Q&A: Migrant Worker Consumers
The migrant population is a diverse workforce, from highly paid professionals to manual labourers, but they share some common concerns and aspirations, from staying in touch with family and friends to achieving a standard of living out of reach in their home country. Last year saw a series of economic and political crises across the globe, creating a volatile environment in which migrant workers can find their employment and lifestyle under threat, so it seems an opportune moment to look at how they’re coping.
How are migrant workers staying in touch with family and friends?
According to the HSBC Expat Explorer, 41% of participants surveyed during 2010 stated that making friends and forming suitable social networks was one of their biggest concerns when relocating. Worries about re-establishing a social life caused less of a concern for those heading to the Middle East and women were more concerned than men about establishing networks. At the same time, 34% of expats said they were worried about missing friends and family once they had relocated. In 2011 this figure was down to 31%, perhaps because technological advances mean it’s becoming increasingly easier and cheaper to stay in touch.
The results of the 2011 Expat Experience report show that while email remains the most popular method of communication, with 52% of expats using it to communicate with friends and family twice a week or more, social media is increasingly popular across the globe: 39% of expats use Facebook more than twice a week, and 36% use video calling services such as Skype. Contributors to the online forum britishexpat.com seem typical of users who see it as a lifeline, one recently enthused to a new expat seeking advice on keeping in touch: “Skype is great. The advantage is that you can use Skype at your end and call a landline. That costs but still much less than if you phone from your home phone to one in the UK.”
Less popular are traditional forms of communication, such as landlines (14%) or mobile phones (16%), perhaps because new technologies are less expensive. Facebook is the most popular social networking service, used by 69%, followed by LinkedIn, used by 40% of expats surveyed. Twitter and MySpace are less widely used (14% and 2% respectively). Expats earning higher incomes are less likely to use social media to touch base with friends and family on a regular basis, preferring instead to call or text. Half of expats earning less than $60k use Facebook at least twice a week to contact friends or family, while only 28% of those earning over $250k do the same.
African expats, however, appear to prefer to call home using more traditional communication methods. According to a recently released 2011 Holiday Calling Report by VIP Communications, a provider of international calling services, based on the seasonal calling habits of over 40,000 expat customers from 100 countries, African expats make the most Christmas calls. Of the top 10 countries receiving expat calls on Christmas, New Year’s Day and Valentine’s Day, five were African. Kenya showed the largest increase in call volumes in 2011: 280.9%. The Ivory Coast came in second with a 229.8% increase and Ireland third with a 207.5% rise. Although HSBC’s findings suggest wealthier expats make more international phone calls, expatmarketing.com seems correct in drawing the conclusion that it’s likely expats from both wealthier and poorer countries make more international calls than those with middling incomes. Mobile telephone use in Africa has seen explosive growth in recent years and it seems reasonable to assume that international calling volume should also increase.
What are young migrant workers looking for in health cover?
Not surprisingly, many migrant workers are concerned about healthcare, not only in terms of accessibility and the quality of provision available in the host country but also cost. In some countries private medical insurance is mandatory but even where it isn’t, or where healthcare is provided by the state, some opt to pay insurance premiums to secure a high standard of care.
David Pryor, senior executive director at medical insurance company MediCare, explained to expatmarketing.com last October that “underwriters love young expats.” They often purchase the same level of cover as older expats but make much fewer claims, so they’re a highly lucrative customer segment. Younger expats prefer plans that cover outpatient services and sports activities. Routine dental cover is also very important for the 24-40 age band, and about 90% of MediCare’s young expat customers choose their Executive policy, which covers all of these elements. Around 35% of their customers are young expats, and those who pay their own premiums are extremely price sensitive; perhaps not surprisingly, those whose cover is paid for by their company are much less so. Most of MediCare’s customers only live as expats for 3-5 years, and although about 25% are lost each year some keep their policies once they return home. A contributor to the website expatica.com points out another selling point: “Expats often prefer worldwide or regional health cover so that they can get treatment paid for wherever they happen to be.”
