By Jason Gale
Expats are being hit as the financial crisis heralds new measures by the nation's richest employers.
Company-paid perks from $17,000-a-month housing allowances to country club memberships may dry up for Singapore's expatriates as the financial crisis heralds new austerity measures by the nation's richest employers.
"Banks are hiring or replacing more cautiously," PricewaterhouseCoopers International (PwC), the world's largest accountancy firm, said in a statement. "Recruitment today is now focused on critical positions to meet business needs."
The cost-cutting measures follow the $636bn of losses and writedowns posted by the world's largest financial institutions since the collapse of the US subprime-mortgage market. Singapore, in its first recession since 2002, forecast last week a slowdown in financial services, an industry that employs about 157,000 of the city's 4.8 million people.
"As the financial industry rides out one of the worst crises in recent times, we expect more banks to focus on cost containment," said James Clemence, a Singapore-based partner with PwC's international assignment services unit. PwC released findings of its survey on cross-border moves in Asia last week.
More than 30,000 people in Singapore work at major banks including Citigroup Inc and UBS AG. At least a 10th of those receive expatriate-style benefits, typically after they make more than $150,000 a year, said Mark Ellwood, managing director of recruitment company Robert Walters Plc in Singapore.
"Expat packages" diminished in the wake of SARS, the deadly virus outbreak in 2002-2003 that infected more than 8000 people worldwide including 238 in Singapore, Ellwood said. The trend was reversed in 2006 when banks had to compete for talent and match the rising cost of living.
"The talent crunch in recent years prompted many financial services companies to be more aggressive in their remuneration packages," PwC's Clemence said last week. "In the current market, we expect to see less of these upfront inducement payments."
Andrew, a 43-year-old credit trader with a German bank in London, spent five months negotiating to join another European bank in Singapore, only to see the deal evaporate this month.
"By mutual consent, we just stopped calling each other," he said by telephone. A confidentiality agreement with his employer precludes him from talking to the media, he said. "You're going to need less bankers worldwide than you need right now."
The Singapore offer included a base salary equivalent to $207,000, an annual bonus, and housing and car allowances that would be removed after three years, he said.
"There will be casualties in all regions, including Asia, but in the medium term, it's going to be a more attractive place to be than Europe or the Americas," he said.
Funds under management in Singapore climbed 32 percent to $818.11bn last year, and the number of investment professionals jumped 22 percent to about 2200, the Monetary Authority of Singapore said in July. The central bank said last week that financial services, the nation's top-paying industry, will experience slower growth in the coming months.
That may sharpen banks' focus on costs. "From the assignment cost projections we run for many clients, it is evident how costly international assignments on expatriate terms are," PwC's Clemence said in an Oct 6 e-mail.
Housing allowances in Singapore increased about 15 percent to 20 percent over the past 18 months, he said. In Singapore and Hong Kong, fewer employers offer club memberships now, he said.
More Americans and Europeans are choosing to move to Singapore to gain Asian experience in a Westernised city, said recruiter Ellwood.
"Singapore is a very easy place to live," he said. "It's safe, clean, English-speaking. It ticks a lot of boxes."
Employees lose their bargaining power when the move doesn't solely address a business need, said Jill Lim, a tax partner with Deloitte & Touche LLP in Singapore. In some cases, assignments are shortened to six months so the employee isn't obliged to bring their family.
"When it's a personal request, the company will scale down a lot of benefits," Lim said in an interview.
These individuals might receive a salary similar to that of a locally hired employee, as well as an allowance for housing and school fees, which start at $13,635 a year at Singapore's most popular international schools.
People who switch employers are more likely to be hired on local terms, said Jeremy Canning, head of recruitment company Morgan McKinley in Singapore. Still, employees with unique, hard- to-find skills can still bargain on pay and benefits.
In Singapore, "expatriate" has often described affluent Westerners, especially those living in colonial-style bungalows, Canning said. These homes, complete with servants' quarters and swimming pools, are known as "black and whites" because of their striped awnings, and cost as much as $34,100 a month to rent.
That stereotype is becoming less relevant, Canning said.
"You're always going to get a set of society that likes to go to art galleries and likes to be seen moving in the right circle," he said. Over time, "the term ‘expat' won't necessarily be affiliated with a group of people who just hang out with each other and go to the same art galleries and live in ‘black and whites'."
This article is courtesy of Bloomberg.