were not very friendly, so I battled to settle and make friends, it took me at least a year. The kids felt the same, but it was easier for Natalie she has a more casual personality. She made friends really quickly but I think it was more of the case that she was a foreigner and the young kids in school really take to outside people. With Marco it was more difficult, he is shy and much quieter and they played none of the sports he used to play at home. It definitely took him longer, but he now has a handful of really good friends, it did make it more difficult for him to settle though.
8. Communicating with your children
It is so important to constantly communicate with your children. Did you involve them in the decision to move?
Denise: When my husband came back from his interview and said he had been offered the position, we told the kids about the country and focused on the positive aspects of moving, eventually our son asked whether we could please move there and of course his sister always agrees with him, so that was easy. We were very excited that he was so excited.
It is very important to consider your child’s opinions and constantly talk to your kids about how they are feeling. Listen to your children, really listen! We have also set each of the kids up on gmail, and they sometimes email us and let us know how they feel (even though we are not talking, they are still communicating with us on their feelings).
Trudie constantly communicated with her son - During our alone time I constantly reassured Matthew that dad will be with us soon, and when Dad did not come back to our home country, but to our expat spot and we had to go there Matthew was the first to jump at the idea. We also constantly talk about the fact that we will move again- this is not home yet- we will be here for a couple of years - we wanted Matthew to be prepared for that and use it to motivate him-work harder at school etc.
Monique discusses everything with her kids and emphasizes never hiding the truth from them: They have learnt a lot and I would not change what we have done, they have really experienced life to the fullest, doing things most kids their age dream about.
9. Personality, age and attachment types
Your child’s personality, age and how they attach themselves to you is also going to determine how well they settle. If they are still babies, it is going to be a lot easier
Denise finds her daughter who is 6, remembers those people who were closest to her, but often gets peripheral people mixed up. She remembers experiences through our home videos. Our son at 8 remembers a lot more about home and took longer to settle and make friends. If we go down to the pool, Jess will attach herself to any of the children their and start playing, Sean will shy away and take longer to be comfortable to mingle, but once the mingling starts he is just fine.
Teenage years are even tougher. If your child is shy and attaches themselves to you for support, then settling will be harder. The child with an assertive, outgoing personality is going to find it a lot easier to get along in the new environment. You need to take this all into account in helping them to settle. For the shy child, make play dates for them, even if you invite the parent for tea with the child tagging along as company for your child, be sly if you need to. Get your kids out their, join clubs, take them to different socials, help them find their feet and new friends. In the long run, it is going to make your life easier if your children have friends and settle down.
Kids must not focus on the things they are missing out on at home, but rather on what they are experiencing right now (which they would have missed out on had they stayed at home). If they are down and feeling depressed, get busy! Have fun!
Shirley remembers not worrying about Natalie (she was 13) I thought she would adapt easier than Marco (15 ½), which was the case in the end.
Marco could not play the sports he was really good, he found it really hard to settle into the boy school we sent him to as he had been at a private mixed school. I think that this really was a hard period for him and I really worried and felt sorry for him. He also found it really hard to make friends at the beginning, but that changed after a couple of months and he has now made some really strong and trustworthy friends.
He has adapted and I think he is now more at ease with his life and I do not think that he really misses our home country.
Natalie was more adaptable and is more like the locals … she even has a different accent to everyone. She made friends really quickly but I think it was more of the case that she was a foreigner and the young kids in school really take to such a person. Natalie is also easier going than Marco, so I think she found it easier, but she also missed her friends terribly. She still does and always looks forward to going back and meeting up with everyone. She did tell me that it is peer pressure that she is under and to be able to blend into the group, you try really hard to do what they do because if not, then you are not good enough. We were encouraging of everything they did and gave them the space they needed to grow. We let them be independent, which we could not do at home. They have flourished and have very independent, strong and self assured personalities now.
10. Family traditions, original culture and language
It is important to keep your countries traditions going within the family, remember everyone at home is growing up with those traditions and if you are going back to live there, keep those traditions alive within your own family.
Well where we come from we don’t have any dress codes but two things that are close to our hearts, are sport and food, says Trudie. We always watch all and every major sporting event from cricket to rugby with our kids. Where they can see the intensity and passion we have towards sport. The food part is very easy for me, my children get traditional food over and over, on a weekly basis.
