Five and a half
It still doesn't make any sense

Discriminating expats

The most puzzling story of the week is the one about the government outlawing expat pay packages. The SCMP ran this story (subscription required) on Wednesday:

Hong Kong companies will have to justify their offers of generous "expat packages" to foreign employees under an anti-racism bill now in an "advanced stage of drafting". They will have to prove the recruit has expertise not readily available in Hong Kong, and permanent residents will not be able to receive such special terms.

Are we really supposed to believe that although Hong Kong has no minimum wage, there is going to be legislation to stop companies paying staff more than they are worth? Seems unlikely.

There are (as far as I know) two types of "expat" job. The first is where a foreign company wants to have someone from Head Office on-site, and the second is where an expat has skills or experience that are not available locally. It is many years since Brits could work without an employment visa, and if you want to hire someone from abroad you already have to convince the Immigration Department that local candidates are not available before an employment visa will be issued (and rumour has it that a high salary makes it easier to convince them to grant the application). So why would anyone go to the trouble and expense of recruiting from abroad if there are local candidates who could do the job?

Not that you'd believe it from reading the letters in the SCMP. Here's Harry Chen, who seems to have a chip on his shoulder:

I believe that it is time for the glorified expat salary packages to disappear. It is true that they are important to attracting to Hong Kong staff with talent and expertise, but at the same time the companies providing these expat packages are guilty of racial discrimination. A local Hongkonger educated in an Ivy League university and fluent in four languages would not be eligible for the same generous expat salary package that an American, with a lower educational level and no Asian language skills, demands.

Ask yourself if having these overpaid staff actually helps the economic situation of your typical Hongkonger. An expat company vice-president in Hong Kong would still be a department supervisor if he or she had stayed in their home country.

Isn't this a myth? How many expat companies like that are there left in Hong Kong? Well, OK, there are a few companies left where all the top jobs go to expats, and very competent locals are stranded beneath the glass ceiling, but the good staff will leave and join employers who will give them more opportunities, and fewer and fewer companies can afford that luxury. Things are changing, and one high-profile example of this was Marks & Spencer, who decided to cut costs by getting rid of expat managers and 'localizing' instead. Hence you hear complaints from expats who find it difficult to get jobs because companies prefer locals (perhaps in the belief that expats expect higher salaries).

The fact is that the last ten years have seen a steep decline in traditional expat packages, and the main reason is the economy. As the economy picks up, a few companies will look abroad for staff with particular skills, but it seems very unlikely that we will ever see a return to the way things were ten years ago. There is absolutely no need for the government to legislate against expat packages, and I find it hard to believe that they would do so.

Comments

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Thingfish

All very true. I don't know whether Harry Chen is a real person, or a down-table sub with a cunningly concealed identity - but the SCMP is one of the few companies left in Hong Kong that offer generous expat packages. Not to the staff, but to the owners.

Nude King

Personally, I think Hong Kong Government should drop the idea of anti-racism or anti-discrimination law(s) and let things continue as they have (for a long time) in Hong Kong.

Obligations or not, the current wishy-washy (anti-racism) proposals will do more harm than good. And I am afraid that Hong Kong will wander further away from its goal - "Asia's World City."

Ciao!

ken

I can't see why 'expat packages' have anything to do with "anti-racism". On the one hand, such packages were genuinely intended to compensate for the high costs of housing in HK, for the hardship of relocating to an alien country etc. On the other, it is really intended to attract talents from overseas, whether these happen to be Gweilos or Asians is another matter. The government here itself is a leading racist. One of the criteria for being granted an HKSAR passport is that one should be a "Chinese citizen". However, it is never explained WHAT constitutes "Chinese citizenship". Of course it can't be explained, at least not openly. Any permanent resident with a Chinese name, a Chinese face, a self-proclaimed province of origin, and Chinese-speaking would be "considered" a 'Chinese citizen' by the local Immigration Department. No documentary proof would be required. No doubt, "gweilos" would hardly be considered a Chinese citizen in like manner. If that is not racist, what is?

A racist government drafting anti-racism legislation? Huh! It's not surprising that 'expat packages' now have something to do with 'anti-racism'.

IanMcneil

An excellent summary, thank you.

I fall into the first category you mention: "where a foreign company wants to have someone from Head Office on-site". The buzz work for this is "cross-pollenation", having the perceived benefits of ensuring that HO principals are applied in overseas offices while obtaining feedback from the expat as to local pracices and regional variences to improve HO knowledge of and confidence in e.g. that their HK office are not a risky, maverick operation. This is to everybody's benefit.

The leeking of this proposal is obviously a deliberate and populist move, but serves only to perpetuate a myth. There is a misconception among the local populace as to what actually is in a modern expat package which often manifests itself as a tangible and palpable jelousy or worse.

