ASSIGNMENT II

Relative Cost of Living of 5 Countries

Drafting a Pay Plan for Managers
Submitted By: Abhishek Rao 101202136 MBA IV sem

Relative Cost of Living of 5 Countries

COST OF LIVING OF 5 Countries COUNTRIES Australia Brazil Korea USA Clothing Communication Education Household Accommodation Transport FACTORS low High High High High high high high high high low low low low low high

UK high

average high high average

average high high high

When we look at the above table we mentioned countries and factors in different axis. Countries are Australia, Brazil, Korea, USA and UK. These are the most preferred countries where the expatriates are sent on for foreign assignments. Whenever the expatriates go on foreign assignment it is important for him if he goes with a family. The factors like clothing, communication, Education, Household accommodation and transport are the major factors which are considered by the employee as well as the organization. The employer has to see that the employee is sent on foreign assignment and has to come back and work for the organization. For this the most important is the Compensation Plan which is an important part for an expatriate. According to the survey many expatriate assignments fail each year by 30% ie because of family dissatisfaction, cultural issue and financial dissatisfaction.

So in the above table we have considered factors like Clothing, Communication, Education Accommodation and Transport. So the pay plan has to be planned as per the basic needs to survive in other country. 1) CLOTHING: In Brazil, USA, and UK the clothing cost is high compared to Australia and Korea that means the amount of compensation has to be paid more than the other two countries. This is according to the Cost of living index 2011. So the employee has to see that the pay plan should increase the component of pay in 3 countries. 2) COMMUNICATION: This is a basic requirement for an expatriate when he is on foreign assignment. When we look at the consumer price index of 2011 korea and USA are at the lower side and the other countries are at the higher side. So the employer would be advantageous were the communication expense is at the lower side.

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Relative Cost of Living of 5 Countries 3) EDUCATION: This is when the expatriate is with his family on foreign assignments. In the above table we can see that korea and UK are cheaper. So it would be easy for the employee and the employer to accommodate family in these two countries. But the level of education also matters. Since the level of education is more important the employee may not consider more important than the pay. But employer has to see that the pay considers the expense of the education allowance or education fee reimbursement facility in the pay plan. 4) HOUSE HOLD ACCOMMODATION: in most of the countries the accommodation is the major problem and most costly factor as an expatriate goes on foreign assignment. Australia: Rent Per Month Apartment (1 bedroom) in City Centre Apartment (1 bedroom) Outside of Centre Apartment (3 bedrooms) in City Centre Apartment (3 bedrooms) Outside of Centre Avg. 1,570.79 $ 1,194.20 $ 2,491.73 $ 1,752.59 $

Buy Apartment Price Avg. Price per Square Meter to Buy Apartment in City Centre 6,571.15 $ Price per Square Meter to Buy Apartment Outside of Centre 4,563.11 $ (Amount in $) Brazil: Rent Per Month Apartment (1 bedroom) in City Centre Apartment (1 bedroom) Outside of Centre Apartment (3 bedrooms) in City Centre Apartment (3 bedrooms) Outside of Centre Buy Apartment Price Price per Square Meter to Buy Apartment in City Centre Price per Square Meter to Buy Apartment Outside of Centre Avg. 548.26 $ 386.06 $ 1,298.59 $ 823.49 $ Avg. 2,599.24 $ 1,668.73 $

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Relative Cost of Living of 5 Countries United Kingdom: Rent Per Month Apartment (1 bedroom) in City Centre Apartment (1 bedroom) Outside of Centre Apartment (3 bedrooms) in City Centre Apartment (3 bedrooms) Outside of Centre Buy Apartment Price Price per Square Meter to Buy Apartment in City Centre Price per Square Meter to Buy Apartment Outside of Centre Avg. 741.62 605.66 1,201.51 960.12 Avg. 3,390.96 2,377.13

KOREA: Rent Per Month Apartment (1 bedroom) in City Centre Apartment (1 bedroom) Outside of Centre Apartment (3 bedrooms) in City Centre Apartment (3 bedrooms) Outside of Centre Buy Apartment Price Price per Square Meter to Buy Apartment in City Centre Price per Square Meter to Buy Apartment Outside of Centre USA: Rent Per Month Apartment (1 bedroom) in City Centre Apartment (1 bedroom) Outside of Centre Apartment (3 bedrooms) in City Centre Apartment (3 bedrooms) Outside of Centre Buy Apartment Price Price per Square Meter to Buy Apartment in City centre Price per Square Meter to Buy Apartment Outside of Centre Avg. 897.56 $ 701.96 $ 1,556.21 $ 1,237.34 $ Avg. 1,980.14 $ 1,332.01 $ Avg. 563.09 $ 395.68 $ 1,519.99 $ 892.02 $ Avg. 6,042.15 $ 3,775.30 $

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Relative Cost of Living of 5 Countries From the above table we can see that the cost of living in accommodation is much cheaper in korea. It also gives a data of apartment cost with the city and outside the city. this would be helpful for the employer and employee in different ways, like travelling and pay plan, while designing it would help the employer to manage the plan in a simpler and also reduces the travelling cost if within the city if nearby to office. So all this would help in designing an effective pay plan when the expatriate is sent to these countries. TRANSPORTATION: whenever an expatriate is sent on a foreign assignment it is most important that transportation cost which is most incurred. It depends on the employer whether he stays with or outside the city and whether he uses the public transport or his own vehicle. So when we look the above table except korea all other countries transportation is on the higher side. That means when the employer deigns a pay plan and also sending expatriate onsite the location and the expense paid to the employee has to be competent enough to manage himself and his family. The employee has to see that the transportation allowance has to be paid as per the cost of living of the country which has to be paid on the higher side. As the cost of living of the other country increases the amount of allowance has to increase in the pay plan. CONCLUSION: So finally we can come to a conclusion that the from the above 5 countries Korea is the cheapest countries for an expatriate as well as the employer. So the pay plan for Korea will be much comprehensive than the other countries and the employee would feel more comfortable with the pay package and also it s benefited to the organization. Every company compensates differently. TOP PRIORITY: MAKE THE EXPATRIATE HAPPY!! It is important to get an understanding of how the employees perceive the international human resources policy put in place and why they have been relocated them. It is necessary to make sure they feel good about the programs that are underway to facilitate their international assignment.

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Relative Cost of Living of 5 Countries

REFERENCE: http://www.bestplaces.net/col/ http://www.expatistan.com/cost-of-living http://www.numbeo.com/cost-of-living International Journal of Management & Marketing Research (IJMMR); 2010, Vol. 3 Issue 2, p85-118, 34p Social Security Bulletin; 2007, Vol. 67 Issue 3, p73-88, 16p, 4 Charts, 1 Graph Journal of the History of Economic Thought (Cambridge University Press); Jun2011, Vol. 33 Issue 2, p187-222, 36p Wages, prices, and living standards in China, 1738-1925: in comparison with Europe, Japan, and India. Applied Economics; Jun90, Vol. 22 Issue 6, p739, 19p, 6 Charts, 1 Graph How Design Rates on Pay Scale - Design News; 9/3/90, Vol. 46 Issue 17, p19-19, 1/4p

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