Mercer’s Cost of Living Survey helps employers navigate
expatriate packages, essential due to uncertainty from
pandemic
New York is the top-ranked city in the United States,
Winston-Salem, NC ranks lowest
In the wake of COVID-19, social and economic disruption has
spurred organizations to reassess their global mobility programs
with a focus on the well-being of their expatriate employees. As
they leverage new working arrangements, changing technology, and
adaptive ways of thinking, they are considering alternate forms of
international assignments in addition to traditional mobility
programs to sustain their overseas operations and workforces.
Despite an appetite to grow and scale globally while navigating
the uncharted waters of a health and economic crisis, reductions in
staff and salaries as well as changes to benefit programs have
challenged overseas expansion strategies. As organizations
re-examine talent portfolios, mobility programs, and remuneration
packages with a keen eye that balances empathy with economics,
accurate and transparent data is essential to compensate fairly for
all types of mobility assignments, taking into account changes
resulting from the current pandemic and subsequent market
volatility.
Mercer’s 26th annual Cost of Living Survey finds that specific
factors such as currency fluctuations, cost inflation for goods and
services, and instability of accommodation prices, are essential to
determining the cost of expatriate packages for employees on
international assignments.
“The COVID-19 pandemic reminds us that sending and keeping
employees on international assignments is a huge responsibility and
a difficult task to manage,” said Ilya Bonic, Career President and
Head of Mercer Strategy. “Rather than bet on a dramatic resurgence
of mobility, organizations should prepare for the redeployment of
their mobile workforces, leading with empathy and understanding
that not all expatriates will be ready or willing to go
abroad.”
In the short-term, preparation for this new approach to global
mobility may involve re-relocating assignees who have been
repatriated. In the medium-term, the priority will be about
realigning the mobile workforce with new economic models centered
on shortened supply chains, more regional moves and a renewed need
to train talent. In addition to these concerns, relevant
information about the cost and location of assignments worldwide
will be a critical factor post-crisis.
Mercer’s 2020 Cost of Living Survey
According to Mercer’s 2020 Cost of Living Survey, Hong Kong tops
the list of most expensive cities for expatriates, followed by
Ashgabat, Turkmenistan in second position. Tokyo and Zurich remain
in third and fourth positions, respectively, whereas Singapore is
in fifth, down two places from last year. New York City ranked
sixth, moving up from ninth place. Mercer’s data was collected in
March; price variances in many locations were not significant due
to the pandemic1.
Other cities appearing in the top 10 of Mercer’s costliest
cities for expatriates are Shanghai (7), Bern (8), Geneva (9), and
Beijing (10). The world’s least expensive cities for expatriates,
according to Mercer’s survey, are Tunis (209), Windhoek (208),
Tashkent and Bishkek, which tied to rank 206.
Mercer's widely recognized survey is one of the world’s most
comprehensive, and is designed to help multinational companies and
governments determine compensation strategies for their expatriate
employees. New York City is used as the base city for all
comparisons and currency movements are measured against the US
dollar. The survey includes over 400 cities throughout the world;
this year’s ranking includes 209 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.
“Border closings, flight interruptions, mandatory confinements,
and other short-term disruptions have affected not only the cost of
goods and services, but also the quality of living of assignees,”
said Mr. Bonic. “Climate change, issues related to environmental
footprint, and health system challenges have pushed multinationals
to consider how a city’s efforts around sustainability can impact
the living conditions for their expatriate workers. Cities with a
strong sustainability focus can greatly improve living standards,
which can in turn improve employee well-being and engagement.”
Properly vetting locations and compensating employees on
international assignments is as important as it can be costly.
Mercer’s survey shows that costs of goods and services shift with
inflation and currency volatility making overseas assignment costs
sometimes greater and sometimes smaller.
“Sudden changes to exchange rates has been mainly driven by the
impact COVID-19 is having on the global economy,” said Vince
Cordova, Partner at Mercer. “This volatility can affect mobile
employees in a variety of ways, from shortages and price
adjustments for goods and services, to supply chain disruptions or
when employees are paid in home country currency and need to
exchange funds into the host country for local purchases.”
The Americas
Mr. Cordova continued, “While the global economic downturn took
hold during the first part of the year, the strength of the dollar
drove up costs for expatriates in US cities. As a result, cities in
the United States have climbed in this year’s ranking of most
costly cities.” New York (6) is the highest-ranked city in the
country followed by San Francisco (16) Los Angeles (17) Honolulu
(28) and Chicago (30). Winston Salem, North Carolina (132) remains
the least expensive US city surveyed for expatriates.