It also helps to create new little family traditions while maintaining your own value system and beliefs. As Denise remembers: At home we have full time maids, so in our new country we created traditions of cooking, cleaning and a family dinner every night. One of our traditions is to find out the best thing that happened to each person during the day. To reminisce on the good points. We also have a bell which we ring if you have done something particularly note worthy, such as getting a certificate at school or doing something nice for a stranger, it can be nearly anything special.
Some last thoughts:
Trudie : no matter where you are, make sure your religion is number 1 (even when your friends don’t believe and tease you). Culture does not define you, you do. (Stand by your values and morals even if it’s hard). Every moment we have together counts –let’s spend it together in a remarkable way. At the end we are all experts and our children are therefore the same as us adults.
Denise: Try and always be yourself around people, don’t try and be someone else or the person you think they want you to be. Living abroad changes your perspective on life, you meet people that are worse off than you and live in poverty and people who are wealthy beyond belief, people who have few moral beliefs and those who are overly so – this life gives you perspective on so many topics – world politics, thinking globally, it is the different angle and understanding of others that allows you to have more empathy.
You can contribute more to conversations with all the added experience you have gained compared to most people in the world.
Much of the research I encountered showed that – expat kids grow up to be diversity-embracing, intelligent, savvy, articulate, interesting, adults. As their parents we are giving them a chance of a lifetime, a life-altering, enriching experience.
This article may be freely copied as long as reference is made to http://www.xpatulator.com/
A new approach to expatriate pay
The challenges of ensuring expatriates are paid fair salaries across different countries, in the current economic climate, of the credit crisis together with rapid currency and inflation fluctuations are increasingly complex.
The current economic climate has made it necessary to constantly review expatriate salaries. Rapidly fluctuating exchange rates and inflation can increase or decrease the amount of salary paid, and significantly impact purchasing power both positively and negatively in a very short period of time. The approach many organizations have taken is to convert a spendable percentage (typically 60%) of the expatriate’s salary into the host country currency on a monthly basis and to provide non-cash benefits such as accommodation, transport, education of children etc. This can result in employers paying too much or too little salary in these volatile times.
Too Much: The expatriate experiences short-term upside, as a result of a change in the exchange rate. A fall in the value of the host country currency against the home country currency, without an increase in the prices of goods and services in the host country, results in the expatriate having increased purchasing power. It may appear for a while that all is well. The expatriate has an unexpected windfall. A wise expatriate will save this windfall knowing that the situation will not be permanent. Either the exchange rate will adjust back to where it was or prices and inflation will begin to increase until economic equilibrium is achieved. The reality is, that in the short-term the employer will be faced with increased overall salary costs, and will eventually have to deal with disappointed expatriates when the trend inevitably reverses itself and their purchasing power drops again to realistic levels.
Too Little: The expatriate experiences short-term downside as a result of a change in the exchange rate. An increase in the value of the host country currency against the home country currency, without a decrease in the prices of goods and services in the host country, results in the expatriate having reduced purchasing power. This is when the employer faces complaints from expatriates unable to make ends meet. Prices of goods and services have remained the same in the host country but as a result of the change in the exchange rate, the expatriate receives less salary in local currency. In the long term either the exchange rate will adjust back to where it was, or prices and inflation will begin to decrease until economic equilibrium is achieved. The reality is that in the short-term the employer will be faced with decreased overall salary costs and will have to deal quickly with unhappy expatriates.
Clearly the approach on converting a portion of the salary into host country currency on a monthly basis does not work any more.
The expatriate compensation questions that employers must consider:
-What amount of salary will ensure that the expatriate will have the same purchasing power overseas as they have at home?
-What process / tool will be used to ensure the salary retains its purchasing power when inflation and exchange rates change?
New Approach: The ideal approach is for the employer to decide on a process / tool that establishes and maintains the expatriate’s salary purchasing power. The Salary Purchasing Power Parity (SPPP) approach is one such approach and involves the following steps:
-Committed Salary: Decide what amount / portion of the current salary (in home currency) will remain in the home country to meet committed expenses such as mortgage commitments, retirement funding, savings etc.
-Home Gross Spendable Salary: Establish what amount / portion of the current salary (in home currency) is spent in maintaining the expatriates current standard of living / lifestyle. What will the expatriate need to spend their salary on in the host country? For example will accommodation be provided or will the expatriate pay rent, will healthcare be provided etc.
-Home Net Spendable Salary: Establish the net spendable salary by deducting the amount of tax, social contributions and any other statutory deductions applicable in the home country to the Home Gross Spendable Salary.
