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2.2 to 1 Aus to GBP

2.2 to 1 Aus to GBP

Old Dec 28th 2011, 2:14 am
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Default 2.2 to 1 Aus to GBP

I had a final discussion re an offer today, as previously posted, 170K base, 20K lump sum for moving costs. Was on 100K GBP in London. Bonus of 5% only which seems low to me for financial work - London would be 10% in a bad year more like 20%.

The company's position was that roughly 160K would be a fair 'conversion' given current exchange rates so the extra 10K plus to moving allowance is 'fair'. Given comments on this thread though 220K sounds like a wash re break even. I was also told they had 'never heard of' the 2.2 ratio and that usually an average exchange rate is used combined with cost of living cals from the country and city you are moving from.

Looking at various cost of living calculators online I am seeing a view that housing in Melbourne vs London is about 30% less with other costs like food being on average a bit to quite a bit higher, with things being about 'the same' over all. Is the 2.2 ratio pretty firm of could an offer in the 170-180K range be OK vs 100K GBP if you avoid some of the more extreme cases where prices are different. (Certain meats for example and some consumer goods seem dramatically more vs London, other aspects seem much more inline)

At this point I am trying to determine if this is effectively a real pay cut all things considered or it it is decent provided I am careful to avoid some of the things that are much higher in cost. (I dont plan to have a car, for example, Id be happy to buy wine in bulk and have it shipped, etc)
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Old Dec 28th 2011, 2:52 am
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Default Re: 2.2 to 1 Aus to GBP

Originally Posted by rld1177
I had a final discussion re an offer today, as previously posted, 170K base, 20K lump sum for moving costs. Was on 100K GBP in London. Bonus of 5% only which seems low to me for financial work - London would be 10% in a bad year more like 20%.

The company's position was that roughly 160K would be a fair 'conversion' given current exchange rates so the extra 10K plus to moving allowance is 'fair'. Given comments on this thread though 220K sounds like a wash re break even. I was also told they had 'never heard of' the 2.2 ratio and that usually an average exchange rate is used combined with cost of living cals from the country and city you are moving from.

Looking at various cost of living calculators online I am seeing a view that housing in Melbourne vs London is about 30% less with other costs like food being on average a bit to quite a bit higher, with things being about 'the same' over all. Is the 2.2 ratio pretty firm of could an offer in the 170-180K range be OK vs 100K GBP if you avoid some of the more extreme cases where prices are different. (Certain meats for example and some consumer goods seem dramatically more vs London, other aspects seem much more inline)

At this point I am trying to determine if this is effectively a real pay cut all things considered or it it is decent provided I am careful to avoid some of the things that are much higher in cost. (I dont plan to have a car, for example, Id be happy to buy wine in bulk and have it shipped, etc)
However you dress it up it's a pay cut. You will have less disposable income than you had. It's still plenty mind you.
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Old Dec 28th 2011, 2:59 am
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Default Re: 2.2 to 1 Aus to GBP

Yes that is pay cut in real terms. I'm really not sure where the 2.2 came from, over the years regardless of exchange rates 2 to 1 has been accurate as overall wages are about the same in both countries. If you earn 1GBP then you need to earn at least $2 to be on par. The company using the current rate is meaningless.
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Old Dec 28th 2011, 3:16 am
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Default Re: 2.2 to 1 Aus to GBP

There isn't a magic 2.2 number; this number is mentioned a lot as being on average what would provide comparable purchasing power and I believe loosely corelates to a very long run historical average. Some people might think 2 is accurate enough and others think you would need 2.5 is what you would need for comparable purchasing power. There is no exact right anwer.

I thought you were coming from Denver not London? Still if you would pitch yourself around the £100k in London then this is certainly a pay cut and using current exchange rate makes no sense as even a pint of milk would seem very expensive if you did that. Maybe you need to attribute some of the drop to taking a slightly more junior role though (from another thread).

I have only worked for one company since I moved here but they are a big corporate and assume they follow the market, bonuses do seem to be a little lower here than in London financial services. The "target" bonus for the highest salary band in my company is 25% (excl. the top executive who have their own secret salary brackets). The lowest "target" bonus for people in my team who would be qualified or part qualified accountants is 10%. So I find 5% quite low.
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Old Dec 28th 2011, 3:35 am
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Default Re: 2.2 to 1 Aus to GBP

Agreed re the role change and the shift. What seems to be difficult is finding good salary range website - for example (as we discussed on the other thread) is 220K about right for a head of job in a a risk / accounting job while say 170K is about right for someone that reports to one.