In South America, San Juan (66) ranks as the costliest city,
followed by Port of Spain (73), San Jose (78) and Montevideo (88).
Managua (198) is the least expensive city in South America. Caracas
in Venezuela is excluded from the ranking due to the complex
currency situation; its ranking would have varied greatly depending
on the official exchange rate selected.
The Canadian dollar has appreciated in value, triggering jumps
in this year’s ranking. Up eighteen places from last year,
Vancouver (94) is the most expensive Canadian city in the ranking,
followed by Toronto (98). Ranking 151, Ottawa is the least
expensive city in Canada.
Europe, the Middle East, and Africa
Three European cities are among the top 10 list of most
expensive locations. At number four in the global ranking, Zurich
remains the most costly European city, followed by Bern (8), up
four spots from last year. The next European city in the ranking,
Geneva (9), is up four places from last year.
Despite some low price increases across the region, several
local currencies in Europe have weakened against the US dollar,
pushing many cities down in the ranking. As France and Italy's
economies shrank at the end of 2019, Eurozone growth came close to
zero. Yet, there are no signs of crisis when it comes to inflation
in any of the leading EU countries. The region saw cities like
Paris (50), Milan (47) and Frankfurt (76) drop in this year’s
ranking.
A decision by the United Kingdom to leave the European Union has
not impacted its local currency which remains strong, gaining value
to all major global currencies. London (19), Birmingham
(129) and Belfast (149) jumped four, six, and nine places,
respectively.
The United Arab Emirates continue to diversify the economy,
subsequently reducing the impact of oil industry on GDP. With this
ongoing process, there has been negative price movement in both
Dubai and Abu Dhabi. Just like UEA, Saudi Arabia is seeking to
limit the impact of oil exports and move to a more diversified
economic model. Prices have remained stable over the course of the
last six months; however, with the upcoming value-added tax
increase there is an expectation to see prices change. Tel Aviv
(12) continues to be the most expensive city in the Middle East for
expatriates, followed by Dubai (23), Riyadh (31), and Abu Dhabi
(39). Cairo (126) remains the least expensive city in the region
despite rising forty places.
Ndjamena, Chad (15) is the highest ranked city in Africa while
Tunis (209) in Tunisia ranks as the least expensive city in the
region and globally.
Asia Pacific
Six of the top 10 cities in this year’s ranking are in Asia.
Hong Kong (1) retained its spot as the most expensive city for
expatriates both in Asia and globally due to currency movements
measured against the US dollar and driving up the cost of living
locally. This global financial center is followed by Ashgabat (2)
Tokyo (3) Singapore (5) Shanghai (7) and Beijing (10). Mumbai (60)
is India’s most expensive city while Kolkata (185) is the least
expensive Indian city ranked.
Australian cities have fallen in the ranking this year as the
local currency has depreciated against the US dollar. Sydney (66),
Australia’s most expensive ranked city for expatriates, experienced
a drop of sixteen places. The least expensive city in the region,
Adelaide fell seventeen places to rank 126.
Mercer produces individual cost of living and rental
accommodation cost reports for each city surveyed. For more
information on city rankings, visit https://bit.ly/3c9EzFN. To
purchase copies of individual city reports, visit
https://mobilityexchange.mercer.com/multinational-approach-cost-of-living-data.
Notes for editors
The figures for Mercer’s cost of living and rental accommodation
cost comparisons are derived from a survey conducted in March 2020.
Exchange rates from that time and Mercer’s international basket of
goods and services from its Cost of Living Survey 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 demand for data.
About Mercer
Mercer believes in building brighter futures by redefining the
world of work, reshaping retirement and investment outcomes, and
unlocking real health and well-being. Mercer’s more than 25,000
employees are based in 44 countries and the firm operates in over
130 countries. Mercer is a business of Marsh & McLennan (NYSE:
MMC), the world’s leading professional services firm in the areas
of risk, strategy and people, with 76,000 colleagues and annual
revenue of $17 billion. Through its market-leading businesses
including Marsh, Guy Carpenter and Oliver Wyman, Marsh &
McLennan helps clients navigate an increasingly dynamic and complex
environment. For more information, visit www.mercer.com. Follow
Mercer on Twitter @Mercer.
1 Due to timing of the COVID-19 outbreak, Mercer conducted
further analysis on availability of goods in April and May to
verify pricing.
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version on businesswire.com: https://www.businesswire.com/news/home/20200609005129/en/
Miriam Siscovick +1 206 356 8549
miriam.siscovick@mercer.com
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