Panasonic First Multinational Company To Pay Air Pollution Hardship For Overseas Workers In China

CREDIT: AP/Andy Wong

A Chinese woman wears a mask as she walks past the capital city skylines shrouded by pollution haze in Beijing Monday, March 3, 2014.

Hardship pay has taken on new meaning for foreign workers in China. On Thursday, Japanese-based Panasonic became the first international company to openly state that it will pay employees in China a wage premium to compensate the hazardous air pollution levels there.

The move came during Japan’s annual labor talks, which otherwise focused on preventing an economic slowdown and boosting workers’ wages. A Panasonic document from the labor talks reads “as for the premium for expatriates to compensate for a different living environment, the company will have a special review for those sent to Chinese cities.”

Throughout the winter, Chinese cities like Beijing and Shanghai have been suffering severe pollution bouts unheard of in most other cities — causing flight delays, school closings and widespread public concern. The government has been making large strides to try and assuage the worries of both Chinese citizens and foreign workers — including top executives and other senior staff — that they are doing all they can to clear the air and make the atmosphere more inviting.

“We will declare war on pollution and fight it with the same determination we battled poverty,” China’s premier Li Keqiang said at the opening of China’s Parliament last week in an occasion similar to the annual State of the Union speech in the U.S.

Even before China declared a war on pollution, Panasonic generally paid employees posted in China a premium for working in a “hardship posting,” which was not uncommon for other companies to do as well. However, announcing remuneration specifically for polluted air sets a new precedent for multinational companies operating in China.

“This puts huge pressure on other multinationals to follow suit,” Professor Kamel Mellahi from the Warwick Business School in the U.K. told the International Business Times. “Given the high status of Panasonic in China, one expects other multinationals to start introducing something similar.”

With pollution monitors in Beijing hitting PM 2.5 readings 10 to 15 times the maximum recommended allowance by the World Health Organization, apprehension over working in China is not surprising. PM 2.5 particles are particulate matter that is 2.5 micrometers in diameter or smaller, and they can penetrate the lungs and cause premature death. PM 2.5 particles come from vehicle emissions and other operations that involve burning fossil fuels, such as coal-fired power plants and heavy industry that ring many large Chinese cities as they’ve rapidly industrialized.

“That’s the first time I’ve heard any company be quite so brazen about it,” Robert Parkinson, head of Beijing-based recruiter RMG Selection, told the Financial Times. “It’s a bit like saying we know we are exposing you to something that could be life-threatening. We’re going to admit it and compensate you for it.”