💾 Archived View for gmi.noulin.net › mobileNews › 6117.gmi captured on 2021-12-03 at 14:04:38. Gemini links have been rewritten to link to archived content
-=-=-=-=-=-=-
For these UK-based expats, paying their bills back home just got a lot tougher.
By Alina Dizik
29 June 2016
When American expat Katie Sidell pays her student loan bill this month, she ll
likely be parting with a bigger cut of her take-home pay.
The 29-year-old London resident is one of many expats bracing for the fallout
of the Brexit vote and already feeling the pain of the 10% drop that the pound
has experienced against the dollar.
It s a massive change.
It s a massive change, she said. Almost all of us send money back to the
States.
If the British government acts on the referendum by pulling out of both the
European Union and its principle of free movement, then UK-dwelling Europeans
could bear the most immediate brunt of the decision.
But for the tens of thousands of non-European expats in the UK, the vote to
leave also comes with a serious and unexpected dose of uncertainty. Many have
seen a sudden drop in the value of their salary because they are paid in what s
known as the host currency, but must pay back mortgages or other loans in
their home currency. In the US, Canada, Australia and other countries outside
of the EU, currency remains strong. That means a $1,000 bill paid in US dollars
now takes 750 to pay, compared to just 640 a year ago.
Other expats are worried about the stability of their job and residency
permits, and are left wondering whether they are even welcome to work in the UK
at all. A down economy could cause them to lose their jobs and the ability to
live and work in the country that comes with it.
Many non-European expats work in finance and banking in London. Some companies
in that sector have already begun to plan for moves of staff to elsewhere in
Europe and some have even warned of layoffs. HSBC, for instance, told the BBC
it would move 1,000 staff from London to Paris if the UK acts on the
referendum. And the chief executive of JP Morgan, one of the world s biggest
banks which employs 16,000 people in the UK, including over 4,000 in
Bournemouth, warned earlier in June that the bank might have no choice but to
reduce headcount in the UK and shift jobs to other places in Europe.
The hardest hit expats could be those who negotiated a compensation agreement
within the country and work for organisations where they are treated like any
British employee, said Kate Fitzpatrick, London-based senior global mobility
consultant for human resources consulting firm Mercer.
Expats who are regular local employees who happen to have outside [financial]
commitments are probably going to feel it the most, she said.
Planning ahead
Some expats are planning ahead to protecting their salaries negotiated back in
their home countries. If the pound stays low against the dollar, American expat
Ben Weinberger is considering negotiating a currency-related bonus with his
US-based employer to offset what s essentially a 10% discount that the software
company is reaping by paying him in pounds.
My wife said, since you re saving your company money, maybe you should ask
for a bonus , he said. Though he hasn t yet felt the pinch , he s now
budgeting more money towards travel outside of the UK, which now costs him more
because of the pound s decline.
The spouse conundrum
Those who ve long worked in the country, but are not sponsored by multinational
companies are especially worried about what s next. A large number of expats in
the UK have a work visa based on a spouse who is a European Union citizen,
rather than being sponsored by an employer, said Sidell, an American whose
husband is German. With the potential of husband s EU benefits stripped away
while living in London, Sidell worries she may be on her own when it comes time
to secure a work visa.
I m not waiting for it to shake out. I sold my things on Thursday.
Others are taking immediate measures to protect their money. After two years in
London, real estate broker Jon Sterling plans to relocate back to Los Angeles,
while conducting business in both the US and the UK. The career move will help
him avoid any instability of the pound while maintaining the real estate
business he s built while in London, he said.
I m not waiting for it to shake out, said Sterling, who is looking to sublet
his flat and move this summer. I sold my things [on] Thursday.
Recruiting woes
Incoming expats are now worried about relocating for fear their jobs might be
unstable once they arrive in the UK. That could make recruiting especially
challenging, said Owen Darbishire, associate professor in organisational
behaviour at the University of Oxford s Sa d Business School.
Many highly-qualified expat candidates will choose nearby financial centres for
work.
As an expat, you need to consider whether you want to go to London for this
period and whether that job is going to be there in two to three years time,
said Darbishire. It s a harder job for the firms to attract people who ll
accept these financial changes.
Should instability continue, he expects that many highly-qualified expat
candidates will choose nearby financial centres for work, including Dublin and
Frankfurt, where employees are not paid in pounds.
Meanwhile, many UK employers now need to focus on assuring Britons who are
working abroad for their firms that they can make a smooth transition if they
choose to head home. They are more worried that the timing of the assignment
may hinder their return, said Darbishire.
Sterling, the real estate broker, has put all hiring in the UK on hold. Rather
than hiring an expat software developer from San Francisco to join his team in
the UK, he s now looking to hire someone outside of the UK and pay in a more
stable currency, he said. Two more employees will eventually be relocated
outside of the UK.
There are other European countries where we can set up shop, he said.
Following a precedent
Despite the concern and uncertainty, many economists say it s not time to
panic. Large multinational companies are used to dealing with currency crashes
and often have policies in place to protect employees, said Mercer s
Fitzpatrick. Within the last year Brazil, Nigeria and Russia have experienced
drops that are even more dramatic, she added. And most companies have long had
provisions in place for tax equalisation, upping allowances and splitting pay
into two currencies when it comes to dealing with similar scenarios.
I suddenly have more buying power.
We tend to recommend that companies actually wait and retroactively make some
adjustments, said Fitzpatrick. It s just too early to tell. After the vote,
more UK-based companies hiring expat employees can expect to see a trend of
employees who prefer to stay on their home currency, she believes.
Of course, for some there is a bright side: reaping the benefit of a low pound
against investments back home. Rather than continuing to make mortgage payments
on his home in the US, Weinberger is now planning to sell the home which
itself has increased in value in order to invest his dollars into the
notoriously expensive London real estate market while the pound is in his
favour.
I suddenly have more buying power, he said.