Human Resource Management in the Global Firm

1 Human Resource Management in the Global Firm The US Department of State provides a wide range of information for people who want to travel and work abroad. They have information from every country in the world and it includes security information, health and medical conditions and social and economic information. In terms of the economy, they provide information about the living costs as well as the living standards and the compensation packages of expatriates in various cities in the world (US Department of State 2011).

These compilations of information in the world have provided an incentive to the various firms in the world, in a sense that they are able to come up with an appropriate package for employees mostly the manager who work abroad. I am going to prepare a report on the living costs and other factors that influence the compensation package for expatriates in Prague and Tokyo.

Japan itself is the third largest country in the world in terms of industrialization and free-market economy. Tokyo in itself has the largest metropolitan economy and is the world’s most populous city with close to 35 million people. It is the world’s most expensive city for quiet along time and it is a financial command center and can be classified with cities such as London and New York. In Tokyo a regional minimum wage is set and it is based on the industry including the consent of the workers advisory council.

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2 The minimum wage in Tokyo is around 5560 yen or an equivalent of $53 per day. The minimum wage can provide a worker with a means of providing for his or her family comfortably and give them the ability to maintain a decent standard of living (US State Department). Furthermore, the labor standard laws ensure that a 40 hour work in a week in most industries and premium pay for workers who exceed the 40 hour time in a week.

Buying land in Tokyo is the most expensive in Japan and the subsequently in the world. Apartments in Tokyo are very expensive; even small apartments are quiet expensive in the city center. However it is distinctively lower in the suburbs of Tokyo.

Transport is also very expensive and utilities such as gas, water, electricity and phone rates are considerably very high as well. People who would make international calls quiet frequently should consider using internet calls and callback back services especially for the expatriates to lower the costs of communication.

Foods in Tokyo is quiet expensive if they are not local, locally available foods such as vegetables, sea food, rice and soya beans are inexpensive while imported food are very costly. Owning a car in Tokyo is very costly too due to the bi-annual inspection, mandatory insurance and parking rates. However, costs of purchasing a car are relatively low. Tokyo is largely concentrated with corporate headquarters. This existence of these corporate has enhanced a high economic activity in the city. According to the US Department of State, the cost of living allowance percentage of spendable income is 80 percent in Tokyo city for the federal employees. The indexes for the cost of living are calculated by the US State Department based on higher living standards than in Washington D.C. area. The cost of living index is applied to the spendable income; spendable income is the estimated salary used by employee to purchase goods and services. However it does not cover foreign tax, retirement contributions, life insurance, personal savings and investment on charitable contributions (US State Department 2011).

The US government may provide housing to federal employees or alternatively provide housing allowance. Maximum allowance for housing is based on the family size and federal grade levels for Tokyo city. Depending on the grades and number of family, the 128,000 and 103,200 US Dollars for federal employees without family and 120,100 and 91,400 US Dollars annually for federal employees without family depending on their grades. The computed indexes for costs of living is published every January and the compensation of Government Employees who work in foreign countries (US State Department 2011).

The post (hardship) differential percentage of basic compensation is 0 percent of the base salary. This differential rate is based on the standard evaluation of the environmental conditions. The rate depends on the total hardship rating and employees are paid post differentials of between 5 and 35 percent of the base salary and are subject to federal tax. Issues regarding danger pay allowances are based on the civil insurrection, civil war and terrorism. Federal civilian employees are offered a danger pay depending on the level of danger. The level varies between 5 and 35 percent of the base salary but subject to federal income tax. The federal employees working abroad are also offered an education allowance of approximately 35,000 US Dollars annually (US State Department 2011).

Prague is relatively inexpensive in comparison to Tokyo. However, it is considered to be quiet expensive in the Czech Republic itself. A US federal employee would be given a 42 percent of the salary base for the cost of living allowance of

3 spendable income. Food and transport are relatively cheap in Prague and have remained significantly stable. The costs of communication are also high in comparison to other major cities. High costs of communication includes, telephone, internet connection and cellular communication. The costs of education - primary, secondary and tertiary - are quiet inexpensive compared to other big cities. According to the US State Department, the allowances offered to the federal employees of the US are given educational allowances of between 28,750 and 33400 US Dollars per annum. They also offer 0 percent allowance on post (hardship) differential compensation in Prague. This is due to the less environmental hardship in the city (US State Department 2011).

Moreover, the annual allowance on housing is set at between 17,800 and 14,600 US Dollars for federal employees living in Prague who are living with a family and between 17,000 and 13,000 US Dollars for federal employees living without a family.

Also the rates of the housing allowance vary between the various federal grade levels of the employees. Federal employees of US working abroad are also accorded a foreign transfer allowance for extraordinary, reasonable and necessary expenses. The foreign transfer allowance includes a lump sum of the miscellaneous expense compensation which is for the purpose of covering the extraordinary expenses incurred during reassignment, appointment, assignment or transfer from one post to another. These include expenses such as the automobile registration and driver’s license, personal cable and telephone relocation, conversion of household equipments and shipment requirements among many others. Secondly, foreign transfer allowance also includes a lump sum allowance on the wardrobe expense; this is due to the variations incurred in the weather. Thirdly, there is an allowance for pre-departure subsistence portion which is applicable for ten days before the final departure. It involves the lodging, meals, laundry and cleaning expenses. Lastly, the federal employees are offered a lease penalty expense for early termination of residence quarters (US State Department 2011).

4 References US State Department. (2011, October). U.S. Department of State Indexes of living costs abroad, quarters allowances, and hardship differentials-October 2011. Retrieved on December 5, 2011, from http://aoprals.state.gov/