The Grey Chronicles

2009.March.6

Relative Hardship in Iligan? Epilogue


This is the final part of my previous post on a quest of a suitable figure for Iligan City’s Relative Hardship for 2005. Part I summarized economic, political, and public service conditions. Part II summarized climatic, religious, and safety conditions. Part III summarized health, education and transportation conditions in India and the Philippines.


Recapitulation of Raw Scores was done by adding all the columnar raw scores. Setting India’s Relative Hardship as 40.0, as specified by Coleman (2009), by simple ratio and proportion of the total raw scores, the Philippines’ raw score was converted into a value of Relative Hardship amounting to 34, or six points less than that of India’s.

Comparative Relative Hardship 2005—Recapitulation

Comparative Relative Hardship 2005—Recapitulation

So, some reader might ask: why go all this length? No, it’s not an indication of obsessive/compulsive disorder, but rather the belief that the calculated amount would be more tangible, if not more credible, enough to be used.

Although by someone’s standard, the methodology might be rudimentary or crude, but at least the data used were based on internationally—known indicators: World Bank, International Monetary Fund, World Resources Institute, Transparency International, Freedom House, Social Watch, Human Rights Watch, Crisis Group, the United Nations and its various departments, such as WHO, UNESCO, EFA, UNDP, FAO, and a host of other web sites and resources.

With such extensive search and research of quantifiable and verifiable data as published by these various online entities, it was hoped that the resulting Philippine score of 34 for Relative Hardship would become a benchmark of sorts.


Overview of Relative Hardship Per Criteria

Relative Hardship Per Criteria

Application:

Going back to the first post, a week ago, and with a verifiable Relative Hardship for the Philippines, now found at 34, it would then be possible to solve for the salary of expats received while posted in the Philippines.

Thus, relative hardship of India’s at 40% [for comparison: New York at 10%], and the Philippines at 34%, or roughly the same as for Iligan, expats in the Philippines would qualify for a meager 6% hardship allowance (40% for India less 34% for Manila). In rude terms, the Indian expats are moving to a place 6% easier than before!

Cost of LivingIn 2004 survey on Cost of Living [CoL] index survey by Mercer, however, reveals that Manila CoL Index was 92.97 while Mumbai was 66.80. Meaning in that year, it became apparent that living in Manila is much more expensive than Mumbai. Remember that New York is rated at 100. The overall cost of living in Manila in 2004 is 26.17% more expensive than Mumbai. There were no comparable Cost of Living index surveyed in 2005. Thus, it was assumed for the sake of computations below that the 2004 Cost of Living index is almost similar in 2005.

The average exchange rate US Dollars to Indian Rupees [US$:INR] in 2005, from FXTrade, was at 44.11538, while US Dollars to Philippine Pesos [US$:PhP] is at 55.08438, thus the exchange rate from Philippine Peso [PhP] to Indian Rupee [INR] was about PhP 1.0000 : INR 0.80087.

The computation adopted Coleman’s formula:

Salary in Manila X CoL Diff. X Hardship Premium X Exchange Rate = Salary in India

Thus, CoL Difference: 26.17%; Relative Hardship Premium: 1.06 and US$:INR: 44.11538

$1,000 X 0.2617 X 1.06 X 44.11538 = 12,238 (INR)

Thus, a salary of $1,000 in the Philippines adjusted for the positive difference in cost of living and the positive hardship premium would equate to INR 12,238.

Or equivalent to PhP 15,280!

A question: Why were the lowest paid expats in 2005 received a PhP50,000-salary PLUS an allowance of $1,000 per month, according to hostile sources, while in fact they were having an all-expenses company-paid, no-fuzz, all-frills-fringes-and-perks included while on a “working vacation” in Iligan, spending nothing except for food and personal necessities? In one-year’s time, salaries and allowances accounted, all expats become instant millionaires!

Can the allowances received by expats be considered the net spendable salary? Coleman (2009a) explained:

“The Host Net Spendable Salary is “grossed up” by the amount of tax, social contributions and any other statutory deductions applicable in the host country, to establish the host gross salary that will provide the expatriate with the same standard of living as they had in their home country.”

Do you think this scenario is equitable? Yet, Steven McManus (2008) justifies: consider also the fact that expats and local employees markets are two different things! This was discussed in a previous post. Earlier in July 2008, a post explained some of the obvious or possible reasons why expats earn more than locals.

Oh! Life is sometimes NOT FAIR! Arrghh! Globalization, are you really the cure or a panacea?


Notes:

For interactive links, see also respective sources of data from the previous posts. A consolidated image of this summary is also found here.

Coleman, Steven (2009a). A New Approach to Expatriate Pay in 2009 Online: Online: ArticleBase.com, 10 February 2009. back to text

Coleman, Steven (2009). Expatriate Cost of Living in India for February 2009 Online: EzineArticles.com, 13 February 2009. back to text

McManus, Steven (2008). What Makes Expatriate Pay Different to Local People? Online: ArticleBase.com, 29 March 2008. back to text

Disclaimer: The posts on this site does not necessarily represent any organization’s positions, strategies or opinions; and unless otherwise expressly stated, are licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 Philippines License.

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1 Comment »

  1. This is very hot information. I’ll share it on Digg.

    Comment by Get Your Ex Back — 2009.April.10 @ 01:57 | Reply


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