Coke Pays Employees to Breathe China's Air
How much should a person be compensated to breathe China's polluted air? If you're an expatriate employee of Coca-Cola, the answer is a 15 percent bonus, according to a report last week in the Australian Financial Review. (Local Chinese are excluded from the bonus, despite breathing the same air.) Is offering an "environmental hardship allowance" enough for multinational companies in China to retain expatriate employees?
A reasonable person might look at the health risks associated with living in China -- and Beijing, especially -- and conclude that no sane person would take that deal. On some days the air pollution is 25 times worse than what's considered safe in the U.S., deaths from lung cancer have risen 465 percent over the last three decades, and a recent study showed that Beijing residents can expect to spend significant periods of their life infirm. Many Chinese residents have grown so pollution-aware that they check air-quality rating apps before they check the weather when they wake in the morning, and they converse knowledgeably about air purifiers and masks.
Unsurprisingly, expatriates are quietly leaving China's biggest cities, with many blaming the pollution and its effects on their children. Everyone, it seems, knows someone who has moved away. I recently left after almost 12 years in Shanghai, and my own departed acquaintances include a physician, a journalist and an intellectual-property lawyer. For corporate human-resources managers, the pollution issue affects retention and attraction of quality new hires. Who, after all, wants to take a job in a place that the previous holder abandoned because it was harming their kids?
Coca-Cola's bonus is similar to the "hardship differential" pay increases that the U.S. State Department awards to foreign-service officers serving in posts with difficult circumstances, including "notably unhealthful conditions." Officers stationed in parts of Afghanistan, the Central African Republic, Iraq and Libya, for example, earn a top-of-the-chart 35 percent rate. Those stationed in Winnipeg, Canada, get nothing. In China, the rates vary from 0 percent in relatively clean Kunming, to 30 percent in heavily industrial Shenyang and Wuhan (making them equivalent, in hardship-differential terms, to Haiti). And in Shanghai and Beijing, home to most expats (and U.S. foreign-service officers in China), the rates are 10 percent and 15 percent, respectively.
Panasonic also announced in March that it would begin compensating expatriate union employees for the air pollution "problem." Did Panasonic's need for high-quality expatriates trump the risk of damaging relations with local officials sensitive to China's pollution reputation? Or did the company simply notice that large numbers of wealthy Chinese are also anxious to leave China and decide to offer a financial incentive to keep foreign employees?
It's hard to believe that offering a bonus will do much to help companies attract or retain people who weren't already bent on working in China anyway. For those who have been there already, however, and know what it's like to breathe hazardous air on a cold winter day, a 15 percent bonus will probably not be enough.
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Adam Minter at email@example.com