Expat workers take crisis in their stride

Some dollar-salaried expatriates in Indonesia cleaned up when the rupiah hit rock bottom. For others, the party was over, with many firms laying off foreign workers. Despite the changing fortunes, there are expatriates, particularly Asians, who have been willing to take a pay cut in order to remain in Indonesia. The Jakarta Post's contributor Rudy Madanir profiles some of the hardy few.

JAKARTA (JP): For one Jakarta-based Filipino expatriate worker, gone are the days when he could fly to Bali to spend a leisurely weekend at Kuta beach.

It is no longer an option after he moved from his longtime job in one of the top 10 conglomerates in the country to a new position, with a lower salary and fewer benefits.

"I have to think 10 times whether it's wise to go there considering my new tighter budget," said the expatriate, who requested anonymity.

Saying goodbye to suddenly expensive weekend trips to Bali is only one of the unexpected new realities he has had to face after nine years in Indonesia.

Yet he has stayed on despite the comedown from the economic crisis which struck in mid-1997. It, along with the deteriorating security situation, led thousands of expatriate workers to pack their bags and leave the country.

Some others have been unaffected, their dollar salaries allowing them to live in precrisis prosperity.

They are part of an exclusive club, able to afford nights out on the town and pricey antique Javanese furniture for their homes in expatriate enclaves of Kemang, South Jakarta, and Menteng, Central Jakarta.

There are also those whose only option to stay on in the country was to take a pay cut, accepting locally based contracts instead of expatriate benefits. They have had to adjust to the new conditions and what some might call a less comfortable life.

Some left luxury homes with security guards and housemaids to share cheaper accommodation with two or three colleagues. In many cases, acceptance of a local package meant they could not bring their dependents to Indonesia. Gone are educational support for their children and travel allowances to their home countries, often part of expatriate packages.

The expatriates, many from Asian developing countries like the Philippines and India, decided to stay because they find limited job opportunities at home, said A.B. Susanto, a managing partner at Jakarta Consulting Group.

He added that some Australians fall into the same category.

Unlike expatriate workers from most developed countries, Asians have long been known for their flexibility regarding salaries and allowances. Some people in the expatriate community said rather dismissively "they are cheaper by the dozen" than a European or an American worker.

Established headhunter Yaya Suwarso of Ernst and Young said some firms, in need of expatriates but with limited budgets, find that Asian workers fit the bill.

It remains to be seen if the trend of hiring Asians will continue when the economy improves, or whether Indonesian workers have the right stuff to fill vacant expatriate positions.

Susanto estimated that of the total number of expatriate workers now in Indonesia, 70 percent were Asian, from about 55 percent before the crisis struck.

Asians are also in demand because of similar cultural and social customs with Indonesians.

"Probably, the increasing trend will stop at 80 percent-20 percent (Asian expatriates to those from developed countries)," Susanto said.

He added that some home country-oriented foreign companies still preferred to employ people from their country of origin, "who mostly come from industrialized countries".

Although the percentage of Asian expatriates working in the country is now greater compared to the ones from the developed countries, the total number of expatriate workers has decreased sharply in tandem with the crisis.

Statistics show that the total number of expatriate workers declined from a high of 57,159 in 1995, to 18,502 people in 1998, when the country was severely affected by the crisis. The latest data show there were 29,444 expatriate workers in 1999, still an almost 50 percent reduction from the total number four years before.

When the expatriates headed home, a challenge was presented to Indonesian professionals to fill the abundant vacant positions that in the past were entrusted only to expatriates.

Some companies simply let Indonesian professionals take over the positions, Susanto said, "since there were no other choices, and if there was, it was a very expensive one."

Yaya Suwarso acknowledged that she recruited more Indonesians than expatriates today.

"Now, even for a country manager, some foreign companies ask for Indonesian nationals," she said.

It is in marked contrast to the heyday of Indonesian conglomerates, when money was seemingly no object and workers of different nationalities could be found in various positions.

"Just for a human resources manager or an accountant, they simply hired Asian expatriates," said Suwarso.

English proficiency

She said many Indonesian professionals were more capable than the expatriates but lacked English proficiency, which presented a problem when they were required to write reports in English.

However, locals often carry the perception that an expatriate worker, particularly one from Europe or the United States, is more capable and knowledgeable even when it is not the case.

Suwarso told of a government institution with a policy of paying higher compensation to foreign consultants than to Indonesian ones. She added that it did not mean that Indonesian consultants produced lower quality work compared to their foreign counterparts.

No global template exists for how expatriates should be compensated; it varies from country to country, and from company to company.

A source in a joint venture company in Jakarta said an expatriate worker holding a middle level management position in the company was paid in a range from US$8,000 to $12,000 monthly; locals earned about Rp 20 million (about $2,600).

An expatriate holding a top level management position can expect $18,000 monthly salary, the source added.

Susanto said expatriate workers were paid four times higher than Indonesian professionals in middle level management, and in some cases the compensation gap could be much wider.

What is known as the "third world country hardship allowance" is one of the factors which boosts expatriate compensation, he said. Some expats from industrialized countries make themselves "third-world specialists", living like "little kings" to enjoy facilities they cannot afford in their home country, he added.

Susanto said that in top-level management positions, the compensation received both by the expatriates and the Indonesian executives was almost similar.

"At that level, Indonesian executives could be more choosy than the foreign ones," he added.

In creating an investment-friendly atmosphere, Susanto recommended that the country welcome foreign companies and expatriates with a profitable business which could contribute to the country's tax revenues, or their business creates a lot of job opportunities for locals.

Another important consideration is the transfer of knowledge from the expatriate consultants to local employees.

Conversely, qualified Indonesians must be given equal opportunities to fill positions. Local professionals with commensurate skills should also be encouraged to explore opportunities to work abroad.

"Protection regulations (to limit the number of expatriate workers) are not the right solution in the middle of the current economic condition of high unemployment, because job scarcity will still remain," he said.