-Host Net Spendable Salary: Use the established amount of Home Net Spendable Salary in home currency, to calculate the amount of Host Net Spendable Salary required in the host country, in order for the expatriate to have the same amount of purchasing power as they have in their home country. The calculation comprises 4 factors:
1) The difference in the cost of living index for the same basket of goods and services between the home and host country applicable for the spendable salary.
2) The difference in hardship that the expatriate and their family are likely to experience.
3) The exchange rate between the home and host country.
4) The Net Spendable Salary
-Host Gross Salary: The Host Net Spendable Salary is “grossed up” by the amount of tax, social contributions and any other statutory deductions applicable in the host country, to establish the host gross salary that will provide the expatriate with the same standard of living as they had in their home country.
The Host Gross Salary is established in local host currency. As a result it is no longer subject to changes in the exchange rate. Over time the salary may be eroded by local inflation which will be reflected in the cost of living indexes. It is recommended that the Host Gross Salary be reviewed on a quarterly basis, to monitor the impact of any change in cost of living and the exchange rate.
Steven Coleman runs the most comprehensive international cost of living website available www.xpatulator.com an internet service that provides free cost of living and hardship information for 276 global locations to registered users. The premium content calculators allow you to customise your own cost of living index by choosing your own basket groups and includes a COLA calculator. Follow Steven on twitter
http://twitter.com/steveninseattle/.
This article may be freely copied as long as reference is made to http://www.xpatulator.com/
The current economic climate has made it necessary to constantly review expatriate salaries. Rapidly fluctuating exchange rates and inflation can increase or decrease the amount of salary paid, and significantly impact purchasing power both positively and negatively in a very short period of time. The approach many organizations have taken is to convert a spendable percentage (typically 60%) of the expatriate’s salary into the host country currency on a monthly basis and to provide non-cash benefits such as accommodation, transport, education of children etc. This can result in employers paying too much or too little salary in these volatile times.
Too Much: The expatriate experiences short-term upside, as a result of a change in the exchange rate. A fall in the value of the host country currency against the home country currency, without an increase in the prices of goods and services in the host country, results in the expatriate having increased purchasing power. It may appear for a while that all is well. The expatriate has an unexpected windfall. A wise expatriate will save this windfall knowing that the situation will not be permanent. Either the exchange rate will adjust back to where it was or prices and inflation will begin to increase until economic equilibrium is achieved. The reality is, that in the short-term the employer will be faced with increased overall salary costs, and will eventually have to deal with disappointed expatriates when the trend inevitably reverses itself and their purchasing power drops again to realistic levels.
Too Little: The expatriate experiences short-term downside as a result of a change in the exchange rate. An increase in the value of the host country currency against the home country currency, without a decrease in the prices of goods and services in the host country, results in the expatriate having reduced purchasing power. This is when the employer faces complaints from expatriates unable to make ends meet. Prices of goods and services have remained the same in the host country but as a result of the change in the exchange rate, the expatriate receives less salary in local currency. In the long term either the exchange rate will adjust back to where it was, or prices and inflation will begin to decrease until economic equilibrium is achieved. The reality is that in the short-term the employer will be faced with decreased overall salary costs and will have to deal quickly with unhappy expatriates.
Clearly the approach on converting a portion of the salary into host country currency on a monthly basis does not work any more.
The expatriate compensation questions that employers must consider:
-What amount of salary will ensure that the expatriate will have the same purchasing power overseas as they have at home?
-What process / tool will be used to ensure the salary retains its purchasing power when inflation and exchange rates change?
New Approach: The ideal approach is for the employer to decide on a process / tool that establishes and maintains the expatriate’s salary purchasing power. The Salary Purchasing Power Parity (SPPP) approach is one such approach and involves the following steps:
-Committed Salary: Decide what amount / portion of the current salary (in home currency) will remain in the home country to meet committed expenses such as mortgage commitments, retirement funding, savings etc.
-Home Gross Spendable Salary: Establish what amount / portion of the current salary (in home currency) is spent in maintaining the expatriates current standard of living / lifestyle. What will the expatriate need to spend their salary on in the host country? For example will accommodation be provided or will the expatriate pay rent, will healthcare be provided etc.
-Home Net Spendable Salary: Establish the net spendable salary by deducting the amount of tax, social contributions and any other statutory deductions applicable in the home country to the Home Gross Spendable Salary.
