Mercer’s 21st annual Cost of Living Survey finds African, Asian,
and European cities dominating the list of most expensive locations
for employees working abroad
New York is the top-ranked city in the United States,
Winston-Salem, NC ranks lowest
Just as foreign exchange costs create headwinds for many
multinational organizations, currency fluctuations – driven by
economic and political unrest – are contributing to the cost of
expatriate packages for those on the front line of globalization of
their organizations. Mercer’s 21st annual Cost of Living Survey
finds that factors including instability of housing markets and
inflation for goods and services impacts significantly the overall
cost of doing business in a global environment.
“As the global economy has become increasingly interconnected,
close to 75% of multinational organizations are expecting long-term
expatriate assignments to remain stable or increase over the next
two years to address business needs,” said Ilya Bonic, Senior
Partner and President of Mercer’s Talent business. “Sending
employees abroad is necessary to compete in markets and for
critical talent, and employers need a reliable and accurate
reflection of the cost to their bottom line.”
According to Mercer’s 2015 Cost of Living Survey, Asian and
European cities – particularly Hong Kong (2), Zurich (3), Singapore
(4), and Geneva (5) – top the list of most expensive cities for
expatriates. The costliest city for the third consecutive year is
Luanda (1), the capital of Angola. Despite being recognized as a
relatively inexpensive city, the cost of imported goods and safe
living conditions in this country are available at a steep
price.
Other cities appearing in the top 10 of Mercer’s costliest
cities for expatriates are Shanghai (6), Beijing (7), and Seoul (8)
in Asia; Bern (9); and N’Djamena (10). The world’s least expensive
cities for expatriates, according to Mercer’s survey, are Bishkek
(207), Windhoek (206), and Karachi (205).
Mercer's authoritative survey is one of the world’s most
comprehensive, and is designed to help multinational companies and
governments determine compensation allowances for their expatriate
employees. New York is used as the base city, and all cities are
compared against it. Currency movements are measured against the US
dollar.
The survey includes 207 cities across five continents and
measures the comparative cost of more than 200 items in each
location, including housing, transportation, food, clothing,
household goods, and entertainment.
“Aligning workforce and mobility strategies by ensuring the
right employees are in the right places is more critical than ever
to manage globalization,” said Mr. Bonic. “Properly compensating
employees on international assignments is as important as it is
costly.”
According to Mr. Bonic, this is especially important for
emerging mobility programs with smaller pools of candidates and
higher business needs for sending employees on international
assignments. It is essential that these organizations have accurate
and transparent data as they consider how to compensate fairly and
in line with market demands.
The Americas
Cities in the United States climbed dramatically in the cost of
living ranking due to the strengthening of the US dollar against
other major currencies. While New York (16), the highest-ranked
city in the region, remained the same as last year, cities on the
West Coast, including Los Angeles (36) and Seattle (106) climbed 26
and 47 places, respectively. Among other major US cities, Chicago
(42) moved up 43 places, Washington, DC (50) moved up 42 places,
Honolulu (52) moved up 45 places, and Houston (92) moved up 51
places. Cleveland (133) and Winston Salem (157) were among the less
expensive cities in the US surveyed for expatriates.
Steve Nurney, Partner and Mercer’s North America Global Mobility
business leader, said, “The sweeping rise in the rankings of US
cities this year is due unquestionably to the strength of the US
dollar compared to the other currencies around the world.”
In South America, Buenos Aires (19) climbed 67 places to rank as
the costliest city this year due to a strong price increase for
goods and services. The Argentina capital and financial hub is
followed by São Paolo (40) and Rio de Janeiro (67). Other cities in
South America that rose on the list of costliest cities for
expatriates include Santiago (70) and Managua (199). Caracas in
Venezuela has been excluded from the ranking due to the complex
currency situation; its ranking would have varied greatly depending
on the official exchange rate selected.
Canadian cities dropped in this year’s ranking with the
country’s highest-ranked city, Vancouver (119), falling 23 places.
Toronto (126) dropped 25 spots, while Montreal (140) and Calgary
(146) fell 17 and 21 spots, respectively. “The Canadian dollar
continues to weaken against the US dollar, triggering major slips
in this year’s ranking,” explained Mr. Nurney.
Europe, the Middle East, and Africa
Three European cities exist in the list of top 10 most expensive
cities for expatriates. Zurich (3), the most costly European city,
is followed by Geneva (5) and Bern (9). Switzerland remains one of
the most expensive locations for expatriates due to the surge of
the Swiss franc against the EUR. Moscow (50) and St. Petersburg
(152) dropped 41 and 117 spots, respectively, as a result of
Russia’s ruble losing significant value against the US dollar,
lower oil prices, and a lack of confidence in the currency
following Western sanctions over the crisis in Ukraine.
Aside from cities in the United Kingdom, Western European cities
dropped in the rankings mainly due to the weakening of local
currencies against the US dollar. While London (12) remained
steady, Aberdeen (82) and Birmingham (80) rose in the ranking.
Paris (46), Vienna (56), and Rome (59) fell in the ranking by 19,
24, and 28 spots, respectively. The German cities of Munich (87),
Frankfurt (98), and Berlin (106) dropped significantly as did
Dusseldorf (114) and Hamburg (124).
