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Old 10.10.2009, 20:00
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Salaries and Exchange Rates

I'd like to know how others have dealt with the issue of exchange rates when negotiating their salary from the UK. Two years ago, 1 GBP was worth 2.5 CHF and now it is significantly less. Looking at a salary of 80K GBP - should the exchange rate start going the other way I'd be losing out quite a bit.

Please let me know if you have any advice on this point.

Many thanks.
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  #2  
Old 11.10.2009, 00:39
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Re: Salaries and Exchange Rates

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I'd like to know how others have dealt with the issue of exchange rates when negotiating their salary from the UK. Two years ago, 1 GBP was worth 2.5 CHF and now it is significantly less. Looking at a salary of 80K GBP - should the exchange rate start going the other way I'd be losing out quite a bit.

Please let me know if you have any advice on this point.

Many thanks.
But where are you going to be spending your salary?

In a sense the value of your Swiss salary in GBP wouldn't play much part in a salary negotiation. You're just looking at it in relation to the local labour market, right?

I arrived 14 months ago and have seen the value of the pound plummet. Does this make me feel richer? Not in any hugely meaningful way . . . apart from when I visit London.
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Old 11.10.2009, 01:06
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Re: Salaries and Exchange Rates

Agree, I will be spending most of it in France/CH but the travel to London especially if you have assets in London or elsewhere is an important consideration.
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Old 11.10.2009, 01:11
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Re: Salaries and Exchange Rates

Easy answer...

use a hypothetical exchange rate of around 2.00, you can't go wrong...

Empoyers aren't offering less for people coming from the UK, because they have a lot of people coming from the european area and the EURO hasn't moved much against the CHF.

my rule... x 2 + 20% and settle for x 2 + 10% + relocation package.

Good luck

TLD
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Old 18.10.2009, 08:55
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Re: Salaries and Exchange Rates

Thank you very much mr. love doctor. I completely agree and will use your approach.

best, rs




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Easy answer...

use a hypothetical exchange rate of around 2.00, you can't go wrong...

Empoyers aren't offering less for people coming from the UK, because they have a lot of people coming from the european area and the EURO hasn't moved much against the CHF.

my rule... x 2 + 20% and settle for x 2 + 10% + relocation package.

Good luck

TLD
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  #6  
Old 02.09.2011, 16:01
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Re: Salaries and Exchange Rates

I know this post is a little date but I have a similar question but for USD.

I received an to relocate to Zurich from Chicago. The move would also include a promotion from Senior Finance Analyst to Manager.

The company is quoting my CF salary in terms of USD as leverage. They are currently using the .80 USD to 1 CF, but I feel by doing this I'm not realizing the promotion, only cost of living adjustment.

My question is shouldn't a company be using a 5 year historical average when making this comparison? Which would be somewhere around 1 to 1? Which would give me an extra 5k-8k CF?

Thanks!
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Old 02.09.2011, 16:04
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Re: Salaries and Exchange Rates

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Easy answer...

use a hypothetical exchange rate of around 2.00, you can't go wrong...

Empoyers aren't offering less for people coming from the UK, because they have a lot of people coming from the european area and the EURO hasn't moved much against the CHF.



Good luck

TLD
Famous last words...
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Old 02.09.2011, 16:11
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Re: Salaries and Exchange Rates

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I know this post is a little date but I have a similar question but for USD.

I received an to relocate to Zurich from Chicago. The move would also include a promotion from Senior Finance Analyst to Manager.

The company is quoting my CF salary in terms of USD as leverage. They are currently using the .80 USD to 1 CF, but I feel by doing this I'm not realizing the promotion, only cost of living adjustment.

My question is shouldn't a company be using a 5 year historical average when making this comparison? Which would be somewhere around 1 to 1? Which would give me an extra 5k-8k CF?

Thanks!

I don't think you should do either spot or 5 year average. Once you move and you get paid in CHF, pay your bills in CHF, you should forget the USD comparison.....you should ask what the salary scale is for your job in Zurich and get paid that.

You'll feel p*ssed off if you negotiate the right exchange rate but then get paid 30% lower than the guys and girls around you
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Old 02.09.2011, 16:16
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Re: Salaries and Exchange Rates

yes, it seems a bit unfair to use the current exchange rate as a basis - but are you sure they are doing that to calculate how much to pay/offer you, as opposed to paying you the going rate for a manager.

As an aside - and I may be totally off with my calculations/assumptions here - if a 25% change in currency (from 0.8CHF/USD to 1:1) will only result in a max CHF 8k increase in your swiss salary, this would imply a Swiss salary of CHF32k (based on a USD salary of $40k). Something seems wrong ...
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Old 02.09.2011, 16:31
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Re: Salaries and Exchange Rates

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I don't think you should do either spot or 5 year average. Once you move and you get paid in CHF, pay your bills in CHF, you should forget the USD comparison.....
Caviarchips and Gastro Gnome are right. If you are taxed in CH and your bills are in CHF, foreign currency comparisons are irrelevant. If you are moving here on a local package, all that should matter is whether you are being paid the going local rate for the grade. Quoting your salary in USD and thinking of it in those terms is a red herring. It doesn't take much in the way of mental gymnastics to figure out if the increase in relative disposable income is worth the move taking into account things like local cost of living and necessary flights back to your home country. Anyway, with easyjet, flights to London are cheap.

If your pay was determined in a currency other than CHF and merely FXed to you in CHF at then current exchange rates, then exchange rates would be a consideration.
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Old 02.09.2011, 16:42
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Re: Salaries and Exchange Rates

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yes, it seems a bit unfair to use the current exchange rate as a basis - but are you sure they are doing that to calculate how much to pay/offer you, as opposed to paying you the going rate for a manager.

