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Location Ratings and Covid-19

In late 2020 I wrote a blog post about the impact of the coronavirus pandemic on expatriates and their location allowances and ended it on a relatively hopeful note - that the newly created Covid-19 vaccines would allow the world to return to some degree of normality by late 2021, and that the heightened location ratings scores that we had witnessed would be reduced. So, has this been reflected in the recently published new set of location ratings and allowances? To a significant extent “yes”. But not completely. 

The Covid-19 vaccination rollout has certainly allowed greater international mobility and fewer domestic restrictions on movement. For example, a significant number of locations that have had successful vaccine rollouts have implemented vaccine certification systems whereby recreation venues can operate at full capacity if customers present proof of having been vaccinated. Similarly, many countries have implemented the same requirements for international travel, eliminating the need for periods of isolation on arrival. For the purposes of location ratings scoring, we have assumed that expatriates will have been vaccinated for Covid-19 in these cases. 

Last year we saw total score increases for just over three quarters of published locations, with just under 10% seeing total score decreases. This trend has been reversed to some degree in 2021. Just over half of our 500 published locations have seen total score decreases this time, mainly in Europe and the Americas where the impact of vaccines has allowed restrictions to be largely, or at least partially, lifted at the time of publication. Many locations are still scored worse than they were before the pandemic, highlighting the fact that the pandemic is very much still with us and its impact is still being felt by expatriates. The emergence of the significantly more transmissible Delta variant earlier in the year is perhaps the main reason why the world is still not quite as open as we were hoping it would be by now.

The Covid-19 situation has improved in some locations. For example, on a Western Europe base even Rome qualified for a location allowance in 2020 due to the level of restrictions in place. However, the recently published 2021-22 scores see Rome and many other locations return to being a non-hardship posting. But will these changes be sustained? At the time of writing restrictions are beginning to return in some European locations, particularly for the unvaccinated, with Covid-19 cases increasing as we enter the winter season. So far though, these restrictions are not at the level seen in late 2020 and this again can be attributed to the impact of the vaccines. It remains to be seen how the situation will develop in the long-term, it is of course possible that the emergence of a vaccine-resistant variant will cause the situation to deteriorate significantly again. 

On the other hand, particularly in some Asian countries such as India, China and Thailand, location ratings scores are still elevated and in some cases have increased even further this year due to pandemic-related restrictions in place. How long such heightened assessments will remain appropriate is difficult to say, though with countries like China having pursued a “Zero-Covid” strategy it is possible that higher scores will stay until the pandemic is considered at an end. However, the emergence of the Delta variant revealed the deficiencies of this strategy and more countries have realised that they will have to live with the virus in the medium- and long-term, leading to a reduction in some of the more extreme measures which have been in place. 

Scoring changes

It is useful at this point to reiterate the aspects of the location ratings scoring methodology where the effects of pandemic-related restrictions have impacted (or not) on location ratings.

 If expatriates are unable to enter and/or leave the host location due to unavailability of international flights or entry bans, then this is reflected in the External Isolation score.

 Where recreational facilities such as cinemas, gyms, museums, children’s activities or theatres are closed due to lockdowns (or have restricted capacity) higher Recreation scores are likely. The scores represent a realistic assessment of the social activities that are unavailable compared to those that can be reasonably continued online, or which can still be reasonably accessed despite capacity limits. As mentioned above, some countries have implemented certification systems which allow events and venues to operate at full capacity providing customers can show evidence of vaccination. We are regarding these events and venues as open and without capacity limits in our recreation scoring. 

There is an element of the Socio-Political Tensions scoring that looks at any restrictions on freedom of movement experienced by expatriates in the host country. If strict and lengthy curfews are currently in force, or if movement between certain regions or cities within a country is significantly restricted, then this is taken into account here.

Finally, Health is among the most significant concerns for an expatriate and their family  even in pre-pandemic times and it is the joint most heavily weighted category for this reason. Health risk scores have not been adjusted for pandemic-related reasons. Partly this is because once an outbreak becomes a pandemic there will, by definition, be a risk of infection in almost every country. Additionally, the link between cases and risk has been disrupted by the availability of vaccines but also each country measures the number of cases and deaths in different ways, making score changes based on international comparisons problematic and potentially misleading. 

In terms of health facilities, those locations where health infrastructure has significantly struggled to cope with the pandemic tend to already score highly for health facilities in their location ratings assessment - this is the case in many Indian cities, for example. While score increases are therefore inappropriate in this case if the quality of the health infrastructure deteriorates for any reason over time then the scoring will reflect this.

What is not covered and why

Some countries still require a period of quarantine when entering the country, regardless of point of origin or vaccination status. Such quarantines can last for just a few days or as much as three weeks. While this is certainly inconvenient for expatriates in such situations this is something that falls outside the scope of location allowances, as it is an immigration-related issue. If expatriates are unable to enter the country due to lack of international flight connections or significant barriers on entry, then this is reflected in the External Isolation assessment. Where quarantines exist, in the home or host location, companies can choose to recognise the costs to assignees and offer support in other ways such as paying for the quarantine accommodation, offering extra annual leave, or allowing home leave trips to be cashed out or carried over.

The new location ratings reflect our understanding of the situation in each location as it stood at the point in mid-November when the scores were set. So, if restrictions were in place earlier in the year, but are no longer in place, then these are not reflected in the new scores. ECA’s Location Ratings take the medium-long term view of a situation into account, so it is inappropriate to carry out ad-hoc updates in response to events with potentially short-term effects, like the imposition of short-term pandemic restrictions. Rather than pay increased location allowances, or other financial compensation, companies should have an effective crisis policy in place. In terms of the current pandemic, this may involve allowing people to work from home or arranging safe transport to and from work and ensuring they have adequate support.

Looking beyond the pandemic

It should be noted that not all score or allowance increases are a result of the pandemic, and some rises may have been countered by non-Covid-19 related changes. There have been coups, military action and violent unrest to name but a few and I will be writing another blog post soon which will look at the impact of these. Furthermore, even significant score increases will not necessarily result in an increased location allowance if that score was only just above a band boundary.

So, will this blog end on a cautiously optimistic note as it did last year? The Covid-19 vaccines have been a hugely positive development, even though this progress was somewhat held back in 2020 by new strains of the virus. This is still a concern going forward and with cases still high in many European countries going into the winter period, it is possible that more restrictions will return there and elsewhere. However, with vaccine-booster programmes in place combined with hopefully higher rollout levels in the developing world, by this time in 2022 more and more countries around the world will be closer to their pre-pandemic scores and we will all be another step closer to normality.

  FIND OUT MORE

We recently ran a webinar looking at how location ratings have been affected by the Covid-19 pandemic - you can sign in and view the recording here

As ever, we remain available to support our clients during the current situation. Please do not hesitate to contact us or your ECA point of contact directly if you would like to discuss any of the above in further detail, or seek our advice regarding how to manage your mobile employees during the pandemic. 

ECA's Location Ratings are delivered through ECA's Location Allowance Calculator which offers a transparent and detailed system for calculating location allowances for expatriates relocating to a new country.

  Please contact us to speak to a member of our team directly.

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