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Asia's pollution problem is choking off talent

Around 10 per cent of the workforce called in sick during a recent smoggy spell in Delhi

By Katrina Hamlin

HONG KONG (Reuters Breakingviews) - Smog is casting a sickly shadow over Asia. Poisonous air is currently blanketing a large swathe of northern China. New Delhi was choking in October after pollution intensified with fireworks let off to celebrate the annual Diwali festival. The air quality problem is now such that employers will need to factor in a fatter premium in 2017 if they want to attract the best brains in the region's dynamic but dirty markets.

The continent is already home to the world's scummiest skies, and the problem is getting worse. This is a growing headache for companies that want to tap the same economic expansion that is fuelling the smog. A Breakingviews analysis of HSBC's 2016 expat survey shows countries with severe air pollution are much less attractive despite career opportunities.

This could prove expensive for multinationals. The Economist Intelligence Unit and U.S. consultancy firm Mercer — which advise employers on hardship allowances for globetrotting execs say clients are increasingly concerned about costlier compensation for bad air. In hotspots like Beijing where the air quality is already notorious, negotiations over a pollution premium can drive salaries as much as five per cent higher. Where pollution is rising, as in India, haze haggling over remuneration could become an even bigger battle.

Employees will also expect pricy benefits. In China, it is now common to have air filtration systems in both the office and home. In India, companies are providing extras like facemasks  local distributor Nirvana India told Reuters last month that sales were almost 10 times greater than a year earlier.

Then there are the mounting costs of inconvenience and ill health. Around 10 per cent of the workforce called in sick during a recent smoggy spell in Delhi according to one survey by the Associated Chambers of Commerce & Industry of India (Assocham). In Beijing there is a formal system to shut down schools and factories on the dirtiest days; hundreds of flights were also cancelled this week.

Some companies are mulling even more extreme measures — Paytm, the Alibaba-backed digital wallet, is one of several that has considered moving from its base outside Delhi. Assocham fears the pollution issue could threaten billions of dollars of new investment.

Ambitious companies will be loath to let the best brains leave their fastest growing markets, smog or no smog. But if employees have to suck it up, employers will have to pay up.


- Beijing issued a red alert, the highest possible air pollution warning, on Dec. 15. High levels of pollution have continued across northern China since then, and as many as 24 cities had issued similar warnings by Dec. 20, according to China Environmental News.

- Average levels of small pollutants in the atmosphere reached a so-called PM2.5 measure of 72 in South Asia in 2015, according to World Bank data.

- South Asia was the worst affected region, and PM2.5 readings there have been growing steadily worse over the past five years, according to the dataset.

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