I am currently in Denver on assignment (will be a year in January) on my 100K package from London. I'm using the 100K package as a baseline since I know London cost of living well (by way of comp, here I am in a nice one bedroom in the burbs for about 800 USD a month including electric)

The bonus rate is what I was quoted by HR who seemed 'unclear' on the specifics so it is possible it is off. 5% seems way too low to me - in London even our accounting teams that were manager or above were on 10% for average performance to say 20% for people exceeding. I also got the comment that salaries are reviewed in October and it could / should increase then and that the bank is in 'cost review' mode so the offer is at a bad period re new hires. All typical HR of course to get someone in for what they can - no different vs London. I also couldnt get clarity on stock options and stock discounts as I was told that is 'explained' once youa rrive in Oz which seems odd to me.

This board has been really useful - without it I would have assumed a conversion re: the exchange rate and using cost of living calculators gets you to about 170K ish which is why this board is really helpful to show people the reality of the situation.
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Old Dec 28th 2011, 3:38 am
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Default Re: 2.2 to 1 Aus to GBP

i concur. I would much rather be on 100k in London than 170k in melbopurne.

Also check if that 170 figues actually includes or excludes the mandatory 9% superannuation contribution.

Still, 170k is a great wage to live on.
But 100k in the UK IMO would get you further.

also you said you probably wouldnt need a car. But honestly, I would factor in getting a car.
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Old Dec 28th 2011, 3:45 am
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Default Re: 2.2 to 1 Aus to GBP

Originally Posted by rld1177
Agreed re the role change and the shift. What seems to be difficult is finding good salary range website - for example (as we discussed on the other thread) is 220K about right for a head of job in a a risk / accounting job while say 170K is about right for someone that reports to one.
I think that the $220k is in the range, at the light end definitely but at least in the range for a "head of" in accounting. As I have mentioned, I am a "head of", I have six direct reports and of the two more senior ones one is on $180k and the other $160k. One is 35 and the other maybe about 37, which I mention as it gives you an idea of years of PQE. (figures incl super and are Sydney salaries.)

Last edited by Bermudashorts; Dec 28th 2011 at 3:52 am.
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Old Dec 28th 2011, 3:51 am
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Default Re: 2.2 to 1 Aus to GBP

Thanks, that is really useful. I am in that age range myself so it sounds like outside of the job being a step down in level (as noted with the tradeoff / selling point being in an Asian region bank with serious Asia growth ambitions) and assuming pay is similar in Risk (it was in London, generally) then it sounds like it really isn't that far off. Not good enough to move purely for the money but more for the regional experience and knock on wood better growth options in Asia vs the UK / USA these days.

If I can land something like a small one bedroom in the Melbourne CBD for about 2500 a month / 650 a week or so I think I am comfortable with in financially. (That remains to be seen, seem to be a ton of new build options though with a lot of availability - the demand seems to be for houses for families outside of the CBD)
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Old Dec 28th 2011, 4:41 am
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Default Re: 2.2 to 1 Aus to GBP

170k isnt a huge amount and would feel less than 100K GBP in london. Tax here is a lot higher - you need to take a serious look at the taxation element.

Are you moving within the same company? You might want to look at equivalent pay-grade for ranks , our company uses that approach - you are currently on x% of the pay range for grade A, and you are moving to Australia so x% of pay range for grade A is YY$ AUD - thats the offer.

If you get here and are good - you'll find plenty of opportunity to move or be headhunted so Im sure it would settle itself ultimately if they under pay you.

170k sounds a lot to most people but its not unusual in senior professional circles. It will put you close to top 1% of earners according to the salary analysis but that top 1% includes a lot of people on giga-bucks. I would not say that 100K GBP equates to 170K in Aus. I would see that as closer to 220k AUD.

You should throw in the bonus as another Factor to ask for more - try and break the 200k barrier would make life a lot more comfortable.

This is assuming you are talking salary to salary comparison - if your 100k in London includes freebies like bupa or other stuff then you need to net-that out obviously - also check+validate whether the money they're offering you includes Super contributions - those should be on top at 9% at least which is the legal minimum
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Old Dec 28th 2011, 4:51 am
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Default Re: 2.2 to 1 Aus to GBP

Spalan, thanks. Actually you hit the issue for me, it appears to be in the top 1% range yet from what I am reading on this forum people are posting about it being 'difficult to live' on 140K a year. Granted most people here seem to be figuring this with families or as a two person joint income so as a single guy in the mid-30's I am coming at this from a different angle.

