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Podcast Episode 7 - Cost Factor Employee Deployment

12.12.2022  |  Application, European Visas, Helpful, Relocation Information

Sending employees to other countries can quickly become very expensive.

Apart from the costs incurred by the relocation alone - housing, travel costs for the expat including family, furniture transport, vehicle procurement, possible costs for international schools, etc. - the compensation of the cost of living is also a factor. The key immigrants are entitled to maintain in the new country the lifestyle they led in their home country. A very helpful website to estimate the expected costs in the target country is numbeo.com: a platform that is fed by expatriates from all over the world with information on current prices in various countries.

In the case of internal assignments, the employer saves external recruiters and possibly even a mobility management expert such as Moves Consulting, who support the expat and his family in the application process for work and residence permits. Or it helps you to find your way around the new country. An employee posting can nevertheless lead to an employee who costs the employer 120,000 euros annually costs 170,000 euros in the year of the assignment. In addition, there are unforeseen events – on the basis of which external consultants such as Moves Consulting also learn again and again – such as a pregnancy of the accompanying partner, who has to be cared for in the destination country and is not yet covered by the expat's health insurance. In this case, the expat must pre-finance the costs in order to get them back later fromhis health insurance in his home country. In order to ensure this, a social security agreement must be concluded within Europe by means of form A1: the key employee is thus still covered by pension and health insurance in their home country during their stay abroad.

For example, the A1 form is also required when registering in kindergarten and must be recognized by the kindergarten in the destination country before the child concerned can be registered.

For expatriates, the largest and most burdensome cost factor is housing. The costs amount to  an average of 20,000 to 30,000 euros including brokerage fee, deposit, furniture and equipment. Temporary temporary temporary housing financed by the employer before finding a permanent place to stay is also very expensive in urban areas. In addition, landlords are hesitant towards expats because they cannot rely on a long-term tenancy. You can save a lot in terms of housing, for example, by leaving the entire household in your home country and only moving favorite pieces that have emotional significance to the destination country.

An important cost factor for employers, which is difficult to influence, is delays. If a project cannot be completed because the key personnel are still missing, corporations usually pay penalties. In the worst case, orders have to be rejected because the key workers are still missing, which can lead to a decline in competitiveness or even to economic ruin. The bureaucratic behaviour of the authorities and insurance companies is particularly counterproductive in such cases. Official delays often occur, among other things, because the authorities have the task of not making it too easy for skilled workers from abroad to gain a foothold in the target country so that domestic skilled workers also have a chance of employment. (Original statement by an employee of a German employment agency!)  From the company's point of view, savings are most likely to be made at the age of the key employee. Young managers often see posting to another country as a career opportunity, are often single, which saves the cost of relocating the family, and do not have high standards of living.

By the way: most expatriates want to return to their home country at some point, and then need a perspective there – this is also part of successful mobility management. The employer in the home country should definitely query and use the knowledge that the key employee has built up abroad.

Support and information regarding mobility management and expat coaching can be obtained at any time via  mailto:office@moves-consulting.com.

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