Talent, taxes add up to challenge for expatriate communities
Friday, December 21, 2012
Millions of people expatriate every year to work overseas. This phenomenon is especially evident in Europe, where skilled English-speaking workers frequently emigrate to nations in the Middle East to assist in regional expansion plans. Many such professionals choose to live in short term rental apartments and temporary lodging, especially in cities such as Riyadh where expat housing remains at a premium. While the search for suitable accommodations is common to the expatriate experience, new regulations could create a whole new set of challenges, according to the Saudi Gazette.
New fees, new problems
The news source reports that the Saudi Arabian Ministry of Labor's decision to levy additional fees on expat workers has been met with fierce opposition by the Shoura Council, the consultative assembly of the country.
Companies employing a certain number of expat workers will be charged SR200, approximately $53, for each additional employee. Members of the Shoura Council criticized the proposals, claiming that the Ministry of Labor lacks the authority to levy fees on Saudi businesses and that doing so could hurt international investment in the country.
"As we are a legislative body, any set of fines suggested by the ministry should first be sent to the council so it can be studied and reviewed from all angles," said Major General Abdullah Al-Sadoun, as quoted by the news source. "We support the ministry in making any decision to improve the income of Saudi employees in the private sector by fixing the maximum and minimum ceiling of salaries."
While many workers come to Saudi Arabia to work for foreign companies, there is confusion regarding whether the fees would apply to naturalized professionals or not. The proposal is likely to come under additional scrutiny to prevent the potentially negative impact on the country's economy.
The war for talent
Real estate developers are eyeing Saudi Arabia as a destination for investment due to the severe shortage of corporate housing and furnished extended stay apartments in cities like Riyadh. While a crowded rental market is to be expected in any major city, some experts believe that the constant influx of expatriate workers is causing lengthy delays for many professionals.
According to The Telegraph, this is partly due to many companies' insistence on hiring expat workers over their comparably skilled local counterparts. The news source reports that while expat hiring trends are predicted to remain largely unchanged in the coming years, salaries of foreign workers typically overshadow those of regional professionals substantially.
Researchers at Pedersen and Partners surveyed more than 300 global human resources professionals at companies with strong expat workforces. Of those polled, many indicated that expatriate workers were paid an average salary of £290,000 - roughly five times the sum typically earned by local professionals in similar positions. This disparity could be seen as a driving factor in heightened interest in positions overseas, resulting in a dearth of available housing.
However, Andy Piacentini, head of rewards at Howden Engineering, told the news source that while high-level executives often commanded substantial salaries, expatriate workers were typically offered compensation packages similar to their local counterparts, with some additional benefits to aid them in relocating to another country.
The news source reports that many wealthy expat hubs such as Dubai have seen a "watering down" of benefits packages provided to expat workers, including cross-cultural training initiatives such as language instruction, support for spousal and household pet relocation assistance and smaller annual bonuses.
Regardless of whether the exodus of expatriate workers from nations such as the U.K. continues or not, securing suitable housing in cities such as Dubai and Riyadh is likely to remain challenging.