Panasonic staff earn hazard pay in polluted Chinese cities

Panasonic has confirmed that it is planning to provide staff working in Chinese cities a salary premium to compensate them for the effects of the country's escalating smog crisis.

In a move that further will intensify pressure on the Chinese government to combat the dangerous levels of smog afflicting many of its largest cities, the electronics giant revealed that the threat to health posed by PM 2.5 particles meant that it would undertake a "special review" of pay for those staff sent to Chinese cities.

Like many multinationals, Panasonic already offers hardship premiums to executives asked to relocate overseas, but the move is thought to be the first time a company specifically has linked premium payments to China's smog crisis.

The company refused to divulge how much of a premium staff will be offered or how many people will qualify for the compensation.

However, the move will increase pressure on other multinationals to similarly compensate executives working in China.

It also highlights the extent to which China's economy and its ability to attract and retain top executives is being undermined by the air pollution affecting many of its urban centers.

The government has launched a host of initiatives in recent years to try to curb air pollution and is working on strengthening the country's overarching environmental law, which would give authorities more power to shut down polluting facilities and impose steep fines on businesses that break air pollution rules. A major investment program also has been launched to tackle air and water pollution, after Premier Li Keqiang recently declared "war on pollution."

However, efforts to curb emissions are yet to have a discernable effect, with new figures released during the weekend showing that only three of 74 cities assessed met government air quality standards last year.

Professor Kamel Mellahi of Warwick Business School said Panasonic's move could prove an important precedent.

"Although multinationals have always paid a premium for risks and compensated employees for lower quality living in certain parts of the world, this is the first time a multinational has decided to pay a premium for pollution," he said. "This puts huge pressure on other multinationals to follow suit. Given the high status of Panasonic in China, one expects other multinationals to start introducing something similar.

"The payment makes sense given the dangerously high level of pollution in some urban cities like Beijing and Shanghai. Other multinationals have compensated their employees for a bunch of issues but have not explicitly labeled it as compensation for pollution. They often justify it as adjustment for variations related to occupational health and safety risks. But has Panasonic opened the Pandora's box by introducing this practice?"

This article originally appeared at Business Green. Chinese skyline image by hxdbzxy via Shutterstock.