Japan has overtaken the U.K. as the most expensive place to send overseas employees to work, a new report has found.
The average expatriate package in Japan costs employers $405,685 – more than any other international business hub, according to "MyExpatriate Market Pay" survey by data company ECA International.
The study — which takes into account cash salaries, benefits and tax — points to an uptick in the overall cost of mid-level expat packages in Japan. It comes even as other parts of the world saw the price of accommodation and benefits take a hit due to the pandemic.
The U.K. fell from the top spot to rank as the second most expensive location to send overseas employees in 2020. The others that ranked high on the overall cost list were India, China and Hong Kong.
France, the United States, Switzerland, Argentina and Taiwan rounded out the top 10.
ECA International's regional director, Lee Quane, said the uptick in Japan was due primarily to currency fluctuations, with the Japanese yen remaining steady relative to the U.S. dollar last year.
"There was also some inflation in other areas of the compensation and benefits package," he added. "For example, unlike many other locations in Asia, housing costs rose moderately in Tokyo in 2020 versus 2019. This contributed to higher benefits costs, and consequently, led to higher overall costs."
The annual study aims to assist companies looking to relocate staff by benchmarking their packages against the market. As well as cash salaries, many employers compensate expat workers with benefits such as accommodation, school fees and transportation.
This year, the overall cost of employing expat workers broadly fell as the pandemic and resultant travel restrictions lowered demand — and therefore costs — of accommodation and other benefits.
In many places, expats' take home pay saw a hit too, falling in relation to 2019 levels. Hong Kong was one of just a few to see an increase in expat salaries.
"The cost of employing an expatriate in Hong Kong was lower in 2020 than in previous years, but this was indicative of a much larger global trend," said Quane.
"While salaries for expatriates in Hong Kong rose by less than 1%, employers were able to benefit from lower accommodation costs, and reduce the amount of financial support provided for housing compared to previous year."
There were some notable outliers this year, however. Taiwan, Canada and Morocco were three locations that joined the top 20 in 2020 as the overall cost of expat packages rose.
"The cost of employing a mid-level expatriate in Taiwan increased by $10,733 last year," said Quane, noting the island's strong response to the pandemic boosted house prices. "Consequently, Taiwan has leapfrogged nations such as South Korea and Australia in our rankings, and is now the tenth most expensive location to employ expatriate staff."
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