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Pollution compensation paid to expats in China

The Japanese electronics company Panasonic has decided to pay its expatriate workers in China compensation for the high levels of pollution in Chinese cities. The payments are described as a ‘premium to compensate for a difficult living environment’. This is possibly the first time this has been done by a large international company.


This measure is likely to be in response to an exodus of expats earlier this year when China experienced what has been termed by the media as an ‘airpocalypse’.  Particularly hazardous air quality levels where recorded earlier this year, in some cases 20 times more than the World Health Organisation (WHO) safe limits.

Air quality in China

Air quality and associated health concerns have been a pressing issue in China for many years now due to the country’s rapid industrialisation.  Most major cities are effected with Beijing in particular being at crisis point at certain times with reported ‘hazardous’ air quality levels earlier this year.  The South China Morning Post has also reported that only 3 out of 74 Chinese cities currently meet national air quality standards.

Air purifiers and face masks are used by many residents in order to try and protect themselves from this toxic air. The PM2.5 component can cause respiratory and cardiovascular problems and therefore is a concern for residents, particularly those with young children.

At times of ‘bad air’, children are often not able to play outside, which deters expat families from living in Chinese cities. In the HSBC Expat Explorer Survey 2013, China received a low score for raising children abroad. China did however score highly for overall expat experience, mainly due to financial factors and the experience of living in China.

How much the air quality affects your daily life depends on where you work. If air filters are provided in your work environment for example, this would reduce the impact.

The Chinese Government has announced plans to try and reduce pollution levels including plans to reduce coal burning activities. China has pledged an objective that 60% of its cities will meet national air quality standards by the year 2020. It is expected that green technology including wind, solar and hydroelectric will be used to achieve this aim.

Hardship Allowances

This ‘pollution compensation’ payment is essentially a form of hardship pay relating to expatriates in Chinese cities. A hardship allowance is usually paid to expats to cope with challenging living conditions and difficulties, stress and frustration which the assignment may cause the assignee and / or his family. It is often used as a tool to encourage expats to move to more challenging locations. In this case, the specific type of hardship is identified which is unusual but may be an increasing trend.

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