Cost cuts could drive 20% of expats home

Publish date: 11-09-2009
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The number of expatriates working on the Romanian market could drop 20-30 percent in 2009-2010, if growth does not resume on the local market, according to several specialists on the labor market. These say that multinationals will cut costs by replacing some of the expats with less expensive Romanian managers.

"Foreign companies will not continue to have five-six expats in Romania, but rather will keep one or two to control the business. The others will be replaced with Romanian managers," Alexandru Talmazan, Managing Partner of the Wrightson headhunting company, said.

The salary package of an expat can be even three times higher than that of a Romanian top manager, Talmazan added. Those who were the first to feel the effects of the crisis on the local market were the heads of real estate developers, especially Spanish and British. In other fields, where the effects of the crisis are not so severe, replacing a foreign manager with a Romanian one accelerates a process begun several years ago, Wrightson's Managing Partner indicated.

Other human resource (HR) consultants say that the number of expats on the local market will not fall significantly in this time of crisis, even if they involve higher costs.

Rudolf Fedorovici, Senior Consultant of the Advice HR company, offers several explanations: first, companies in countries which are now in a sharp recession, such as Spain, are sending some of their unemployed managers and specialists to their Romanian subsidiaries, where their businesses are still operating. Although they are slightly more expensive than local specialists, they are far less expensive than they were two years ago. Secondly, companies on rebounding markets, such as Poland, continue to send expats to run their operations in Romania.

"I am skeptical about the fact that a company prefers the solution of replacement based only on costs. The real explanation is the ascension of a generation of local managers, who can do things just as well," Fedorovici said.

Besides the salary package, which is far higher than that of Romanian managers, there are additional costs for expats - related to relocation, transport, and school fees for their children - which can raise the manager's budget by a further 40 percent.

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