“The Singapore dollar has appreciated against most major currencies in the months leading up to our survey,” said Lee Quane, regional director – Asia at ECA International.
“Despite low price rises, the impact of the stronger currency means that where companies provide cost of living allowances to their international executives assigned to Singapore, these will likely need to be raised to ensure that employee purchasing power is maintained.”
When asked about the impact this will have on the country as a host country and on its reputation as a global business hub, Quane told HRD that staff on an international assignment in Singapore make up a relatively small portion of a company’s workforce.
“Therefore, while Singapore’s rise in our rankings means that, other things being equal, a beneficiary of a cost of living allowance will receive a higher allowance, and therefore a higher salary, the fact that this affects a relatively small portion of the workforce in Singapore is unlikely to impact its viability as a host country,” he said.
He added that other locations (such as Hong Kong and Shanghai) that the country compares itself to as a global business hub have a higher cost of living, “so it still remains relatively favorably placed in terms of its cost of living relative to similar locations”.
In terms of whether or not organisations should retool their global mobility programmes given this study, he said that a cost of living allowance makes up only a small element of an international assignee’s salary package.
“A rise in the cost of living allowance may be offset by changes elsewhere in an assignee’s salary package,” he said.
“For example, separate research that we recently undertook shows that housing, whose costs for an assignee are typically compensated for separately in an assignee’s salary package, have fallen in Singapore in the past 12 months.”
“Therefore, if an employer is diligent and reviews the rental allowances provided to assignees regularly, the overall impact of having to pay relatively higher cost of living allowances to staff should be offset by being able to reduce costs associated with the provision of housing.”
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According to the latest research conducted by expatriate management firm ECA International, Singapore moved two spots up in its Cost of Living survey, making it the 16th most expensive country in the world for expatriates.