“Despite moderate price increases in most of the European
cities, European currencies have weakened against the US dollar
which pushed most Western European cities down in the ranking,”
explained Nathalie Constantin-Métral, Principal at Mercer with
responsibility for compiling the survey ranking. “Additionally,
other factors like the Eurozone’s economy, falling interest rates,
and increasing unemployment have impacted these cities.”
As a result of local currencies depreciating against the US
dollar, most cities in Eastern and Central Europe fell in the
ranking, as well. Prague (142), Budapest (170), and Minsk (200)
dropped 50, 35, and 9 spots, respectively, despite stable
accommodations in these locations.
Tel Aviv (18) continues to be the most expensive city in the
Middle East for expatriates, followed by Dubai (23), Abu Dhabi
(33), and Beirut (44), which have all climbed in this year’s
ranking. Jeddah (151) continues to be the least expensive city in
the region despite rising 24 places. “Many currencies in the Middle
East are pegged to the US dollar, which pushed the cities up in the
ranking. Steep increase for expatriate rental accommodations
particularly in Abu Dhabi and Dubai also contributed to the
increase of the cities in the ranking,” said Ms.
Constantin-Métral.
Several cities in Africa continue to rank among the most
expensive, reflecting high living costs and high prices of goods
for expatriates. Luanda (1) remains the most costly city in Africa
and globally, followed by N’Djamena (10), Victoria (17), and
Libreville (30). Despite climbing 5 spots, Cape Town (200) in South
Africa continues to rank as the least expensive city in the region
reflecting the weak South African rand against the US dollar.
Asia Pacific
Five of the top 10 cities in this year’s ranking are in Asia.
Hong Kong (2) is the most expensive city as a result of its
currency pegged to the US dollar and driving up the cost of living
locally. This global financial center is followed by Singapore (4),
Shanghai (6), Beijing (7), and Seoul (8) – all climbing in the
ranking with the exception of Singapore which remained steady.
Tokyo (11) dropped four places.
“Japanese cities have continued to drop in the ranking this year
as a result of the Japanese yen weakening against the US dollar,”
said Ms. Constantin-Métral. “However, Chinese cities jumped in the
ranking due to the strengthening of the Chinese yuan along with the
high costs of expatriate consumer goods.”
Australian cities have continued to fall in the ranking due to
the depreciation of the local currency against the US dollar.
Sydney (31), Australia’s most expensive city for expatriates
dropped 5 places in the ranking along with Melbourne (47) and Perth
(48) which fell 14 and 11 spots, respectively.
India’s most expensive city, Mumbai (74), climbed 66 places in
the ranking due to its rapid economic growth, inflation on the
goods and services basket, and a stable currency against the US
dollar. This most populous city in India is followed by New Delhi
(132) and Chennai (157) which rose in the ranking by 25 and 28
spots, respectively. Bangalore (183) and Kolkata (193), the least
expensive Indian cities, climbed in the ranking, as well.
Elsewhere in Asia, Bangkok (45) jumped 43 places from last year.
Hanoi (86) and Jakarta (99) also rose in the ranking, up 45 and 20
places, respectively. Karachi (205) and Bishkek (207) remain the
region’s least expensive cities for expatriates.
Mercer produces individual cost of living and rental
accommodation cost reports for each city surveyed. For more
information on city rankings, visit www.mercer.com/col. To purchase
copies of individual city reports, visit
https://www.imercer.com/products/cost-of-living.aspx or call Mercer
Client Services in Warsaw on +48 22 434 5383.
Notes for editors
Multinational expatriate assignment data in Mr. Bonic’s quote is
derived from early findings in Mercer’s 2015 Worldwide
International Assignment Policies and Practices Survey due to be
released in full in September 2015.
The list of rankings is provided to journalists for reference
and should not be published in full. The top 10 and bottom 10
cities may be reproduced in a table.
The figures for Mercer’s cost of living and rental accommodation
costs comparisons are derived from a survey conducted in March
2015. Exchange rates from that time and Mercer’s international
basket of goods and services
have been used as base measurements.
Governments and major companies use data from this survey to
protect the purchasing power of their employees when transferred
abroad; rental accommodation costs data is used to assess local
expatriate housing allowances. The choice of cities surveyed is
based on the demand for data.
About Mercer
Mercer is a global consulting leader in health, wealth and
careers. Mercer helps clients around the world advance the health,
wealth and performance of their most vital asset – their people.
Mercer’s more than 20,000 employees are based in more than 40
countries and the firm operates in over 130 countries. Mercer is a
wholly owned subsidiary of Marsh & McLennan Companies
(NYSE:MMC), a global professional services firm offering clients
advice and solutions in the areas of risk, strategy and people.
With 57,000 employees worldwide and annual revenue exceeding $13
billion, Marsh & McLennan Companies is also the parent company
of Marsh, a leader in insurance broking and risk management; Guy
Carpenter, a leader in providing risk and reinsurance intermediary
services; and Oliver Wyman, a leader in management consulting. For
more information, visit www.mercer.com. Follow Mercer on Twitter
@Mercer.
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8549miriam.siscovick@mercer.com
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