This archive report was first published on 22 July 2019.
Published on July 22, 2019, a recent discussion has highlighted the disparity in earnings between expatriates and local employees, particularly in the NGO sector. This disparity has raised questions about the fairness of the compensation system.
Organizations often hire expatriates due to a lack of local expertise or a shortage of skilled professionals in specific fields. In such cases, the expatriate is expected to bring in new skills and knowledge that are not available locally. However, this can lead to a situation where the expatriate earns more than their local counterparts.
There are two common approaches to compensating expatriates: the home salary approach and the host salary approach. Under the home salary approach, the expatriate's earnings are benchmarked against those of similar positions in their home country. This means that the expatriate's salary is denominated in the same currency as their home country and is essentially a deployment arrangement.
On the other hand, the host salary approach involves paying the expatriate a salary similar to what local employees in similar positions would earn. This approach is often used when the organization wants to integrate the expatriate into the local team and sever ties with their home country.
Some organizations have developed 'localisation' policies to address the issue of 'permanent expatriates' who seek to remain in the country after their term expires. These policies involve placing the individual on a local package and reducing expatriate perks over an agreed period.
Clear communication and role profiles are essential in expatriation to avoid suspicion and feelings of inadequacy in local staff. Benchmarking local practices can also aid in identifying differences in advance and implementing appropriate communication plans.
