Sustainability is the watchword for many organisations when constructing international assignment packages, and assignee benefits present a number of options for making sustainable choices. As transport has such a clearly definable carbon footprint, many companies are starting to look to public transport instead of providing a company car for staff on assignment in major cities. Our latest Benefits for International Assignments policy survey showed that 35% of companies currently provide a public transport allowance to their assignees, with this percentage trending upwards. In qualifying locations, providing a public transport allowance to assignees instead of motoring benefits can be both a cost-effective and sustainable component of an assignment package.
Cost savings
Providing a public transport allowance has financial benefits on top of the positive environmental impact. For example, in Vienna an annual travel pass covering all forms of transport costs just EUR 365 and allows for unlimited travel within the city limits. In contrast, an annual motoring allowance for a mid-level manager in Austria is EUR 17 221; a difference of EUR 16 856. These levels of savings can be seen in locations around the globe; in Beijing a standard annual motoring allowance is CNY 89 551, whereas a public transport allowance that covers 2 journeys per day for the same period is just CNY 2 190 – over 97% cheaper.
In locations such as Vienna, Austria, the EUR 365 annual pass is priced so affordably because of government subsidies. The government’s main aim is to get cars off the road and therefore reduce levels of traffic and harmful emissions – and it’s working. Over 800,000 Viennese residents are signed up for a travel pass, more than the number of cars registered in the city. Public transport in Tallinn, Estonia, has been free for residents since 2013, while Luxembourg made it free nationwide in 2020.
Other governments are following suit: in the summer of 2022 the German government offered travel passes on all regional and urban services for EUR 9 a month. This scheme proved immensely popular and successful. This is because it was introduced at a time when the government was looking for ways to cut emissions, while residents were suffering under the burden of rising fuel costs and seeking alternative methods of travel. Cities around Germany are evaluating ways of re-introducing similar schemes in 2023. Despite the success of these schemes, subsidised public transport does not always lead to the desired results. Public transport has been free in Luxembourg since 2020, yet the country has not seen a reduction in the number of cars on the road. This is because the citizens of Luxembourg are some of the wealthiest in Europe, meaning residents can afford more luxury cars as well as the cost of running them, and are therefore reluctant to give them up.
Lifestyle benefits for assignees
As well as the financial advantages, switching to public transport has lifestyle benefits for assignees. Many of the cities covered by ECA’s public transport data suffer from severe traffic problems, causing many hours of delays for drivers each year. One recent study estimated that London residents spent 156 hours per year stuck in traffic!
Air pollution is now the fourth largest cause of deaths worldwide, directly resulting in an estimated 6 million deaths per year. The importance of reducing air pollution in cities is reflected in the ongoing introduction or enhancement of legislation designed to reduce its impact. In the UK the Mayor of London, Sadiq Khan, recently extended London’s ultra-low emission zone to cover the whole of the capital in an effort to boost air quality. The low-emission zone is designed to encourage the owners of London’s most heavily polluting diesel vehicles to switch to more eco-friendly models of transport. By taking cars off the road, organisations and their employees can help reduce their impact and greatly improve their sustainability, as well as avoiding any potential taxes or charges that may occur as a result of using a vehicle.
The provision of a public transport allowance relies on the efficiency, availability, and safety of the public transport system in a given location. The quality of these is usually heavily dependent on one main factor: investment in infrastructure. As you would expect, high levels of continued investment over a number of years leads to a safe and efficient public transport system. In locations where this has occurred, a public transport allowance is a sustainable and viable feature of an assignment package. Returning to Vienna, in April 2022 a EUR 2.4 billion investment was approved to modernise and upgrade the city’s U-Bahn system. This will continue to ensure efficient transport within Vienna, where nearly all residents are already estimated to be no more than five minutes from a bus or tram stop.
How can ECA’s Transport Reports help you?
ECA's Transport Reports provide everything you need to assess the cost of providing public transport benefits for globally mobile employees, across multiple modes of transport where available in the host location. Our most recent update in November 2022 saw 37 new locations added, taking the overall total to 126 locations in 49 countries. All covered locations are deemed both safe and practical for expatriates wishing to use public transport.
FIND OUT MORE
ECA's Transport Reports provide everything you need to assess the cost of providing cars and public transport benefits for globally mobile employees.
Transport Reports are available as part of an ECA data subscription and include:
- Annual car allowances and new car prices
- Electric car prices and information on charging availability
- Figures for insurance, road tax, drivers, and other motoring costs
- Driving licence and insurance regulations
- Public transport travel-pass costs and individual bus, taxi, and metro fares
- Detailed market practice
Please contact us to speak to a member of our team directly.