-Host Net Spendable Salary: Use the established amount of Home Net Spendable Salary in home currency, to calculate the amount of Host Net Spendable Salary required in the host country, in order for the expatriate to have the same amount of purchasing power as they have in their home country. The calculation comprises 4 factors:
1) The difference in the cost of living index for the same basket of goods and services between the home and host country applicable for the spendable salary.
2) The difference in hardship that the expatriate and their family are likely to experience.
3) The exchange rate between the home and host country.
4) The Net Spendable Salary
-Host Gross Salary: The Host Net Spendable Salary is “grossed up” by the amount of tax, social contributions and any other statutory deductions applicable in the host country, to establish the host gross salary that will provide the expatriate with the same standard of living as they had in their home country.
The Host Gross Salary is established in local host currency. As a result it is no longer subject to changes in the exchange rate. Over time the salary may be eroded by local inflation which will be reflected in the cost of living indexes. It is recommended that the Host Gross Salary be reviewed on a quarterly basis, to monitor the impact of any change in cost of living and the exchange rate.
Steven Coleman runs the most comprehensive international cost of living website available www.xpatulator.com an internet service that provides free cost of living and hardship information for 276 global locations to registered users. The premium content calculators allow you to customise your own cost of living index by choosing your own basket groups and includes a COLA calculator. Follow Steven on twitter
http://twitter.com/steveninseattle/.
This article may be freely copied as long as reference is made to http://www.xpatulator.com/
How to Calculate an International Cost of Living Allowance
A Cost of Living Allowance (COLA) is a salary supplement paid to employees to cover differences in the cost of living, particularly as a result of an international assignment.
The amount of COLA should enable an expatriate to be able to purchase the same basket of goods and services in the host location as they could in their home country. The basis for calculating a COLA is the Cost of Living Index (COLI) which indexes the costs of the same basket of goods and services in different geographic locations. COLA is a simple accurate method of measuring fluctuating salary purchasing power and ensuring parity.
Cost of Living Index
Our cost of Living Indexes measure the cost of 230 products and services across 13 different basket groups in 276 cities across the globe. The data is gathered by a team of research analysts who survey comparable items that are available internationally. A minimum of 3 prices for the same brand/size/volume of product is used to determine the average price for each item in each location. The items are priced on a quarterly basis and tend to rise and fall with inflation. The 13 different basket categories are as follows:
Alcohol & Tobacco: Alcoholic beverages and tobacco products
Alcohol at Bar
Beer
Cigarettes
Locally Produced Spirit
Whiskey
Wine
Clothing: Clothing and footwear products
Business Suits
Casual Clothing
Children’s Clothing and footwear
Coats and hats
Evening Wear
Shoe Repairs
Underwear
Communication
Home Telephone Rental and Call Charges
Internet Connection and service provider fees
Mobile / Cellular Phone Contract and Calls
Education
Crèche / Pre-School Fees
High School / College Fees
Primary School Fees
Tertiary Study Fees
Furniture & Appliances: Furniture, household equipment and household appliances
DVD Player
Fridge Freezer
Iron
Kettle, Toaster, Microwave
Light Bulbs
Television
Vacuum Cleaner
Washing Machine
Groceries: Food, non-alcoholic beverages and cleaning material
Baby Consumables
Baked Goods
Baking
Canned Foods
Cheese
Cleaning Products
Dairy
Fresh Fruits
Fresh Vegetables
Fruit Juices
Frozen
Meat
Oil & Vinegars
Pet Food
Pre-Prepared Meals
Sauces
Seafood
Snacks
Soft Drinks
Spices & Herbs
Healthcare: General Healthcare, Medical and Medical Insurance
General Practitioner Consultation rates
Hospital Private Ward Daily Rate
Non-Prescription Medicine
Private Medical Insurance / Medical Aid Contributions
Household: Housing, water, electricity, household gas, household fuels, local rates and residential taxes
House / Flat Mortgage
House / Flat Rental
Household Electricity Consumption
Household Gas / Fuel Consumption
Household Water Consumption
Local Property Rates / Taxes / Levies
Miscellaneous: Stationary, Linen and general goods and services
Domestic Help
Dry Cleaning
Linen
Office Supplies
Newspapers and Magazines
Postage Stamps
Personal Care: Personal Care products and services
Cosmetics
Haircare
Moisturiser / Sun Block
Nappies
Pain Relief Tablets
Toilet Paper
Toothpaste
Soap / Shampoo / Conditioner
Recreation and Culture
Books
Camera Film
Cinema Ticket
DVD and CD’s
Sports goods
Theatre Ticket
Restaurants, Meals Out and Hotels
Business Dinner
Dinner at Restaurant (non fast food)
Hotel Rates
Take Away Drinks & Snacks (fast Food)
Transport: Public Transport, Vehicle Costs, Vehicle Fuel, Vehicle Insurance and Vehicle Maintenance
Hire Purchase / Lease of Vehicle
Petrol / Diesel
Public Transport
Service Maintenance
Tyres
Vehicle Insurance
Vehicle Purchase
Each basket category does not count equally and are weighted in the final calculation based on expatriate spending patterns.
