The net salary accounts for just half of an expat’s costs in Romania. A multinational spends around 30,000 euros a month on an expat who holds a CEO or a general manager position, i.e. 360,000 euros a year, with the net salary making up only half this sum.
The biggest differences between foreign executives and Romanian ones are not salary-related, although the base salary is around 20-30% higher for expats (i.e. 15,000 euros in net sum for a foreign CEO of a large multinational). The major differences lie in the structure of the salary package, which is much more complex in the case of a foreign manager.
Housing-related costs and expenses incurred by the manager’s family are the second major component of an expat’s salary package. “Children’s schooling taxes can reach up to 20,000 euros a year, while rent for an apartment can amount to 6,000-7,000 euros a year. Also included are the salary, 20% higher than a Romanian manager’s, regular visits to the country of origin and medical insurance in private clinics,” says Michael Weiss, principal of A.T. Kearney consulting firm, who oversees the company’s activity in Romania.
It is more advantageous for expats to be transferred from within the company, on a fixed term, than to be recruited directly, from abroad. “Companies pay a fixed sum for housing, when the manager is relocated to Romania, from within the company. For very big companies, this sum exceeds 10,000 euros a month. Other ‘routine’ expenses can easily amount to another 20,000 euros a month for an expat transferred to Romania,” says George Butunoiu, owner of the consulting firm of the same name.
According to the Total Remuneration Survey, conducted by human resource consulting firm Mercer, a Romanian general manager has an annual salary package of around 180,000 euros, i.e. 15,000 euros a month. The bulk of this sum, i.e. 123,000 euros, is the annual salary, to which other benefits are added, such as medical insurance, worth over 1,300 euros a month, a business car- Volvo, VW Touareg, BMW X5, Audi A6, a health plan, and, in some cases, shares in the company.
“For expats, we take into account an around 20% higher compensations and benefits package, to which other benefits are added, such as home insurance or kindergarten expenses for children,” says Ioana Tot, senior consultant of Consulteam, Mercer’s partner on the local market.
An expat manager benefits from a package which includes a full health plan for them and their family, if family is in Romania, health insurance, payment of rent and of utilities, performance-based premiums, a mobile phone, a car – which they can use both for business and non-business purposes, a 27-28-day annual holiday, business class flights, kindergarten and school expenses for children, as well as the possibility of holding shares within the company.
The difference between the salary of a top management expat and that of a Romanian exec has gone down significantly over the last few years, to 20-30% at present, whilst 10 years ago, an expat used to earn double as much as a Romanian.