Israelis may be grumbling about their high cost of living, but if you are an expatriate CEO relocating to a job in Israel, the country is a bargain.
That was the finding of a study conducted by the law firm Herzog Fox & Neeman together with the firm Relocation Jobs, which helps multinational companies address personnel issues in Israel. It compared Israel with Hong Kong, London and California to compare the cost of employing a married CEO with two school age children for a year.
Israel came out as the low-cost country because of the low cost of salary — gross pay plus benefits — which for a CEO earning pre-tax income of $200,000 would cost his or her employer $272,000. In Hong Kong, the most expensive place to relocate a CEO, the cost of salary reaches $402,000.
Surprisingly, the cost of housing is also relatively low in Israel, certainly in comparison to places like London and Hong Kong.
However, for the CEO himself or herself, living in Israel isn’t that lucrative. Take-home pay would amount to just $4,032 a month (15,355 shekels), while in Hong Kong it would be a little over double that — $8,066. The big problem for a relocating CEO is taxes: In Israel, he or she would have a net salary of just $107,200 a year, compared with $170,000 in Hong Kong. In London he or she would be left with $127,400 after taxes and in London $118,1000.
On the other hand, the cost of living in Hong Kong is higher at $6,100 a month compared with $4,900 in Israel. But Israel is a pricier place to live than London ($4,600) or California ($4,300), according to the study.
The relocation business in Israel has changed a lot in recent years. In 2005-07, Relocations Jobs was devoted mostly to helping Israeli companies settle their executives overseas, mainly in the United States and Europe. Some 2,500 CEOs and senior mangers went abroad for stints of varying lengths at an average cost to their companies of $500,00 a year.
In the financial crisis years of 2008-09, companies cut costs by managing their overseas operation by having executives travel a lot rather than living abroad. Or by sending unmarried executives abroad or at least those with children under school-age, saving them on the heavy costs of a private education.
The costs of relocation fell to an average of just $280,000 annually, but only about 1,200 were sent abroad, many of them now going to places like India, Africa, Brazil and Mexico.
The next three years saw demand for relocation services revive, with 2,000 executives sent abroad in 2010-12 costing their employers an average of $340,000. Only 30% were assigned to posts in the U.S. or Europe; the rest went to developing countries, particularly China.
The last two years have seen a revival of executives with families going abroad, with some 2,100 being assigned to a post overseas at an average cost of $400,000. The U.S. and Europe now account for a mere 20% of the relocations, with China, Thailand, Hong Kong and Singapore hosting more and more Israeli expats.