Hardship premiums are on the rise as fewer and smaller incentives are offered to expatriates, says an ORC Worldwide study.

23 March 2007

AMSTERDAM - Hardship premiums are on the rise as fewer and smaller incentives are offered to expatriates, says an ORC Worldwide study.

The '2006 Worldwide Survey of International Assignment Practices and Policies' is based on the expatriate pay practices followed by almost 900 organisations for their 175,000 assignees.

Pay practices vary between different companies with nearly half using the same percentage of base pay to calculate the hardship premium; one third pay the same cash amount to all assignees, and one fifth pay different percentages based on the individual’s home country.

Assignments to the Middle East have doubled since 2000 with 60 percent of expatriates in that region working in the oil and mining industry. However, employers are not providing incentives and premiums.

 “Over the years, although the majority of organisations continue to use incentives to encourage employees to accept an international assignment – even to favourable host locations – there has been a steady trend to provide fewer and smaller premiums”, explains Geoffrey Latta, executive vice president for ORC’s international compensation practice.
 
The use of hardship premiums for dangerous or difficult locations has increased by 10 percent since 1996, from 64 percent to 74 percent in 2006.

Pay practices vary between different companies with nearly half using the same percentage of base pay to calculate the hardship premium; one third pay the same cash amount to all assignees, and one fifth pay different percentages based on the individual’s home country.

[Copyright Expatica 2007]