As the world continues to recover from Covid-19, Mercer’s annual 2021 Cost of Living survey saw Asia dominating the world’s most expensive city rankings, despite significant shifts.Hong Kong lost top spot –a position it held for the past three years – to Ashgabat, Turkmenistan, now the costliest city for international employees, both in Asia and globally. Tokyo, Japan now ranked fourth was leapfrogged by Beirut, Lebanon which climbed42 positions to third,as a result of a severe and extensive economic depression due to escalation of several crises —the country’s largest financial crisis, COVID-19 and the Port of Beirut explosion in 2020.
More than half of the top 10 most expensive cities are located in Asia. Shanghai and Beijing ranked sixth and ninth respectively, up one place from last year, while Singapore moved from fifth place to seventh.Other cities appearing in the top 10 of Mercer’s most costly cities for international employees are Zurich (5), Geneva (8)and Bern (10).
The survey saw a rise in rankings across all Mainland China cities, buoyed by currency appreciation against the US dollar and a swift recovery from the impact of COVID-19.Most notably, Tianjin and Chengdu climbed12 positions to26thand 28threspectively.Strengthening of the Taiwan dollar saw Taipei jump six places to 22. Currency fluctuations and deflationsaw Southeast Asian cities like Bangkok and Kuala Lumpur drop in rankings. Bangkok (46) dropped 11 places, while Kuala Lumpur (144) dropped 8places. Mumbai (78) is India’s most expensive city but dropped 18 places in this year’s ranking due to a relatively weak Indian rupee in comparison with other cities in the ranking.
Julia Radchenko, Global Mobility Leader, Asia Pacific, said, “Across the region, companies are actively reassessing their talent and mobility strategies in light of the complex challenges brought on by COVID-19. Companies are realising more than ever that they need to diversify their mobility scenarios and related compensation practices. And it is no longer about just geographical mobility, it is about talent mobility which implies lateral moves, distributed workforce, geographical mobility, international remote working, virtual assignments, etc.
“What we’ve seen is that companies are exercising more flexibility to accommodate the different personal situations of employees. Broadly speaking, companies are now more open to International remote working arrangements, allowing employers to perform the same role remotely as they would if they were to relocate. That said, international remote working arrangements bring with it other complexities such as determining the right compensation and whether such arrangements can fully replicate the importance and impact of having someone in a specific market.
Companies re-evaluate global mobility programmes
COVID-19continuesto cause unparalleled disruption to international mobility, prompting companies to re-evaluate how they will manage a mobile work force in a post-pandemic world. Cost of living data,mobility research conducted by Mercer and the learnings from Mercer’s work with clients demonstrates that after several years of organisations’ efforts to modernize mobility strategies, organisations are beginning to implement alternate forms of international assignments and cross-border working arrangements to sustain their overseas operations and work forces.
“Cost of living has always been a factor for international mobility planning, but the pandemic has added a whole new layer of complexity, as well as long-term implications related to health and safety of employees, remote working and flexibility policies, among other considerations,”said Ilya Bonic, Career President and Head of Mercer Strategy. “As organisations rethink their talent and mobility strategies, accurate and transparent data is essential to compensate employees fairly for all types of assignments.”
Mobility is evolving from traditional long-term assignments –i.e.,relocating an employee for a few years then repatriating them to their home location –to other kinds of mobility moves such as short-term assignees, international foreign hires, permanent transferees, commuters, international remote workers and international freelancers.Mercer’s2020 Worldwide Survey of International Assignment Policies and Practices confirmed that many of the companies surveyed are offering more flexible options to accommodate diverse personal circumstances of the assignees.Another 2020/2021Mercer survey found that over 50% of employers surveyed expected changes in terms of the number of one-way transfers, talent development, short-term and commuter assignments in their organisations due to the pandemic1. Mercer’s latest Cost of Living Survey helps employers understand the importance of monitoring currency fluctuations and assessing the inflationary and deflationary pressures on goods, services and accommodation in all operating locations. The data also helps employers determine and maintain compensation packages for employees on international assignments and when working abroad.Additionally, the cost of living in a location can have a significant impact on its attractiveness as a destination for talent, and influences siteselection decisions for organisations expanding and transforming their geographic footprint.
Rankings for Other Regions
Cities in the US have dropped in this year’s ranking mostly due to currency fluctuations between March 2020 and March 2021,despite the rising inflation of goods and services in the country.New York (14) ranked as most expensive city in the US, though it dropped eight positions since last year, followed by Los Angeles (20), San Francisco (25), Honolulu (43) and Chicago (45). Winston Salem(151) remains the least expensive US city surveyed for international employees.San Juan (89) dropped23 positions due to deflation in the second part of 2020 and a very low inflation in the beginning of 2021 hence affecting the position in the ranking.The Canadian dollar has appreciated in value in relation to the USD, triggering jumps in this year’s ranking. Vancouver (93) is the most expensive Canadian city in the ranking, followed by Toronto (98) and Montreal (129). Ranking 156, Ottawa is the least expensive city in Canada.In South America, Port of Spain (91)ranked as the most expensive city, followed by Port-au-Prince (92) and Pointe-à-Pitre (107). Brasilia (205) is the least expensive city in South America.Europe, the Middle East, and Africa Three European cities are among the top 10 list of most expensive locations. Number five in the global ranking, Zurich remains the cost liest European city, followed by Geneva (8)and Bern (10).The strengthening of local currency resulted in several European cities climbing in the ranking, with Paris climbing to 33.Local currency in the United Kingdom remains strong with London (18), Birmingham (121) jumping one and eight places, respectively.The United Arab Emirates continued to diversify its economy, which reduced the impact of the oil industry on GDP. With this ongoing process, there has been negative price movement in both Dubai (42) and Abu Dhabi(56). Beirut is the costliest city in the Middle East for international employees, jumping42 positions to third in the global ranking. N’Djamena (13), Lagos (19) and Libreville (20) are first, second and third costliest cities in Africa for international employees. Lusaka ranked 208is the least costly city in Africa. Pacific Australian cities have climbed in this year’s ranking as the local currency significantly gained value against the USD. Sydney (31), Australia’s most expensive ranked city for international employees, experienced a climb of 35 places, followed by Melbourne (59) with a climb of 40 places.