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Considering Working Abroad? How to Negotiate an Expat Package

If you're heading abroad for a job, there's a few things you need to do, especially when it comes to your pay.

As an expatriate in Bangkok, I grimaced with jealousy every time I stepped into the back seat of my fellow UN contractor’s Jeep Cherokee and sat behind his private driver, every time my Danish friends served catered dinner parties paid for by their employer, and every time my boss received a complimentary trip home to New Zealand for her and her family. While they had the life, I took the local bus for a dime, ordered the 25¢ papaya salad that I could afford off the street, and avoided peanut butter and ice cream that screamed from the Western grocery store at the end of my block (two of the many comforts imported from home that cost the same as my hourly wage). I am proud to admit I can still negotiate the best exchange rate for dollars to baht, but I’ve learned from experience that my fellow corporate Americans need to know a thing or two about securing the pluses and evading the minuses when that new job beckons from abroad.

Salary and Compensation
In Bangkok, I had the low-paying English teacher job on even days and the high-paying UN contract on the odd ones, but since I had decided to move overseas on my own, and not with a company, I missed the boat on the expat compensation package. Future expats who insist on nannies and house cleaners may be surprised that such perks are a thing of the past, but negotiating an appropriate salary according to your new posting is not. Two factors are worth considering if you decide to take that overseas position—a change in the cost of living and an augmented salary if the job requires an increase in responsibility. For the cost-of-living allowance, executives should remember that their standard of living could be higher than that for locals, especially if moving to a developing country, and equal or above if moving to a more expensive city than their home.

While researching, executives should make use of the Cost of Living Survey from Mercer Human Resource Consulting. In 2007, they reported Moscow and London moved to the top of their list for most expensive cities due to a weakened U.S. dollar and strengthened Euro. Four of the top ten costliest cities were in Asia, while Sydney was on the rise, pushing ahead of both Los Angeles and New York.

If salary is non-negotiable, you might try for a bonus based on performance. And while you are seated at the bargaining table, get the following written into your contract:

  • Position duration and duties. Is this posting for a specific period of time or will it end after the completion of an objective?
  • Moving costs. For reimbursement of moving expenses, be sure to include customs declaration, transportation insurance, and any costs associated with quarantined pets if the posting lasts longer than a year and the cat or dog must travel with you.
  • Tax liability and Social Security. The IRS allows an exclusion of $87,600 (for 2008) of foreign-earned income on your tax return, but who will pay the taxes on income beyond that amount? Make sure to find out if you will be allowed to participate in the social security system while abroad. And ask about health insurance, since in some countries you may have to be a citizen of that country to benefit from the system.

The benefits of living abroad can outweigh those from home. It is not unheard of to ask your company to help with a housing allowance, compensating your spouse if he or she had to leave his or her job, and factoring in the high sticker price of an international education for children. See about taking one trip to your future destination on the company’s dime beforehand in order to research your options.

  • Housing. Your company should realize that searching for a home can take some time, and if you don’t have it, make sure they pay for a real estate agent or relocation service. The same goes for interim living arrangements; your employer should help out with rent while you look for your new home.
  • Vacation. Most expats take on the holiday and vacation schedule of the country where they are working. Ask about one complimentary trip a year to reconnect with extended family.
  • Spouse relocation. Will your company assist in the relocation of your spouse? Or will they connect him with other companies, help him find a job, or provide training if a new job is required? Any or all should be included in your contract negotiation.
  • Education. The cost of international schools is competitive to the cost of private school back home. Is your company willing to foot the bill for part or all of your children’s education?

Living in a new culture can provide a rich experience for you and your family, and one that can change the course of your professional life. The benefits of working abroad can also increase your bargaining power if you return since you’re the one with the international experience on your resume. Just make sure that when you hire wait staff for that thank you party to say goodbye to your foreign boss that he knows he’s the one who is signing the bill.

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