goodbye expat, Hello nopat

Fast disappearing are the generous perks offered to people willing to relocate overseas for work stints

EXPATS live the good life, according to popular perceptions. Company-provided housing in Districts 10 or 11, children’s school fees, cars, home leave and more do indeed make the expat lifestyle alluring.

A predominance of Western and North Asian expats in past years has given way to ever more nationalities enjoying the same perks.

In reality, these perks are more complex. Even though expatriates are most often employees assigned abroad for two to three years with benefits enabling them to live as well abroad as they did at home, the sizes of their packages vary tremendously.

There are also long-term expats, many of whom stayed on long after their initial 2-3 year assignment to continue to receive expatriate benefits even after living in Singapore for a decade or more. There are also foreigners who voluntarily choose to relocate to Singapore and find an expat package waiting when they were hired.

While reports of fewer expat packages have circulated for years and many foreigners have received reduced packages or nothing extra at all, headhunters confirm that the recent economic downturn has speeded up the shift away from expat packages; fewer now enjoy the pampered expat lifestyle. When they’re cutting benefits or even eliminating jobs, companies are hard pressed to continue paying the large packages for a select few.

As Ms Linda Eunson of the University of Chicago in Singapore puts it, more businesses have moved from hiring expats to employing “lopats” or “nopats”.

Instead of offering a full package of expat benefits, some companies have moved to offering lower level – “lopat” -benefits that may only include support for housing or children’s schooling. An increasing number of companies are now offering only “nopat” terms whereby foreign employees receive the same compensation as Singaporeans and have no expatriate benefits.

One headhunter reiterated this trend, saying his US and European clients are specifically requesting that he first look for candidates willing to accept local rather than expatriate packages, even at senior levels. Global hiring freezes by some multinationals have also meant that the pool of expat jobs is also shrinking.

Another reason for the shift away from expat benefits is that more people in New York or London and other hard-hit markets are turning to Asia for jobs. Search firms, companies and career offices at universities are being flooded with resumes from talented people wanting to work in Singapore even on local terms, just so they can have a job. When companies receive this many resumes from people abroad willing to relocate on local terms, there’s little reason to offer expat packages.

Added to that, companies are able to find more local employees with the right skills. This abundance of local talent also makes it harder to justify paying more for expatriates.


One manager at a multinational company estimated that it would cost him three times more to bring in an American from the head office as it would to hire someone locally.

Even though the American might have valuable skills and head-office knowledge, the hiring of one or two well-qualified Singaporeans at a lower cost seemed preferable to importing one expensive expatriate.

All these changes don’t mean that the days of high-level expat packages are over. Search firms say they still expect top management at the president or managing-director level to be offered expatriate packages. There is still a shortage of top company leaders, said Mr Charles Moore of search firm Heidrick & Struggles, so these executives can continue to expect generous packages.

Companies will also need to dangle expat benefits to lure staff with specialised skills in still-growing economic sectors. Increasingly, though, all but staff at the very top levels or with highly specialised skills seem likely to become nopats or at most lopats, on a package with only limited benefits.

The existing expats, too, are likely to remain on their current packages as the changes primarily affect new hires. However, some companies are renegotiating packages downwards, though, according to Mr Moore.

While high rentals continue to cause more expats to move from District 10 to outlying areas when they renew their leases, and they now fly home in economy rather than business class, companies seem reluctant to eliminate packages entirely for their current staff.

To wit, international schools still have waitlists, even if they’re shorter; and clubs report that they’ve seen little drop in membership so far.

While these patterns could change if the economic downturn deepens, the full effects of the reductions in expat packages are likely to become visible only over the next two or three years.

As more new staff below the very top levels are offered local terms and more staff who want to stay on after the end of their initial assignment are only given a choice of staying on a local package or returning home, the number of expats looks set to drop.

So, while expat packages are far from totally redundant, expect to say “bye-bye expat” and “hello, nopat” more often.

The writer is a consultant who has lived in Singapore since 1992.

Source : Today – 29 Nov 2008

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