Most multinationals now employ external expert agencies to manage and calculate these packages on an "equalization" basis which is specifically designed to ensure that the expat is no better or worse off in lifestyle terms than they would have been in the home country. For example a UK expat will typically have a tax/NI deduction to their salary based on UK rates, while only HK tax is paid by the employer. Similarly, while accomodation is provided, but there is a salary deduction equivelant to a typical UK mortgage. Expat packages are undeniably expensive to the (foreign) employer but it is certainly not the case that the benefit of this is passed on to the employer in cash terms. The expat does of course end up slightly nett better off, but no more so than he/she deserves for moving himself and his family 7000 miles from home for the benefit of his employer in both locations.

The idea that an expat is living some obscene, overpaid tax and rent free existance, to the detriment of others, is one that belongs in the '80's and the wheels fell off that particular gravy train a long time ago. Still, it would be unlike the SCMP or its letter writing department to let the truth stand in the way of a good story.

GB

About 5 years ago a gweilo friend married with a local Chinese moved with her to Europe. She was just a normal civil servant in HK and he told me the HK overseas package she received to work in a HK Gov't European office was HKD 800,000 per year. It was such a great package and salary increase compared to working in HK they moved to Europe. So I wonder how much more the HK gov't pays their overseas stationed workers compared to what that same worker would make in HK. If they pay more then in HK, this is clearly a double standard by trying to limit what a expat in HK can make in HK.

I can assume the same goes for some HK companies moving a local HK person to London or Paris or NY and maybe places in hard to live countries. I am sure they consider some of the same issues, housing, private schools with maybe Chinese language, cars, security, maids etc.. I bet if someone takes a look they will see a few interesting facts.

I was told diplomats do not need to pay tax in the country stationed and normally a HK company employee overseas do not pay local HK tax and the company pays the tax difference in the country the employee is stationed. I know I end up paying tax in HK and as my income surpasses my native countries allowance I will need to pay tax in my home country as well. I also have to pay top dollar for english school because english is the mother tongue for my children. My tax input personally and with my company is a whole lot more then most locals. What benefits do I get? Ok I get to breath this fantastically clean air!

expat@large

I came to HK to live an "obscene, overpaid tax and rent free existance, to the detriment of others" and did marginally well at it, I thought, until my cool Seattle-based company was taken over a by a huge European multinational.

As a VERY experienced technical expert who sits half-way betewen the customer (medicos) and the salesmen (glorified burger-flippers) there is no local person in HK who could match my skills and the rapport I could generate with customers, not too many in the world in fact. Plus my job was > 60% travel. Our main Asia Office was in HK but I actually "worked" elsewhere - Korea, Taiwan, SE-Asia, India, Japan, China, frequent training trips to the US - as my role was totally Regional. In fact the HK salesman was forever moaning about having no support - he had to get someone in from Taiwan - the reaction to that was very poor: can't speak Cantonese, can't speak proper English, etc!

Conversely imagine a HK-trained technical person trying to convince someone in Japan or Beijing that you know better than they do... "Get out of here, hongkie!"

My first trip to Beijing one of the female Drs asked me, "Do you like the Hong Kong girls?" "Yes," said I, "they're lovely." "Oh really," she replied. "I think they look like dogs." Straight faced.

Alos, no local person would have my Aussie-passport flexibility for travel, my single-man preparedness to travel, not limited by language so long as it was English, and anywhere near my technical skill set (Drs do my job in Asia, not radiographers like me). THAT is why I was paid (relatively) well. No where near what bnaker-wnakers get, but OK.

Gradually in my new mother-company we were moved towards "local equivalence" i.e similar salary level to what I would have got in Australia, plus it had a stated policy of "median level" salary - of all companies in the business around the world it was going to pay around about the average salary. No room for high-fliers, no reward for people with true talent or ambition, etc... Screw that. Gradually they were filling the office and middle-management roles with people from lower base-salary countries, like India, as well! Competent, sure, but cheaper. I had another 20% package drop looming as my contract was morphing to completely Local Hire - despite being Regional! - so I went on a go-slow, looking for a package, and got it!

Now I am Singapore working for a much smaller company with an eye for excellence which understands the rarity of a sucker like me and is prepared to reimburse me suitably. Problem is that I have to base myself in Singapore!! Though again about 80% travel, so it's OK.

And yesterday I was head-hunted for my old job in HK because they still can't find anyone with similar skills, 2 years on!

My point? Expat packages are disappearing and so too, therefore, are people with the skill and talent, willing and able to do demanding regional roles.

E@L

non-chinese hongkonger

i think it is really important that the goverment will pass though the law about racial discrimination because it it needed in hongkong

i'm a student in hong kong who happen to be a non-chinese but could speck in cantonese Fluently and read and write a bit which i learn by myself.

in hong kong it's so hard to find school and work for non-chinese.

it's so hard for us to further our study who's parent are not rich enough to pay their school fee and not much help for those who finish school(F.5),like the local chinese study.

so form my piont of view i hope the law will pass though

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