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U.S. Department of State January 2000 Quarterly Report Indexes of Living Costs Abroad, Quarters Allowances, Hardship Differentials, and Technical Notes

Introduction This report contains the U.S. Department of State indexes of living costs abroad, quarters allowances, hardship differentials, and danger pay allowances. The statistics are computed by the Office of Allowances of the Department of State for use in establishing allowances to compensate U.S. Government civilian employees for costs and hardships related to assignments abroad. This information is also used by many business firms and other private organizations to assist in establishing private compensation systems. The data are published quarterly in January, April, July, and October. Please note that the Office of Allowances has implemented a new procedure for publishing the latest index information in its quarterly reports. Starting in the year 2000, reports for April, July and October will contain only the indexes for those locations that have changed since the previous report. Indexes for all locations required to report will continue to appear in the January editions of this publication. Detailed explanations of the methods of compiling the local and U.S. Government indexes, quarters allowances, hardship differentials, and danger pay allowances are included in the Technical Notes sections of the January, April, and July publications. It is important that allowance data users be thoroughly familiar with the methods used in compiling these statistics and their limitations. The data are compiled primarily to establish allowances for Federal civilian employees abroad, and the government allowance program includes additional relocation benefits which are described in the Technical Notes section of the October publication Indexes of Living Costs Abroad The indexes of living costs (Table 1) are used to compute cost-of-living allowances for employees at posts where living costs, based on an American pattern of living, are significantly higher than in the Washington, D.C. area. To compute a cost-of-living allowance, the appropriate index of living costs is applied to spendable income the estimated portion of employee salary used to purchase goods and services. The cost-of-living allowance is a goods and services allowance. It does not cover U.S. or foreign income taxes, retirement contributions, life insurance premiums, personal savings, investments or charitable contributions. In addition, it does not cover housing and children's education, which are covered by separate allowances. The indexes of living costs abroad compare the costs in dollars of representative goods and services (excluding housing and education) purchased at the foreign location and the cost of comparable goods and services in the Washington, D.C. area. The indexes are calculated on the basis of price data reported by foreign posts using a standard Retail Price Schedule and data similarly reported by the Bureau of Labor Statistics of the U.S. Department of Labor for the Washington, D.C. area. In addition to the indexes used to establish post (cost-of-living) allowances for U.S. Government employees, separate indexes are computed solely for private Americans living abroad. The indexes computed for private American employees - the local relative and local index--exclude special advantages that may be available only to U.S. Government employees. The U.S. Government relative and the U.S. Government index must include prices of goods imported to posts, sales tax rebates, military or employee operated post commissaries, and the advantages that may be available only to U.S. Government employees. The indexes are published for all locations for which reliable indexes are computed regularly. The indexes are place-to-place comparisons at specific times and currency exchange rates. They cannot be used for measuring cost changes over time at a foreign location. Also, the indexes should not be used to compare living costs of Americans in the United States with the living costs of foreign nationals living in their own country, since the indexes reflect only the expenditure pattern and living costs of American families. Quarters Allowances The quarters allowances (Table 2) are the maximum allowances payable to U.S. Government employees to cover housing costs at the foreign location. Employees recruited in the United States to work abroad for the U.S. Government may receive either free government housing or an allowance to substantially cover the cost of privately rented housing. The allowance payable to a Federal civilian employee is either the amount of actual housing costs or the maximum allowance, whichever is less. The quarters allowance reimburses Federal employees for rent; electricity, gas, fuel, and water; taxes and insurance premiums required by local law or custom to be paid by the tenant; and the agent's fee incurred by the landlord and required by law or custom to be paid by the tenant as a condition of obtaining a lease. The allowance may also be used to cover some of the costs for garage rent and necessary furniture rental. Quarters allowances are established on the basis of annual expenditure reports submitted by all U.S. Government civilian employees in private housing abroad. Maximum allowances are established for employees of various Federal grade levels and family sizes. For publication purposes, approximate salary levels for each Federal grade level are indicated in Table 2. The family rate shown in the table is for an employee with one family member. The additional amounts for larger families are described in footnote 4 to Table 2. The quarters data are published for selected locations. The allowance rates established at the time of the annual survey are designed to fully reimburse approximately 80 percent of the employees in the sample for all allowable rent and household utility expenditures. Post (Hardship) Differentials Post differentials (Table 3) are provided to Federal employees, recruited in the United States, as foreign area recruitment and retention incentives. A differential is established where living conditions for U.S.G. employees are extraordinarily difficult, physical hardships are excessive, or living conditions are notably unhealthful. The differential rate for each location is based primarily on a standard evaluation of environmental conditions as reported in the Post Differential Questionnaire. The overall rating results from an examination of 150 specific environmental factors, weighted for their relative importance. Depending on the total hardship rating, employees are paid post differentials of 5, 10, 15, 20, or 25 percent of base salary. The maximum amount that Federal employees can currently receive as combined annual base salary and hardship differential is $136,700. Any post differential paid Federal employees is subject to Federal income tax. Danger Pay Allowances A danger pay allowance may be paid Federal civilian employees where civil insurrection, civil war, terrorism, or wartime conditions threaten physical harm or pose imminent danger to the health or well-being of the employee. Locations authorized danger pay allowances are identified by footnotes in Table 3. Conditions that may warrant a danger pay determination are reported in the Danger Pay Factors Form. Depending upon the level of danger, levels of 15, 20, and 25 percent of base salary are authorized. Danger pay allowances may be paid to employees on temporary detail at a danger pay location for at least 4 consecutive hours. The danger pay allowance paid to Federal employees is subject to Federal income tax. Technical Information Technical notes in this publication describe the compensation of American Government employees in foreign areas. The notes also explain how the indexes of living costs abroad may be used to adjust a U.S. salary level for higher living costs abroad. Technical questions may be directed to the Office of Allowances, SA-1, Room H426, U.S. Department of State, Washington, D.C. 20522 (202-663-1121). Quarterly Reports | Office of Allowances | Department of State | Secretary of State