International Expatriate Hardship Premiums and Calculators

Hardship refers to the relative difference an expatriate and their family are likely to experience and the relative impact on their lifestyle when moving between different locations. The hardship ranking system measures the relative quality of living in each location, and assesses the level of difficulty that will be experienced in adapting to each one.

Hardship factors include-:

• Economic Factors: Such as poverty levels and level of service provision
• Political Factors: Such as freedom or tolerance towards different points of view or lifestyle
• Religious Factors: Such as freedom or tolerance towards different religions
• Public Service Factors: Such as provision of water, electricity, sanitation, work permits etc
• Environment or Climate Factors: Such as extreme weather
• Personal Safety Factors: Such as personal safety or level of crime
• Health Factors: Such as prevalence of disease and health standards
• Education Factors: Such as education standards and the prevalence of international schools
• Transportation Factors: Such as prevalence of public transport, fuel and road safety.

In assessing how much to pay an expatriate, it is important to take into account the relative hardship, in terms of quality of living conditions between locations, and assesses the relative level of difficulty that will be experienced in adapting to a new location.

The international expatriate hardship premiums for the Top Ten Cost of Living Country Rankings are listed below:

CODING IS AS FOLLOWS:

4 = Extreme Hardship
3 = High Degree of Hardship
2 = Some Hardship
1 = Minimal Hardship

1. Japan Rated 3: Expatriates typically paid a 30% salary premium

2. Switzerland Rated 1: Expatriates typically paid a 10% salary premium

3. Angola Rated 4: Expatriates typically paid a 40% salary premium

4. China Rated 3: Expatriates typically paid a 30% salary premium

5. Venezuela Rated 4: Expatriates typically paid a 40% salary premium

6. Monaco Rated 1: Expatriates typically paid a 10% salary premium

7. USA Rated 1: Expatriates typically paid a 10% salary premium

8. Bermuda Rated 2: Expatriates typically paid a 20% salary premium

9. United Kingdom Rated 1: Expatriates typically paid a 10% salary premium

10. Norway Rated 1: Expatriates typically paid a 10% salary premium

To help you to determine what you need to earn when you are moving locations there are a variety of factors you need to take into account.

Firstly, what salary are you earning in your current location.

Secondly, what benefits are being offered in the new location – this will determine the basket groups you will need to exclude to determine your package if using one of the salary cost of living calculators.

Thirdly, are you moving to a higher or lower cost of living country, what are the hardship factors that you need to take into account and how will the exchange rate fluctuations affect you.

Fourthly, are you moving for a better salary or work experience. If it is work experience than earning a lower salary would be the compromise you would need to take into account.

The below are examples of the type of calculators that can be used when moving locations:

Salary Purchasing Power Parity (SPPP): The SPPP report calculates how much you need to earn in another location to compensate for a higher cost of living, hardship, and the exchange rate, in order to have the same relative spending power and as a result have a similar standard of living as you have in your current location.

Cost of Living Allowance (COLA): The COLA report calculates how much additional allowance (over and above your current salary) you need to earn in another location to compensate for a higher cost of living, hardship and the exchange rate, in order to have the same relative spending power and as a result have a similar standard of living as you have in your current location.

Cost of Living Index (COLI): The COLI report calculates cost of living indexes for the locations you select using the home location you specify. You can select between one and all host locations. You can choose from any one of the 13 different baskets or you can choose the overall cost of living index for each location.

As an expatriate these are important decisions to make, the incorrect salary allowance could result in a package that does not cover your usual standard of living and the hardship within a country could be higher than you expected it to be. Be aware of the decision and ensure that your salary is the right one for the right job in the right location.