In order to calculate an accurate cost of living index for a specific individual the basket items that are not relevant to the individual should be excluded from the calculation. For example if education and housing is provided by the employer these basket categories would be excluded from the cost of living index calculation. This increases the accuracy of the cost of living index and makes it possible for each individual to have their own customized cost of living index based on their specific arrangements rather than using an overall “generic” index which is likely to contains costs that are not relevant to the individual.
The formula for calculating the specific cost of living index for an international assignment is as follows:
Cost of Living Index = Customized Cost of Living Index for Host City / Customized Cost of Living Index for Home City
When moving to a higher cost of living host city, the index will be greater than 1 (positive). When moving to a lower cost of living host city the index will be less than 1 (negative). Where the index is negative it means that in real terms the cost of living in the host city is lower than the home city. This means that if the negative index where to be applied to the employee’s salary, they would actually be paid proportionately less spendable salary in the host city. It is important to note that the majority of organizations do not apply a negative cost of living index because it makes it difficult to persuade an employee to take up an assignment as they tend to see it as a reduction in salary.
Examples of Cost of Living Index Calculations using our data:
Example 1) An Australian employee moving from Perth to London where healthcare and communication will be provided by the employer
More Expensive in London:
Alcohol & Tobacco +4.77%
Clothing +21.85%
Education +31.53%
Furniture & Appliances +16.03%
Groceries +16.35%
Household +50.72%
Miscellaneous +137.47%
Personal Care +11.18%
Recreation & Culture -6.82%
Restaurants Meals Out and Hotels +34.99%
Transport +19.80%
The overall difference in cost of living moving from Perth and London is +28.06%.
In this case the cost of living index is positive and would be applied as it is.
Example 2) A British employee moving from London to Mumbai where the employer will provide housing and education
More Expensive in Mumbai:
Alcohol & Tobacco -37.53%
Clothing -9.58%
Communication -44.92%
Furniture & Appliances -19.31%
Groceries -24.03%
Healthcare -31.24%
Miscellaneous -72.43%
Personal Care -24.94%
Recreation & Culture -35.73%
Restaurants Meals Out and Hotels -33.11%
Transport is -27.99%
The overall difference in cost of living moving from London Mumbai is -30.53%.
In this case the cost of living index is negative and would not be applied.
Net Spendable Salary
Differences in cost of living only impact the portion of the salary that is spendable in the host country. Items in the home country such as retirement funding, medical insurance and other home based costs are not impacted by the cost of living in the host country.
To determine the Net Spendable Salary establish what amount / portion of the current salary (in home currency) is spent in maintaining the employee’s current standard of living / lifestyle. What will the expatriate need to spend their salary on in the host country? For example will accommodation be provided or will the employee pay rent, will healthcare be provided etc. Deduct all items that are either provided in kind or are spendable in the home country. Deduct the hypothetical amount of tax, social contributions and any other statutory deductions applicable in the home country from the Spendable Salary. What is left is the Net Spendable Salary.
Cost of Living Allowance (COLA)
The formula for calculating the cost of living allowance using the above inputs is as follows:
(Net Spendable Salary X Cost of Living Index X Hardship Index X Exchange Rate) less (Net Spendable Salary X Exchange Rate) = COLA
Examples of COLA Calculations using our data
Example 1) An Australian employee with a net spendable salary of AUD$100,000 moving from Perth to London where healthcare and communication will be provided by the employer
($100,000.00 X 1.2806 X 1 X 0.4768) less ($100,000.00 X 0.4768) = COLA of £13,379.44 (GBP)
Based on all the above factors a person would require a Cost of Living Allowance of £13,379.44 (GBP), in addition to their current salary of 100,000.00 Australian Dollar (AUD) to compensate for relocating from Perth to London. This Cost of Living Allowance compensates for the overall cost of living difference of +28.06% and the relative difference in hardship of 0%.
Example 2) A British employee with a net spendable salary of £18,000 moving from London to Mumbai where the employer will provide housing and education
Note: Because the Cost of Living Index is negative it is not applied.
