How economies effect a foreign teachers salary.

How economies effect a foreign teachers salary

In this article I will discuss how economies effect a foreign teachers salary and I will also touch on why it’s important for you to be aware of it.

Okay, let’s say that you signed a contract early August 2015, you flew out to China by September and you have been teaching and saving your money (for whatever purpose; paying of debts, funding your next trip abroad, saving up for a business venture). Early August 2015, the conversion rate of Chinese RMB to US Dollar was: 1 USD = 6.3 RMB approximately. At this point, you might be saying, what’s the point of all this? Well my friend, you’ll see soon enough.

Now, again let’s assume for the sake of the argument that you are a qualified teacher in your home country and you accepted an offer for 19,000 RMB over a 10 month contract. Now this is the part how economies effect a foreign teachers salary. When you signed up over a year ago, you did your math and calculated you would be getting paid $3K USD per month, giving you a net pay of $30K over a 10 month contract, Great! Fast forward to today, as I am writing this article (6/July/2016, 10:55 AM) RMB hit a record high: 1 USD = 6.959. It’s a record high, that’s great right? NO!

How economies effect a foreign teachers salary.
The graph of Chinese RMB losing value over a period of 12 months.

What this means is that over that period of almost 1 year, the money that you have saved has just lost value be 10%. So, in reality, you didn’t accept a job for $3K per month, you accepted a job that was paying $2.7K per month.

There’s a similar story if you had accepted a job in Malaysia. If you had signed up for a 2 year contract around July/August 2014 where $1 USD = 3 RM (Malaysian Ringgit), you would be surprised to find out for the past year, it has been floating around $1 USD = 4 RM. So last year, all foreign teachers received a 33% pay cut (unless some were lucky enough to renegotiate their salaries).

How economies effect a foreign teachers salary.
The graph of Malaysian RM losing value over a period of 24 months.

So, before you accept your next job offer, consider the state of your target countries economic state and negotiate well accordingly.

One thought on “How economies effect a foreign teachers salary.”

  1. Great insight. This is an important factor to consider when working any profession and getting paid in a foreign currency. One strategy to leverage against the fluctuation of currencies, is to be paid a fixed amount in your home countries currency. Therefore, you would be paid the equivalent on pay day given that days exchange rate.

    For example, if you are paid 1000USD/month and working in China and the rate is 1 USD = 6.3 RMB, then your salary is 6,300RMB. The following month, the rate goes to 1 USD = 6.6 RMB. Based on this contractual arrangement, you are now paid the difference and receive 6,600 RMB. I work in Vietnam and negotiated this in my contract.

    Strategy #2
    Let’s say you are unable to negotiate the strategy listed above. Therefore, you have the same exchange rate for the entire year. Alternatively, you can transfer the amount of money that you save every month to your home country. This will reduce the amount of money lost from fluctuating currencies.

    Definitely an important topic to be aware of. Thanks for sharing.

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