With its spectacular setting at the southern tip of Africa, Cape Town is one of the great cities of the world, very popular as both a tourist and expatriate destination. A relatively low cost of living and multiple attractions add to the allure. There is a “but” of course, and it’s usually related to the chronically high levels of crime in South Africa and the associated security measures that are commonly required for Cape Town residents. It is for this reason that Cape Town tends to yield a location allowance for international assignees posted there.
However, in recent months a new and worrying development is taking some of the shine off Cape Town’s image – the dwindling water supply. Several years of low rainfall and an expanding population have put increasing pressure on water resources, so much so that there is now the real prospect of the water supply being cut off altogether – a potentially catastrophic scenario dubbed “Day Zero”. The predicted date of Day Zero is currently 11 May (but changes frequently) and, should the day arrive, expatriates will not be spared the consequences. Residents are currently being requested to use no more than 50 litres of water a day, seriously impacting on many aspects of life usually taken for granted, especially relating to hygiene and bathing. Unfortunately, many of the water-saving measures taken so far have been unsuccessful and the arrival of Day Zero now seems inevitable. When that happens, residents will need to queue at water collection points to receive their allocation (25 litres per person per day) but there are worries that this system will be open to abuse and could lead to unrest.
We are running a spot survey to find out how organisations with assignees in Cape Town are currently dealing (or planning to deal) with the water supply issue. The survey takes just three minutes to complete and all participants will receive a free copy of the results. If you have Cape Town-based staff and would like to take part, simply click on the image below and submit your answers by Tuesday 13 February. Results will be available at the end of the month.
Effect on location allowances
ECA’s Location Ratings score Cape Town’s utility provision relatively poorly for such a well-developed location, partly owing to infrastructure issues and the power rationing that sometimes takes place. However, the current water crisis represents an escalation of the situation and it is unclear for how long it will persist. Local authorities are hoping that the situation will alleviate within three months of Day Zero, with desalination plants being brought online, the exploitation of ground water resources and the arrival of the wetter winter season. It remains to be seen if this is a realistic scenario. However, ECA’s Location Ratings take the long-term view and location allowance increases are not usually the appropriate answer to short-term crises, with extra money often inadequate to solve the temporary increase in difficulties in any practical way. Administering and deciding when to remove the temporary increase can also be headaches for international HR staff.
Still, companies owe a duty of care to their assignees and there are other, more practical measures which can be taken to help staff on the ground. Take part in our survey to find out what measures organisations are taking to deal with Day Zero and keep track of developments using the local government web resource which provides more information on the crisis, the measures that can be taken and what will happen if and when Day Zero arrives.
Find out more
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. The system recognises that where an employee is coming from as well as going to can affect the level of adaptation required.
Our Consultancy & Advisory service can calculate individual location allowances for you using your chosen home and host locations.