As an aside - and I may be totally off with my calculations/assumptions here - if a 25% change in currency (from 0.8CHF/USD to 1:1) will only result in a max CHF 8k increase in your swiss salary, this would imply a Swiss salary of CHF32k (based on a USD salary of $40k). Something seems wrong ...

Sorry my post was definitely confusing. Actually I'm probably the one confused. I'm just trying to figure out if the promotion and the cost of living adjustment are both reflect. Let me restate.

With a 1:1 ratio. If I was promoted in the USD to Manager I could expect between a 10-15% increase. This would be between 10-14k lower than my Swiss offer. Does that seem like enough of a cost of living adjustment?

Currently at 74k offer was 95k.

Side note: The relocation is for January 2012. I'm due to be promoted to Manager in the US around the same time.
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Old 02.09.2011, 16:43
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Re: Salaries and Exchange Rates

While on the subject of exchange rates, my company decided last month to cut the pay of contractors by 10% as CHF is too high and all sales are in Euros. My own hourly pay went down by 6% and the rest was covered by my agent. Take it or leave it kind of negotiation. But they have put a clause to go back to original pay once euro is 1.30
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Old 02.09.2011, 16:53
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Re: Salaries and Exchange Rates

thanks for clarifying. My impression (admittedly not having lived in the US), is that CHF 95k seems low for a manager level financial position in Switzerland - and that you might well struggle to meet the living standard you have in Illinois in Switzerland on that salary.
Is there scope to renegotiate?
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Old 02.09.2011, 16:59
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Re: Salaries and Exchange Rates

If you, or someone you know speaks German - then you can try using the link in this excellent sticky - a governmental database which gives you salary ranges for jobs. You just enter details of the job profile and your employment profile.

Taxes - Advisors/Accountants / Cantonal Offices / ZH Tax forms / Expat US Taxes
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Old 02.09.2011, 17:01
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Re: Salaries and Exchange Rates

Yep, I got screwed on salary because was offered a UK£ equivalent after tax at today's rate, not the long-term exchange rate of 2.0. I didn't do my homework and bitterly regret it.

I can't afford anywhere near the same standard of living as I did in the UK. So don't let them get away with it.
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Old 02.09.2011, 17:07
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Re: Salaries and Exchange Rates

Wtf are they "getting away with" ? You agree a deal. It is up to you to show due diligence before you accept that deal. You get paid in GBP or CHF and they will vary against each other.

You don't need to be an expert in derivatives to work out the likely scenarios if one goes up.

It may be a bummer if your salary is not hedged and the exchange rate moves against you. But conversely you gain if it rises. You can of course buy currency options or ask for a split currency salary or even renegotiate if there are extreme movements, but please don't indicate that you are somehow being ripped-off because the employer is not using the currency metric of your choosing.

AYB

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Yep, I got screwed on salary because was offered a UK£ equivalent after tax at today's rate, not the long-term exchange rate of 2.0. I didn't do my homework and bitterly regret it.

I can't afford anywhere near the same standard of living as I did in the UK. So don't let them get away with it.

Last edited by AhYesBut; 02.09.2011 at 17:22. Reason: typo
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Old 02.09.2011, 17:20
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Re: Salaries and Exchange Rates

They are only irrelevant if all the poster's bills are in CHF. Most expats retain some mortgage,financial or family commitments in their country of origin. Some of them maintain their family additionally abroad and commute weekly.

Notwithstanding this, your exposure to the exchange rate depends on how you spend or invest your money. Many expats expect to stay a fixed period to make some money and move on to whereever. So they may anticipate that by dripfeeding fund into the appropriate fund or currency. All this will be a factor in your ongoing financial situtation and to say it is irrelevant is simplistic. But hey, don't listen to me get some professional financial planning advice.

AYB

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Caviarchips and Gastro Gnome are right. If you are taxed in CH and your bills are in CHF, foreign currency comparisons are irrelevant.
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Old 02.09.2011, 18:30
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Re: Salaries and Exchange Rates

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to say it is irrelevant is simplistic. But hey, don't listen to me get some professional financial planning advice.
Irrelevant in the sense that most employers for most employees won't tailor make comp. to individual circumstances or offer you a currency hedge or equalization for FX losses. They won't care if you have a GBP mortgage or not.
It's important to you but irrelevant to them.
A local package is a local package. It comes with an FX risk and all you can do is make sure you're paid the going rate and then figure out if you can fund your liabilities.
Now is a great time to be paid in CHF. But if you have significant foreign currency liabilities which you would struggle to meet with the franc at these historical highs, then you should think before accepting a job with a CHF based package.
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Old 02.09.2011, 18:57
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Re: Salaries and Exchange Rates

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It may be a bummer if your salary is not hedged and the exchange rate moves against you. But conversely you gain if it rises.

AYB
However with that hedge you would loose if it rises, there is no free lunch.
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Old 02.09.2011, 19:06
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Re: Salaries and Exchange Rates

No this is wrong. You pay an option premium (which is established based on the time to run, relationship of strike price to current price and analysts' estimates of future volatility) for an option which can either rise in value if the currency pair ratio rises (CALL) or falls (PUT).

If you are agreeing a salary in CHF then you would like to benefit from the upside, but limit the downside. Therefore you could buy an option that increases in value as the CHF value falls, and so you remain in about the same position as if it hadn't.

It is like an insurance policy, and it has a premium to be paid for however long you want to continue the arrangement. It needs to be tracked as well as the overall amount covered by your "policy" will vary with the change in currency.

AYB




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However with that hedge you would loose if it rises, there is no free lunch.
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