(£18,000.00 X 1 X 1.3 X 67.2852) less (£18,000.00 X67.2852) = COLA of 363,340.32 Indian Rupee
Based on all the above factors a person would require a Cost of Living Allowance of 363,340.32 (INR ), in addition to their current salary of £18,000.00 British Pound (GBP ) to compensate for relocating from London to Mumbai. This Cost of Living Allowance compensates for the overall cost of living difference of [-30.53%] and the relative difference in hardship of 30%.
COLA Payment
The COLA is paid as a salary supplement (i.e. as an additional allowance) net of tax in the host country. If the COLA is a taxable allowance in the host country it should be grossed up in order that the full amount of calculated COLA is paid net of tax given that the basis of the calculation is Net Spendable Salary. The COLA is often accompanied by other allowances and benefits such as flights home, relocation / settling in allowance, and furnishing allowance.
Exchange Rate Fluctuations
Significant changes in the exchange rate can make a considerable difference in the COLA calculation. In 2008 some of the major global exchange rates changed by as much as 30-40%.
The cost of living index reflects the changes caused by inflation and exchange rates. In the short-term there may be disequilibrium between inflation and the exchange rate (the one pushes the other), however over time the cost of living index provides the most accurate view of the cost of living.
It is important to remind expatriates that when the cost of living difference is negative, and the negative value has not been applied, they have higher purchasing power in the host country than they would at home.
Where a negative cost of living index has not been applied (our recommended approach), and a change in the exchange rate indicates an upward adjustment in COLA may be required, it is recommended that the COLA should not be adjusted upward until the cost of living index becomes positive i.e. the cost of living reflects that there is a “real” increase in cost of living between home and host countries. This may mean that their would be no increase in the COLA as a result of exchange rate fluctuations for some considerable time. During this time the employee’s purchasing power decreases. But it is important to remember that until the cost of living difference becomes positive, the individual will still have a higher purchasing power than they do in their home country.
It is advisable to stipulate a currency protection rule, rather than reacting to every fluctuation in the exchange rate. For example the rule may state that COLA will be reviewed if exchange rates or local inflation move by more than +10% during a year. It is important to keep in mind that the prices of goods and services are unlikely to drop in local currency. This would only occur in a period of deflation (negative inflation). Therefore the currency protection rule would normally make provision for upward adjustments in COLA and not downward adjustments during an employee’s assignment. Downward adjustments to an existing COLA due to exchange rate fluctuations without a corresponding drop in the prices of local goods and services puts immense pressure on an employee’s host currency budget commitments and can lead to the employee experiencing financial difficulty.
Using an independent service provider provides an independent, objective basis for determining an employee’s COLA.
We recommend therefore that a COLA is calculated by applying the specific (customized) cost of living index to the net spendable salary at the beginning of the assignment and monitoring exchange rate fluctuations thereafter in addition to the annual salary review.
This article may be freely copied as long as reference is made to http://www.xpatulator.com/
The amount of COLA should enable an expatriate to be able to purchase the same basket of goods and services in the host location as they could in their home country. The basis for calculating a COLA is the Cost of Living Index (COLI) which indexes the costs of the same basket of goods and services in different geographic locations. COLA is a simple accurate method of measuring fluctuating salary purchasing power and ensuring parity.
