For many financial sector expats in Asia, the economic crisis has meant redundancy, but the Irish are faring better than most. ANNA HEALY FENTONreports from Hong Kong
WHEN YOUR company dangles the carrot of a short-term expatriate posting to somewhere exotic such as Hong Kong or Singapore, it can seem too good an opportunity to miss. On offer is the chance to work in an exciting overseas city with a salary hike, rent paid, annual business class trip home for you and the family, swanky club memberships and a reduced tax bill. Who could resist? It’s a once-in-a-lifetime opportunity to live high on the hog in a foreign country for a few years and then return home with a healthy bank balance afterwards.
But what happens when the world hits the economic buffers and the music stops? You’re stuck in Hong Kong and the bank, insurance company or big corporation says: “Sorry, we’re letting you go.” As part of their package, most will receive repatriation expenses, so it’s not a case of being cast adrift.
But this economic downturn is different, explains Harry O’Neill, managing partner in charge of Hong Kong and Asia Pacific financial services for leading head-hunter Heidrick Struggles. This time there’s nowhere to run. Previous crises that rocked Asia, such as Sars in 2003 and the financial meltdown of 1997, were regional events. That meant expatriates in financial services found alternative jobs by relocating to London or New York, says Foxrock native O’Neill, Ireland’s honorary consul in Hong Kong. “This time is different because it is truly global – much like 2002 after 9/11 and the tech bubble burst.”
He has been inundated with bankers frantic for work. “I can’t tell you how many e-mails I’ve had from people who’ve lost their jobs. Up to 40 per cent of jobs in financial services disappeared here in the past 12 months.” That said, he thinks it’s getting close to the bottom now. “Financial institutions are reorganising, but the reality is that afterwards only a small percentage of lost jobs will come back in the near term.”
The options for highly-paid financial services people are few and stark. They can stay in Hong Kong or Singapore, move to a smaller apartment, fire the maid and hope something comes up before the savings run out. Or they can head back home. “But things are no better at home,” says O’Neill.
Given that this is a global collapse, many are opting to stay in Asia and look for another job, he says. Most people assume that China and India will recover first.
Then again, many of those who have lost highly-paid jobs are in denial, like the beginning of the five stages of grief, says Simon Smith, head of research for property company Savills Hong Kong. “It starts with denial, leads to anger, then bargaining, followed by depression – and hopefully, eventually acceptance of the real situation.”
Even downsizing to a smaller apartment isn’t simple. Many expatriates or their employers are tied into two-year leases. Ironically, the downsizing bankers, fleeing from luxury property in the HK$100,000 to HK$200,000 (€9,800 to €19,600) per month rent bracket, are causing strong demand in the HK$70,000 (€6,900) a month range.
Finding out the fate of the financial sector nouveaux pauvres is not easy. There’s a conspiracy of silence, as if to talk about job losses is contagious. Everyone knows people who have lost jobs, but won’t name names. Three ex- bankers declined to be interview- ed, saying they didn’t want to broadcast what had happened. “It’s a small community. I’m staying to job hunt but I don’t need to advertise I was made redundant,” said one banker.
O’Neill agrees that denial is widespread in what was an extraordinarily well-paid sector, but isn’t going to be for the next few years. “They must face that even if they get another banking job, compensation could be 30 per cent of what it was two years ago.”
This, for top-flight bankers, will mean $200,000 (€152,000) base salary and little or no bonus. Swiss bank UBS, he points out, recently announced that its managing director-level basic salaries would rise to US$420,000 (€319,000) from the current US$200,000, to compensate for the reduced bonuses.
O’Neill says bankers need to accept the reality that they face a very different future. He advises them to do a skills audit on themselves. “I tell them to strip out their transferable skill set and they could as easily do for Cadbury what they did for the bank,” he says.
Normally, international school waiting lists and relocation company activity are good indicators of the expatriate market. Curiously though, Hong Kong’s seven top English Schools Foundation schools report increased waiting lists and removal companies such as AGS Four Winds report no expatriate exodus. Even the American Club furiously denies any drop in membership numbers.
But the reality is that many financial sector expatriates have to head home, says Guy Day, Asia managing director for head-hunters Ambition. “Some are hanging around for a while in Hong Kong or Singapore or Tokyo, but most are senior-ish people, so jobs at their level come up far less frequently.”
The writing is on the wall, he adds. “Many will set themselves a time frame by when they must have secured something and if they don’t, they are off!” That time frame may tie into the school year ending or just when the money runs out, he adds, which could explain the school waiting lists.
Hong Kong’s 3,000-strong Irish expatriate community seems to be faring well. Many, like O’Neill, are long-term “foreign locals”, rather than expatriates. Many are also resilient entrepreneurs who can roll with the economic punches. O’Neill says he knows of no Irish person who has been axed this time around.
So, is this the beginning of the end for the expat? “I’m asked that every five years,” says O’Neill. “No, Asia’s still a very attractive place for international people to work.”
WORK ABROAD
The typical foreigner on expatriate terms works for a bank, law or accountancy firm, or a corporate. He or she traditionally receives a housing allowance appropriate to their level of seniority. A three- to four-bedroom apartment in Mid-levels or Repulse Bay would be typical, with rents, until recently, of HK$100,000 (€9,800) and upwards. A salary of HK$80,000 to HK$90,000 (€7,800 to €8,800) a month would be normal, before bonus.
While school fees of up to HK$10,000 (€980) a month at an international school are not paid, families could expect a return business-class flight home once a year, worth HK$50,000 (€4,900) per adult ticket.
Club membership is another perk paid for by the employer. Membership of the American Club, for example, costs HK$75,000 (€7,300) per annum, for a weekday-only club membership. Annual membership of a club, including monthly fees, is typically worth HK$100,000 to HK$150,000 (€9,800 to €14,900) a year. Base salary is usually boosted by an extra incentive to come out here to work.
Compensation packages are also enhanced by Hong Kong’s flat rate of income tax of 15 to 16 per cent.