As globalization has brought the world closer together, the number of expats, or people living and working outside their home country, has been on the rise. For many people, working abroad can be a way to gain new experiences, improve language skills, and increase earning potential. However, the question of whether expats actually earn more than locals has been a topic of debate for years.
Some argue that expats are more likely to earn higher salaries due to their specialized skills and experience, while others believe that the salary difference is not significant or even non-existent. In this article, we will explore the topic of expat salaries and take a closer look at the factors that contribute to salary discrepancies between expats and locals.
So, do expats really earn more than locals?
Well, it all depends on who you ask.
It's difficult to make a general statement about whether expats earn more than locals, as it can vary depending on a range of factors. These factors generally include the country of origin, the country of destination, the industry, experience and qualifications and the specific job.
In some cases, expats may earn more than locals due to the specialized skills they bring with them or because they have experience working in a particular industry that is in high demand in their new country.
For example, highly skilled expats who move to countries like the United States, Singapore, or Switzerland to work in industries such as finance, technology, or engineering may earn significantly more than locals with similar qualifications.
However, in other cases, expats may earn less than locals due to factors such as language barriers, lack of familiarity with the local culture and customs, or the absence of a strong professional network.
For example, expats who move to countries like China, South Korea, or Japan to teach English as a foreign language may earn less than locals in other professions due to the relatively low salaries for English teachers.
Here's how expats' salaries may compare to locals' salaries in different countries
United Arab Emirates
In the UAE, expats who work in industries such as finance, oil and gas, and healthcare may earn significantly more than locals due to the high demand for skilled workers in these fields. According to Global Media Insight, there are currently over 8.9 million expats residing in the UAE.
However, with the introduction of the Nafis program in the UAE, more and more skilled Emiratis in private companies are now earning equal salaries to their foreign counterparts. The Nafis (literally translated as “to compete” in Arabic) was launched in 2021 as part of a larger scale of reforms in the UAE meant to support Emirati nationals to pursue employment in the private sector. The initiative aims to create up to 75,000 private-sector jobs for locals by 2025.
According to the MyExpatriate Market Pay Survey, the salary and benefits packages for expats in the United Arab Emirates have continued to fall consecutively since 2018. The same report also indicated that expat salaries in Saudi Arabia rose by 11% in 2021 to an average of $188,000 for middle management roles — making Saudi Arabia the country to offer the highest expatriate salaries in the world
Australia
In Australia, the earning potential for expats can vary depending on their skills and qualifications. For example, highly skilled expats in fields such as engineering, technology, or finance may earn more than locals, while expats working in lower-skilled jobs such as hospitality or retail may earn less.
According to the Australian Bureau of Statistics, the average full-time weekly earnings for Australians in November 2021 was AUD 1,835 per week, which works out to an annual salary of approximately AUD 95,420. This figure can vary significantly depending on the industry, occupation, and location. According to a report by the global mobility company ECA International, the average expat salary in Australia in 2021 was AUD 178,516 per year, which is significantly higher than the average local salary. However, it's important to note that this is an average figure and that expat salaries can vary widely depending on a range of factors such as industry, experience, and location.
It's also worth noting that while the salaries of expats may be higher than those of locals, the cost of living in Australia can also be higher than in other countries, particularly in major cities. Expats should carefully consider the cost of living when negotiating a salary package and making the decision to move to Australia.
Japan
In Japan, the earning potential for expats may be lower than for locals due to factors such as language barriers and cultural differences. While highly skilled expats in fields such as finance or engineering may earn more than locals, those working in lower-skilled jobs such as teaching English generally earn less.
According to a survey conducted by the Japan External Trade Organization (JETRO) in 2021, the average annual salary for expats in Japan was approximately JPY 12,970,000 (about USD 118,000), while the average annual salary for locals was approximately JPY 4,730,000 (about USD 43,000).
The salary gap between expats and locals in Japan can be attributed to a number of factors, including specific skills and work experience. Many companies in Japan are willing to pay higher salaries to expats who possess these skills and can bring a unique perspective to their organization.
Just like with Australia, it is worth noting that the cost of living in Japan can be high, especially in major cities like Tokyo and Osaka, so it's important for expats to carefully consider the cost of living when negotiating a salary package. It's also important for expats to understand the Japanese work culture and expectations, as the work-life balance and work culture in Japan may differ from their home country.
United States
Expat salaries in the USA can be higher or lower than the salaries of locals depending on a number of factors, such as the industry, occupation, location, and the individual's level of experience and qualifications.
According to the US Bureau of Labor Statistics, the median annual wage for all occupations in the United States in 2021 was $58,260. However, salaries can also vary greatly depending on the industry and occupation. For example, the median annual wage for software developers was $110,140, while the median annual wage for food service workers was $26,500.
For expats in the United States, salaries can vary significantly based on their level of experience and qualifications, as well as the industry and location in which they work. Some expats in the United States may earn higher salaries than locals due to their specialized skills and experience, particularly in high-paying industries such as finance, technology, and healthcare.
On the other hand, some expats may earn lower salaries than locals due to a variety of factors such as language barriers, limited work experience in the United States, or lack of familiarity with the local job market.
Expat salaries vs. spending power in different countries
When considering taking up an opportunity abroad, salary is often one of the primary considerations. However, there are other important factors to take into account when estimating the “profitability” of your move. These include:
- Cost of living: The cost of living in a country can have a significant impact on an expat's spending power. Some countries may have a high cost of living, which can offset the higher salaries paid to expats.
- Exchange rates: Exchange rates can have a significant impact on an expat's spending power, particularly if they are paid in a foreign currency. Fluctuations in exchange rates can affect the amount of money an expat can buy with their salary.
- Taxes: Tax rates can vary widely from country to country and can impact an expat's take-home pay and overall spending power.
- Healthcare: The cost and quality of healthcare can also impact an expat's spending power. In some countries, expats may need to purchase private health insurance, which can be expensive.
- Housing: Housing costs can be a significant expense for expats. In some countries, the cost of housing can be high, particularly in major cities.
- Other expenses: Other expenses such as transportation, food, and entertainment can also impact an expat's spending power. These expenses can vary widely from country to country.
Overall, when comparing expat salaries to spending power, it's important to consider the overall cost of living in the country, as well as other factors such as exchange rates, taxes, healthcare, housing, and other expenses. Expats should also consider the lifestyle they want to lead and any additional expenses they may incur.