Cost of Living Index
Our cost of Living Indexes measure the cost of 230 products and services across 13 different basket groups in 276 cities across the globe. The data is gathered by a team of research analysts who survey comparable items that are available internationally. A minimum of 3 prices for the same brand/size/volume of product is used to determine the average price for each item in each location. The items are priced on a quarterly basis and tend to rise and fall with inflation. The 13 different basket categories are as follows:
Alcohol & Tobacco: Alcoholic beverages and tobacco products
Alcohol at Bar
Beer
Cigarettes
Locally Produced Spirit
Whiskey
Wine
Clothing: Clothing and footwear products
Business Suits
Casual Clothing
Children’s Clothing and footwear
Coats and hats
Evening Wear
Shoe Repairs
Underwear
Communication
Home Telephone Rental and Call Charges
Internet Connection and service provider fees
Mobile / Cellular Phone Contract and Calls
Education
Crèche / Pre-School Fees
High School / College Fees
Primary School Fees
Tertiary Study Fees
Furniture & Appliances: Furniture, household equipment and household appliances
DVD Player
Fridge Freezer
Iron
Kettle, Toaster, Microwave
Light Bulbs
Television
Vacuum Cleaner
Washing Machine
Groceries: Food, non-alcoholic beverages and cleaning material
Baby Consumables
Baked Goods
Baking
Canned Foods
Cheese
Cleaning Products
Dairy
Fresh Fruits
Fresh Vegetables
Fruit Juices
Frozen
Meat
Oil & Vinegars
Pet Food
Pre-Prepared Meals
Sauces
Seafood
Snacks
Soft Drinks
Spices & Herbs
Healthcare: General Healthcare, Medical and Medical Insurance
General Practitioner Consultation rates
Hospital Private Ward Daily Rate
Non-Prescription Medicine
Private Medical Insurance / Medical Aid Contributions
Household: Housing, water, electricity, household gas, household fuels, local rates and residential taxes
House / Flat Mortgage
House / Flat Rental
Household Electricity Consumption
Household Gas / Fuel Consumption
Household Water Consumption
Local Property Rates / Taxes / Levies
Miscellaneous: Stationary, Linen and general goods and services
Domestic Help
Dry Cleaning
Linen
Office Supplies
Newspapers and Magazines
Postage Stamps
Personal Care: Personal Care products and services
Cosmetics
Haircare
Moisturiser / Sun Block
Nappies
Pain Relief Tablets
Toilet Paper
Toothpaste
Soap / Shampoo / Conditioner
Recreation and Culture
Books
Camera Film
Cinema Ticket
DVD and CD’s
Sports goods
Theatre Ticket
Restaurants, Meals Out and Hotels
Business Dinner
Dinner at Restaurant (non fast food)
Hotel Rates
Take Away Drinks & Snacks (fast Food)
Transport: Public Transport, Vehicle Costs, Vehicle Fuel, Vehicle Insurance and Vehicle Maintenance
Hire Purchase / Lease of Vehicle
Petrol / Diesel
Public Transport
Service Maintenance
Tyres
Vehicle Insurance
Vehicle Purchase
Each basket category does not count equally and are weighted in the final calculation based on expatriate spending patterns.
In order to calculate an accurate cost of living index for a specific individual the basket items that are not relevant to the individual should be excluded from the calculation. For example if education and housing is provided by the employer these basket categories would be excluded from the cost of living index calculation. This increases the accuracy of the cost of living index and makes it possible for each individual to have their own customized cost of living index based on their specific arrangements rather than using an overall “generic” index which is likely to contains costs that are not relevant to the individual.
The formula for calculating the specific cost of living index for an international assignment is as follows:
Cost of Living Index = Customized Cost of Living Index for Host City / Customized Cost of Living Index for Home City
When moving to a higher cost of living host city, the index will be greater than 1 (positive). When moving to a lower cost of living host city the index will be less than 1 (negative). Where the index is negative it means that in real terms the cost of living in the host city is lower than the home city. This means that if the negative index where to be applied to the employee’s salary, they would actually be paid proportionately less spendable salary in the host city. It is important to note that the majority of organizations do not apply a negative cost of living index because it makes it difficult to persuade an employee to take up an assignment as they tend to see it as a reduction in salary.
Examples of Cost of Living Index Calculations using our data:
Example 1) An Australian employee moving from Perth to London where healthcare and communication will be provided by the employer
More Expensive in London:
Alcohol & Tobacco +4.77%
Clothing +21.85%
Education +31.53%
Furniture & Appliances +16.03%
Groceries +16.35%
Household +50.72%
Miscellaneous +137.47%
Personal Care +11.18%
Recreation & Culture -6.82%
Restaurants Meals Out and Hotels +34.99%
Transport +19.80%
The overall difference in cost of living moving from Perth and London is +28.06%.
In this case the cost of living index is positive and would be applied as it is.
Example 2) A British employee moving from London to Mumbai where the employer will provide housing and education
More Expensive in Mumbai:
Alcohol & Tobacco -37.53%
Clothing -9.58%
Communication -44.92%
Furniture & Appliances -19.31%
Groceries -24.03%
Healthcare -31.24%
Miscellaneous -72.43%
Personal Care -24.94%
Recreation & Culture -35.73%
Restaurants Meals Out and Hotels -33.11%
Transport is -27.99%
The overall difference in cost of living moving from London Mumbai is -30.53%.
In this case the cost of living index is negative and would not be applied.
Net Spendable Salary
Differences in cost of living only impact the portion of the salary that is spendable in the host country. Items in the home country such as retirement funding, medical insurance and other home based costs are not impacted by the cost of living in the host country.
