FSO Tidbits: Post Hardship Differential and Cost of Living Allowance

In our last post, I talked about some congressional legislation which will close the overseas gap between a Foreign Service Officer (FSO) serving in Washington DC versus one serving in an overseas post. In it, I mentioned briefly about other benefits FSOs receive overseas to make the total package worthwhile. I did some research (i.e. google) and I wanted to discuss two such benefits: Post Hardship Differential and Cost of Living Allowances.
First, according to the State Department website, "Post Hardship Differential is an additional compensation of 5-35% over basic compensation for service at places in foreign areas where conditions of environment differ substantially from conditions of environment in the United States."

To my understanding, an overseas FSO will receive a certain percentage over his/her salary based on the level of "hardship" (think Paraguay versus France) in that particular country. This would obviously vary a lot for the State Department guys because they have more of a chance to work in the Englands, Spains, and Germanys of the world. For USAID people though, this added benefit definitely makes a big difference when the best post that you could hope for is the Dominican Republic, Guatemala, or Brazil.

"That sounds horrible," you say.

Just bear in mind that most people go into USAID for different reasons then the State Department. Personally, I think the job would be much more satisfying because of the richness of these developing countries and people you are helping. Now, understand that this is coming from a Returned Peace Corps Volunteer who lived in a Paraguayan shack without window panes for two years. And no, Brooke and I won't be living in a shack, if I get though "pre-employment."

Secondly, another benefit given to FSOs overseas is the Cost of Living Allowance:

According to the State Department website, "cost-of-living allowance is intended to reimburse for goods and services more expensive than in Washington , D.C. "

This is simple economics. The cost of goods and services vary from country to country due to inflation, the exchange rate, and other factors such as supply/demand, transportation costs, and infrastructure. A FSO will receive a percentage more - over their salary - in countries where the cost of goods and services are greater than their respective costs in the U.S. Obviously, this doesn't factor as much for the USAID guys as it does for the Department of State FSOs.

For example, if you are serving in an embassy in Paris then your cost of living will be much higher than it would be in the United States, especially considering the value of the Euro versus the Dollar. On the other hand, although an USAID FSO serving in Costa Rica would still find food costs to be higher than in the United States (Brooke & I know about that!), the exchange rate, housing, and overall Cost of Living would not be as severe as France. To demonstrate to you how the State Department calculates this, the Cost of Living Allowance for Paris is 70%(!) more while it is only 10% more for Costa Rica. The reality being that -generally - developing countries are LESS expensive to live in than the United States, so many of the developing countries have no added living allowance for this reason. Of course, there are some exceptions to this rule. Lucky for the USAID guys is that there isn't any "reverse" Cost of Living adjustment which would force you to return money. That would really suck.
Here are some other examples of USAID countries below. Remember that all of these percentages are cumulative, so the totals will be added together. The first number is Cost of Living Allowance, the second number is Post Hardship Differential, and the third number is Danger Pay-another type of allowance.

Kenya -----------------5%--------- 30%------- 0%
Pakistan-------------- 0%--------- 30%------- 35%
Iraq------------------- 0%---------- 35%------- 35%
India------------------ 5%--------- 15-25%- --- 0%
DR Congo------------ 42%--------- 25%----- --- 0%
Bosnia---------------- 5%---------- 20%-------- 0%
El Salvador ----------5%---------- 15%--------- 0%
Mali------------------ 25%--------- 25%--------- 0%
Indonesia------------ 0%---------- 30%-------- 0%
Philippines ----------0%---------- 20%-------- 0%
Costa Rica ----------10%----------- 0%--------- 0%
China-------------- 5-30%--------10-30%------- 0%
Afghanistan ---------0%-----------35%---------35%
Bolivia----------------0%-----------20%---------0%
Burundi--------------20%----------25%---------20%
Colombia-------------5%------------5%---------15%
Jordan----------------15%-----------5%---------15%
Vietnam---------------5%----------25%----------0%
Kazakhstan-----------5%----------25%----------0%
London---------------42%----------0%-----------0%-----not a USAID Site
Paris------------------70%----------0%-----------0%---- not a USAID Site
Rio--------------------42%---------10%-----------0%---- not a USAID Site
Papua New Guinea -30%---------25%-----------0%


If you want to check out other countries click here