Countries offering the most attractive expat salaries
Some countries are praised for offering the most attractive for expats. In its report on average salaries in 2022, the OECD ranks Iceland as the most attractive country (among OECD members). With an average annual salary of USD 79,473, Iceland is the country where expats are likely to earn more. Luxembourg and the USA follow close behind, with USD 78,310 and USD 77,463, respectively. Switzerland, meanwhile, offers an average annual salary of USD 72,993. Canada ranks 10th (USD 59,050), and France 15th (USD 52,764), just below the OECD average (USD 53,416). The most popular destinations for expats are also those with the most attractive salaries. In addition to Canada, the USA and Switzerland, Australia (9th), Germany (11th), the UK (12th), Norway (13th) and New Zealand (18th) offer average annual salaries above USD 50,000 (USD 50,722 for New Zealand).
Of course, it's important to emphasize the notion of "average".Even within countries, salaries vary according to the sector of activity, experience, position held, bonuses, and so on. However, even a high salary can be swallowed up by the expenses required to live in the host country. First of all, it's important to distinguish between gross and net salaries. The real wage must also be calculated. This is defined as the share of wealth accruing to employees. It corresponds more or less to purchasing power (the estimated amount of money needed to buy goods and services).
Wages are in decline
While employment has more or less returned to pre-Covid levels, inflation still weighs on wages. As a result, real wages are in decline in most OECD countries. The institution compares real wages between Q1 2022 and Q1 2023. In Iceland, real wages dropped by 2.9%. The decline is less significant in Luxembourg and the United States (-0.8 and 0.7%, respectively), but more considerable in Switzerland (-1.4%). The real wage in Canada dropped by 2%, and that in France by 1.8%. The biggest drop, however, was in Hungary (15.6%). Only a few countries recorded a slight increase: the Netherlands (+0.4%), Israel (+0.6%), Costa Rica (+1.7%) and Belgium (+2.9%).
In addition to salaries, all kinds of expenses must be met, for example, rent, taxes, electricity, water, gas, food, fuel, car insurance, medical fees and health insurance, transport, etc. All these costs have also been on the rise since the inflationary crisis.
The housing burden for expats
The housing crisis continues in many countries, including the United States, Canada, Germany, Sweden, and France. Some French regions, such as Lyon, are becoming unaffordable even for an expat with a stable job and a reasonable income. The United States is caught in a housing crisis with significant shortages and rising prices. In 2022, Bloomberg ranked New York as the most expensive city in the United States, followed by San José, Miami, San Diego, Los Angeles, Boston and Washington.
Germany is experiencing a "dramatic" situation. According to the president of the tenants' association, the country has a shortage of 700,000 homes. The government had intended to build 400,000 a year, but the target still needs to be met. Interest rates are soaring, making it even harder for locals and expats alike to get a loan. In Canada, the crisis is such that the government has suspended the purchase of real estate by foreigners. The measure has been in force since January 1 for 2 years. Foreigners will have to wait until they become permanent residents to become homeowners.
Other crises gnawing expat salaries
The housing crisis is echoed to varying degrees in other sectors. The UK is still reeling from its energy crisis. Soaring energy bills are exposing residents to significant financial difficulties. Stable incomes are not always enough to guarantee good living conditions. In Japan, people are considering reviving nuclear power to tackle the energy crisis. Twelve years after the Fukushima tragedy, the Kishida government is relying on recent polls (51% of the population would favor reviving nuclear power) to restart several reactors.
Living abroad also requires health insurance, home insurance, car insurance, etc. Regarding health, your situation may require you to take out private insurance in addition to the local insurance you are affiliated with as a foreign worker. All these charges reduce the actual salary.
Countries offering attractive salaries are also home to the world's most expensive cities. In 2023, the Mercer report ranks Zurich, Geneva and Basel as the most expensive cities for expatriates (3rd, 4th and 5th respectively). New York is the 6th most expensive city for expats, ahead of Berne, Tel Aviv and Copenhagen.
When planning your move abroad, especially if you're looking to grow your career, don't be fooled by the promise of a high salary. There's a world of difference between what you earn and what you have left at the end of the month. The first thing to do is find out about the cost of living in the city you're moving to, especially in terms of rent, tax, food, insurance, etc. By considering all these factors, you'll be able to assess the real attractiveness of the salary you are being offered in a foreign country.
