Hardship Allowances (and the 7 WORST COUNTRIES for Expats!)

Clickbait-style titles aside, you might be surprised by some of the countries in this video of the “7 Worst Countries in the World for Expats to Live”. However, every destination for an expatriate employee offers some unique challenges. One of the jobs of a mobility program is to weigh the pros and cons of living in a specific place. That said, it can be challenging to accurately assess quality of living and potential hardship for all of your talent hubs. 

According to AIRINC, most hardship calculations involve reviewing the host location for physical threat, discomfort, and inconvenience. The company can use those locational assessments to determine whether a hardship allowance should be a specific benefit for living in that location.

For example, a common hardship element is air quality. There is a recent ranking of air quality by IQAir that shares the rankings from cities around the world. As of this moment in time, the worst cities for air quality include:

1. Dhaka, Bangladesh
2. Phnom Penh, Cambodia
3. Beijing, China
4. Bishkek, Kyrgyzstan
5. Kabul, Afghanistan

Semafor shared recently that in Bangkok (#13 on the worst air quality list), more than 350 schools were closed last week because of air pollution. The Thai capital suffers regularly from smog, but conditions have been the worst since 2020. City authorities even announced free public transport to reduce exhaust fumes and lessen the problem. 

Thai children are not alone in having their education hampered by environmental conditions — the United Nations said 242 million children were affected extreme weather events in 2024, including floods, cyclones, and most commonly heatwaves, with Bangladesh, Cambodia, and the Philippines hit the worst. Almost three-quarters of children affected were in low- and middle-income countries.

Plenty of mobility programs move employees into some of these difficult locations. According to data from Mercer and other global mobility experts, it is likely that a significant majority (around 70-80%) of companies will be paying a hardship allowance to expatriates in 2025. Hardship allowances are becoming a standard benefit for assignments in particularly difficult areas. Companies are becoming increasingly aware of the need to compensate employees for adverse living conditions, using data like the sources in this post to decide which locations should qualify.

AIRINC shares that a location's difficulties may come from a variety of factors – crime, inadequate medical care, climate, traffic, pollution, political instability, and cultural and other living difficulties. They assess the relative difficulty of living in the assignment location compared to the assignee’s home country. If conditions in the assignment locations are significantly more difficult than at home, a location allowance (hardship) payment will be made. The payment is usually determined as percent of salary and can vary from 0 to 30% in 5% increments, up to a maximum salary or home country equivalent. 

Ultimately, hardship allowances can be an incentive for getting your talent on site. They can boost morale and elevate acceptance rates while fulfilling duty of care obligations. If you move talent to “unattractive” locales, it's probably worth it for your program to regularly evaluate your own hardship allowance benefits. Make decisions from a wide variety of sources, because some locations pose “invisible” challenges like air quality.