Expatriates vs Permanent International Transfers (Localization)

Current global economic conditions are tempering the mobility activity and promoting change in the practices of multinational companies. There is a trend to develop new assignment policies to provide an alternative to the traditional  Expatriate, that is:
  • a temporary assignment - the employees are placed on assignment for 1 to 5 years before being sent back to their native country
  • with allowances for the employee and his/her family - home, school, health insurance, holiday travel, relocation, language lessons, etc..
  • plus additional economic compensation that allows living comfortably in the country of destination, and often building some savings for the future.
The associated cost of the traditional Expatriate program is not appropriate in many cases. More and more often, the international assignments are self-initiated by the employees to gain international experience, grow professionally and enhance promotion prospects or pursue new career opportunities.

Moreover, it is difficult for a company to guarantee a suitable vacancy in the home country when the Expatriate returns. As a result, companies are promoting Permanent International Transfers where the employee agrees to:
  • a permanent transfer - usually means resigning in the country of origin
  • with economic and labor conditions similar to a local employee in the country of destination (this is why it is also called as "localization")
  • in some cases, companies offer some allowances for a limited period of time to encourage the employee to move.
These kind of transfers face issues in the legal and economic front, that need to be analyzed in detail depending on the country.

In a nutshell, the development of new practices and policies in the world of mobility is an unstoppable trend, as discussed in the recent round table organized by the Universidad Pontificia Comillas. Round table on Expatriation