I didnt think about the headhunting aspect, good point. I was actually assuming a bonus of around 20% which clears 200K in a years time and gets it more in-line as you note - the 5% comment surprised me but I am going to speak to the hiring manager to see if he can come up with something like 10-20% performance based, at least then I have targets to aim for. I have not had a 5% bonus target for at least 10 years and that would be unheard of in London and the 'bonus culture' of FS.

I think my last issue is to just figure out if I can find some small local to CBD (it in I hope) where I can walk to work flat. I see stuff that looks ok in the new builds in docklands for about 500 a week which would be inline with a decent new build one bedroom in Canary Wharf London which I was used to in the past. Again this board seems pretty limited on advice for someone that is single, mid-30's looking for something smaller in the city with short commute times due to longer working hours so I think I will post a seperate thread on that topic to see what insights I get. (Plenty of insights here if I ever get married and have children, that is for sure!)

Thanks a lot for your advice.
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Old Dec 28th 2011, 5:08 am
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Default Re: 2.2 to 1 Aus to GBP

when we came over it was very hard to get a view of what life was like because there are lots of people getting buy on 50k/100k family etc - thats not relevant as you said.. So you need to filter that out.

Tax is very high and as a single person you wont get any deductions. Make sure you look at the ATO tax calculator.

Ive only been in melbourne docklands on business staying in hotels - it seems ok - seems like London docklands - plenty of bars open late, lots of take-away dining etc, lots of nice areas to run/drink/socialise/shop. They are building a lot of stuff down there. Lots of construction happening but its old enough to be mature residential whilst having lots of new residential being put up too. IVe no idea on expense - I would imagine it is expensive - it certainly looks like expensive property :-)

I lived in bermondsey on the rivre for a while - its posher than that :-)
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Old Dec 28th 2011, 5:23 am
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Default Re: 2.2 to 1 Aus to GBP

Yeah I have heard dockalnds is a decent area to live but a bit bland. The properties do look expensive but there seems to be a lot of supply - it was the same in London, I could either be a 5 minute walk to work in an apartment built a year ago, or or somewhere in zone two with 'good schools' and 'a garden' (I am American so my idea of a yard / garden is quite different) for similar money, plus a commute that was 45 minutes door to door or 2 hours on days with tube or train problems. I found the costs were similar once you backed out train and tube costs. (Again, also being willing to live in a smaller apartment)

I personally would rather be close to work and travel when I decide to, not when I have to. Even here in Denver I do this - 5 minute walk to the office while most Americans do 1 hour commutes in their SUVs through snow etc in the winter all to have a bit more space for the family. (While seeing the family 2 hours less per day!) It sounds like Australian commuting culture is quite similar.
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Old Dec 28th 2011, 5:26 am
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Default Re: 2.2 to 1 Aus to GBP

I read in an earlier post that you wanted to gain Asian (at least time zone) experience. Have you looked at jobs in Singapore or even Shanghai? There was a hell of a lot more happening there than in Australia when I quit a few years ago. Career wise would that be a better move?
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Old Dec 28th 2011, 6:00 am
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Default Re: 2.2 to 1 Aus to GBP

Originally Posted by rld1177

At this point I am trying to determine if this is effectively a real pay cut all things considered or it it is decent provided I am careful to avoid some of the things that are much higher in cost. (I dont plan to have a car, for example, Id be happy to buy wine in bulk and have it shipped, etc)
Just what section of "financial work" are you involved in ?
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Old Dec 28th 2011, 6:06 am
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Default Re: 2.2 to 1 Aus to GBP

Risk actually

Yes I get your point about it being a pay cut and I see it one for one, I was mostly just trying to figure out if there were certain things really out of wack re cost vs London. I have lived in London for about 8 years, Hong Kong for 1, and the rest of the time in a few different USA cities and each area had regional things that were good value in one area and frankly quite expensive in another. (For example coyboy boots, jeans, and certain types of shirts are a great deal here in Denver and I'd pay about 3 times as much for the same jeans in London. On the other hand suits are still good value in Hong Kong and probably 3 times as much for something custom in London. Half of living in a new place is learning what is good value in the area and avoiding the things that are not.) The view here seems to be it will be a solid pay cut no matter how I try to spin it in my head.
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