In a rapidly changing world, mobility has become a core component of multinational organisations’ global talent strategy. To support the growing number of international assignees working in an increased number of locations, organisations are focusing on evaluating assignments from a cultural perspective, preparing for regional and lateral moves, and modifying compensation approaches to stay competitive.

As organisations grapple with these challenges, they are working hard to accommodate the needs of their workforce and to support employees’ careers. According to Mercer’s 2017 Global Talent Trends Study, fair and competitive pay as well as opportunities for promotion are top priorities for employees this year – not surprising given the current climate of uncertainty and change.

As a result, multinational organisations are carefully assessing the cost of expatriate packages for their international assignees. Mercer’s 23rd annual Cost of Living Survey finds that factors like instability of housing markets and inflation for goods and services contribute to the overall cost of doing business in today’s global environment.

“Globalisation of the marketplace is well documented with many companies operating in multiple locations around the world and promoting international assignments to enhance the experience of future managers,” said Ilya Bonic, Senior Partner and President of Mercer’s Career business.

“There are numerous personal and organisational advantages for sending employees overseas, whether for long- or short-term assignments, including career development by obtaining global experience, the creation and transfer of skills, and the re-allocation of resources.”

Mercer’s 2017 Cost of Living Survey finds Asian and European cities – particularly Hong Kong (2), Tokyo (3), Zurich (4), and Singapore (5) – top the list of most expensive cities for expatriates. The costliest city, driven by cost of goods and security, is Luanda (1), the capital of Angola. Other cities appearing in the top 10 of Mercer’s costliest cities for expatriates are Seoul (6), Geneva (7), Shanghai (8), New York City (9), and Bern (10).

The world’s least expensive cities for expatriates, according to Mercer’s survey, are Tunis (209), Bishkek (208), and Skopje (206).

Source: Mercer’s 2017 Cost of Living Survey

“While historically mobility, talent management, and rewards have been managed independently of one another, organisations are now using a more holistic approach to enhance their mobility strategies. Compensation is important to be competitive and must be determined appropriately based on the cost of living, currency, and location,” said Mr. Bonic.

See: The Global Workforce Is Increasingly Mobile: Survey Finds

Asia Pacific

Five of the top 10 cities in this year’s ranking are in Asia. Hong Kong (2), which dropped from the top spot, is the most expensive city in Asia as a result of its currency pegged to the US dollar, which drove up the cost of accommodations locally. This global financial center is followed by Tokyo (3), Singapore (5), Seoul (6), and Shanghai (8).

“Commenting on the Mercer 2017 Cost of Living Survey rankings, Mario Ferraro, Global Mobility Leader for Asia, Middle East and Africa (AMEA), Mercer, said, “Although a number of Asian cities remain amongst the world’s most expensive cities, key financial hubs such as Hong Kong and Singapore still continue to attract talent and remain a top choice for relocation. Although this year’s movements were due mainly to currency fluctuations, in particular against the US dollar, we did see cities – such as Mumbai – move up the ranks due to their strengthening economy and growing opportunities.”

Nathalie Constantin-Métral, Principal at Mercer with responsibility for compiling the survey ranking said, “The majority of Chinese cities fell in the ranking due to the weakening of the Chinese yuan against the US dollar. And, the strengthening of the Japanese yen along with the high costs of expatriate consumer goods and a dynamic housing market pushed Japanese cities up in the ranking.”

India’s most expensive city, Mumbai (57), climbed twenty-five 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 (99) and Chennai (135) which rose in the ranking by thirty-one and twenty-three spots, respectively. Bengaluru (166) and Kolkata (184), the least expensive Indian cities, climbed in the ranking as well.

Elsewhere in Asia, Bangkok (67) jumped seven places from last year. Jakarta (88) and Hanoi (100) also rose in the ranking, up five and six places, respectively. Karachi (201) and Bishkek (208) remain the region’s least expensive cities for expatriates.

Australian cities have all experienced further jumps up the global ranking since last year due to the strengthening of the Australian dollar. Sydney (25), Australia’s most expensive city for expatriates, gained seventeen places in the ranking along with Melbourne (46) and Perth (50) which went up twenty-five and nineteen spots, respectively. 

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 over 400 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.

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