Every year, Aires’ Consulting Services conducts a large survey focusing on a specific category of mobile employees. The survey typically rotates between three major areas in global mobility: domestic relocations, international permanent relocations, and expatriate assignments, the topic of this year’s survey. Released on November 30, the Aires 2020 Expatriate Trends Report highlights benchmarking data on all the typical and not-so-typical relocation services, support, and expenses provided to expatriates.
The most common expatriate benefits have been and continue to be a miscellaneous cash allowance, a home finding trip, household goods shipment, temporary accommodations, and compulsory support such as immigration and travel expenses. What sets expatriate assignments apart from other types of employee mobility are the ongoing assignment benefits such as a cost of living allowance (COLA), host country housing, transportation, children’s education, home leave, and tax equalization. Benchmarking and best practice details for all of these and more are included in the report.
The report also includes insight into the trends with expatriate policy administration including average length of assignments (which haven’t changed much over the past seven years), types of policy structure (standard vs. core/flex), other types of international policies in use, and repayment agreements.
KEY FINDINGS
The report revealed some shifting trends for 2020 when comparing the results to the previous years of the expatriate survey. Following are the notable changes in the benchmark data compared to the 2017 results.
- Respondents noted fewer expatriate assignments. This may not be that surprising to many; there are reported increases with international transfers, local hires, and short-term assignments. While the numbers have been declining for years, expatriates still have their place in employee mobility.
- There was a 14-percentage-point increase in respondents offering 30 days of temporary accommodations since 2017. This may be attributed to cost savings.
- There was 16-percentage-point increase in respondents covering the cost of public transit in the host location. If feasible in a host location, paying for public transit can result in savings compared to a costly car allowance.
- There was a 26-percentage-point decline in respondents covering pre-school costs. This percentage increased steadily from 2011, spiking at 56% in 2017; however, this year, it has fallen. When pre-school costs are covered, they are typically limited to a differential (i.e., the additional cost incurred in the host country above and beyond what would have been incurred in the home).
- School-age children’s education costs have seen some changes. While there was little change noted with the number of companies covering tuition and registration fees, there were changes noted with other fees, such as:
- 35-percentage-point decrease in those covering books/materials
- 19-percentage point drop in those covering uniforms
- 17-percentage point drop in those covering busing
- There was a 12-percentage-point increase in respondents offering only one home leave trip per year. There also was an 18-percentage-point drop in the number of respondents stating their home leave benefit was variable (meaning more respondents have a standard a schedule in place). The survey responses also confirmed that 85% of respondents offer home leave and expect expatriates to use their accrued paid time off during these trips. Additionally, there was no change in the number of respondents offering a cash allowance in lieu of actual expenses for home leave, still reported at less than 20%.
- There was a 23-percentage-point increase in respondents that include a reference to localization standards in their expatriate policy of assignment letters. Localization is most often expected to occur after five years on assignment. During localization, the ongoing benefits (e.g., COLA, host country housing, host country transportation, home leave, children’s education, tax equalization, etc.) are impacted in some way, either all at once or over time.
THE IMPACT OF COVID-19
Employee mobility cannot be discussed this year without mentioning the global COVID-19 pandemic and its impact. Approximately one-half of respondents noted that some of their expatriates were returned early. One-third reported their greatest challenge was succession planning and finding a role for the repatriates.
It was refreshing to see the positive attitudes and the resilience of mobility programs despite the pandemic reflected below.
- 60% believe their expatriate populations will not be affected long-term
- 32% believe they will have an increase in virtual assignments
- 58% believe they will maintain the same number of expatriates
- 74% believe they will continue to provide the same level of support
VIEW THE FULL REPORT
To access the comprehensive 2020 Aires Expatriate Trends Report, click here. If you have any questions, please don’t hesitate to contact your Aires representative.