The expats whose pay fell 10% overnight

Source: BBC

By Alina Dizik

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.

The value for a dollar for expats took a hit. (Credit: Getty Images)

The value for a dollar for expats took a hit. (Credit: Getty Images)

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.

The pound dropped to its lowest level in 30 years. (Credit: Getty Images)

The pound dropped to its lowest level in 30 years, putting a strain on many expats in the UK. (Credit: Getty Images)

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.

Read more

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.