To determine the Net Spendable Salary establish what amount / portion of the current salary (in home currency) is spent in maintaining the employee’s current standard of living / lifestyle. What will the expatriate need to spend their salary on in the host country? For example will accommodation be provided or will the employee pay rent, will healthcare be provided etc. Deduct all items that are either provided in kind or are spendable in the home country. Deduct the hypothetical amount of tax, social contributions and any other statutory deductions applicable in the home country from the Spendable Salary. What is left is the Net Spendable Salary.
Cost of Living Allowance (COLA)
The formula for calculating the cost of living allowance using the above inputs is as follows:
(Net Spendable Salary X Cost of Living Index X Hardship Index X Exchange Rate) less (Net Spendable Salary X Exchange Rate) = COLA
Examples of COLA Calculations using our data
Example 1) An Australian employee with a net spendable salary of AUD$100,000 moving from Perth to London where healthcare and communication will be provided by the employer
($100,000.00 X 1.2806 X 1 X 0.4768) less ($100,000.00 X 0.4768) = COLA of £13,379.44 (GBP)
Based on all the above factors a person would require a Cost of Living Allowance of £13,379.44 (GBP), in addition to their current salary of 100,000.00 Australian Dollar (AUD) to compensate for relocating from Perth to London. This Cost of Living Allowance compensates for the overall cost of living difference of +28.06% and the relative difference in hardship of 0%.
Example 2) A British employee with a net spendable salary of £18,000 moving from London to Mumbai where the employer will provide housing and education
Note: Because the Cost of Living Index is negative it is not applied.
(£18,000.00 X 1 X 1.3 X 67.2852) less (£18,000.00 X67.2852) = COLA of 363,340.32 Indian Rupee
Based on all the above factors a person would require a Cost of Living Allowance of 363,340.32 (INR ), in addition to their current salary of £18,000.00 British Pound (GBP ) to compensate for relocating from London to Mumbai. This Cost of Living Allowance compensates for the overall cost of living difference of [-30.53%] and the relative difference in hardship of 30%.
COLA Payment
The COLA is paid as a salary supplement (i.e. as an additional allowance) net of tax in the host country. If the COLA is a taxable allowance in the host country it should be grossed up in order that the full amount of calculated COLA is paid net of tax given that the basis of the calculation is Net Spendable Salary. The COLA is often accompanied by other allowances and benefits such as flights home, relocation / settling in allowance, and furnishing allowance.
Exchange Rate Fluctuations
Significant changes in the exchange rate can make a considerable difference in the COLA calculation. In 2008 some of the major global exchange rates changed by as much as 30-40%.
The cost of living index reflects the changes caused by inflation and exchange rates. In the short-term there may be disequilibrium between inflation and the exchange rate (the one pushes the other), however over time the cost of living index provides the most accurate view of the cost of living.
It is important to remind expatriates that when the cost of living difference is negative, and the negative value has not been applied, they have higher purchasing power in the host country than they would at home.
Where a negative cost of living index has not been applied (our recommended approach), and a change in the exchange rate indicates an upward adjustment in COLA may be required, it is recommended that the COLA should not be adjusted upward until the cost of living index becomes positive i.e. the cost of living reflects that there is a “real” increase in cost of living between home and host countries. This may mean that their would be no increase in the COLA as a result of exchange rate fluctuations for some considerable time. During this time the employee’s purchasing power decreases. But it is important to remember that until the cost of living difference becomes positive, the individual will still have a higher purchasing power than they do in their home country.
It is advisable to stipulate a currency protection rule, rather than reacting to every fluctuation in the exchange rate. For example the rule may state that COLA will be reviewed if exchange rates or local inflation move by more than +10% during a year. It is important to keep in mind that the prices of goods and services are unlikely to drop in local currency. This would only occur in a period of deflation (negative inflation). Therefore the currency protection rule would normally make provision for upward adjustments in COLA and not downward adjustments during an employee’s assignment. Downward adjustments to an existing COLA due to exchange rate fluctuations without a corresponding drop in the prices of local goods and services puts immense pressure on an employee’s host currency budget commitments and can lead to the employee experiencing financial difficulty.
Using an independent service provider provides an independent, objective basis for determining an employee’s COLA.
We recommend therefore that a COLA is calculated by applying the specific (customized) cost of living index to the net spendable salary at the beginning of the assignment and monitoring exchange rate fluctuations thereafter in addition to the annual salary review.
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