What are wealthy migrant workers buying?
Expatriates in developing countries such as South Africa, Thailand and the Philippines are much more likely to enjoy a luxurious lifestyle, compared to the standard of living they had in their home country (47%, 43% and 47% respectively v 32% average) according to the 2011 Expat Explorer. As a result, they top the Expat Economics Luxury league table: South Africa 1st, Thailand and Philippines joint 3rd. The main luxuries enjoyed by expats in these countries, compared to their home country, are: domestic staff, swimming pools, owning more than one property; although expats in these countries are less likely to go on more luxurious holidays (37%, 45% and 53% respectively) compared to expats overall (50%). As the income level of these countries is relatively low, the highlife enjoyed by expats is due mainly to increased affordability, rather than increased income.
The 2011 Expat Explorer indicates the UAE continues to offer expats the opportunity to enjoy an upmarket existence; they are much more likely to have access to luxuries than the average expat (43% v 32%). UAE expats are among the highest earners of those surveyed, with 29% earning over $200k.
How financially savvy are migrant workers?
According to the 2011 Expat Explorer, 71% of expats report having more income since relocating, up on 2010, with expats in BRIC countries being particularly flush: 94% of expats in Russia report a higher income, as do 73% of expats in India. And although the majority of expats report saving more than in their home country, some find themselves succumbing to temptation to spend, spend, spend. It’s probably harder to think about saving for a rainy day when, as in the UAE, blue skies promise a bright future. So while many people accept a job in the Gulf with a view to hoping to build up a nest egg for the future, last September’s Bayt.com MENA Saving and Spending Trends poll found that, despite not paying income tax, just 18.3% of professionals in the Middle East & North Africa region manage to save between 1-10% of their household income while 40.9% of respondents were “unable to save anything” from their household income. Nearly half of the people polled admitted they were “not investment-savvy.”
It seems some expats, distracted by the trappings of the good life in the UAE, find it difficult to stick to a savings plan, according to a report last October in the UK’s Telegraph newspaper. “There is too much of a spend culture among a lot of expats,” the CEO of Dubai-based research firm Insight Discovery told Arabian Business. It’s a sentiment echoed by the CEO of Dubai’s National Bonds Corporation: “People have a short-term view about their financial health because they are locked into a certain living standard.” However, Amer Zureikat, VP Sales at Bayt.com, believes MENA residents spent only on essentials in the first half of 2011. According to the Bayt.com poll, nearly 35% of expats spend more than 40% of their salary on rent or a mortgage and utility bills. Food takes another 40% and, after school fees, clothes, transport and travel, not much is left for saving. “This suggests that the current costs of living exceeds the salaries received by most professionals in the MENA region,” he said.
Another barrier to saving, however, might be the complicated nature of expat finances. Although expats generally benefit from higher earnings and income, moving abroad leads to more complicated finances, and according to the 2011 Expat Explorer 71% of expats say their finances have become more complicated since relocating. They attribute this complexity to a number of factors: moving money between countries (73%), finances being in different currencies (70%), managing finances in both home and host countries (68%) and a more complicated tax situation since relocating.
The highest ranking countries for financial complexity are the USA (82%), Germany (82%), Switzerland (81%), India (81%) and Brazil (81%). Yet with the exception of Brazil, expats in these countries are among the least likely to hold an offshore bank account, including India (53%), Switzerland (51%) and the USA (51%) compared to 59% of expats overall. They report that they don’t see offshore banking as relevant to their circumstances, or are unaware of the benefits. Moves are afoot, however, to persuade expats in targeted regions of the advantages of financial advice and management. The October Telegraph article quoted a report last year by Insight Discovery that international financial services firms are “ramping up their investment in the Gulf”, with a growing number of international and local asset managers and life companies expected to set up in the Middle East in the next 12 months. It seems, however, that these companies should be casting their nets more widely, as expats in other regions would appear to be in need of some sound financial advice.