2015 Cost of Living Survey l Mercer

2015 Cost of Living Survey l Mercer

New Cost of Living research: Weaker Aussie dollar = competitive advantage for global talent

  • 17 June 2015
  • Australia, Melbourne

 

  • Stronger USD against AUD pushes Aussie cities down Mercer’s Cost of Living Index: Improving global competitiveness for key talent

  • African, Asian, and European cities dominate most expensive locations for employees working abroad

 

Mercer’s 21st annual Cost of Living Survey, released today, highlights that currency movements can significantly impact the overall cost of doing business in a global environment.  More specifically, a weakening Aussie dollar can create an advantage for Australian organisations competing for global talent.

Just as foreign exchange costs create headwinds for many multinational organizations, currency fluctuations are contributing to the cost of expatriate packages for those on the front line of globalization of their organizations.

Mercer’s 2015 Cost of Living Survey saw all Australian cities fall in the rankings due to the depreciation of the local currency against the US dollar. Sydney (31), Australia’s most expensive city for expatriates dropped five places. Melbourne (47) fell 14 places, Perth (48) fell 11 places, Canberra (65) fell 12 spots, Brisbane (66) dropped 14 spots and Adelaide (71) fell 12 places.

Mercer’s Global Mobility Practice Leader, Lorraine Jennings, said, “Movement in the Aussie dollar can create a competitive advantage for Australian organisations in terms of attracting key global talent.  Falling down the rankings of the most expensive cities to send your workforce to is actually great news for Australian employers!”

“A stronger US dollar against the Aussie dollar means it is more cost effective for multinational companies to send key talent to our shores than many other parts of the world, particularly many Asian countries,” she said.

“International compensation is an increasing concern for many multinational companies operating in a variety of economic, social and political contexts.

“Currencies inevitably fluctuate, however the RBA continues to flag factors that suggest the Australian currency may well continue to weaken.  Multinational organisations based in Australia can use this information to plan their global workforce and attract global talent that will add value and productivity to their business,” Ms Jennings said.

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 in Switzerland (9); and N’Djamena in Chad (10). The world’s least expensive cities for expatriates, according to Mercer’s survey, are Bishkek in Kyrgyzstan (207), Windhoek in Namibia (206), and Karachi in Pakistan (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.

“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.” 

“Aligning workforce and mobility strategies by ensuring the right employees are in the right places, is more critical than ever to manage globalization. Properly compensating employees on international assignments is as important as it is costly,” said Mr. Bonic

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.

 

Region Summaries:

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.

Ms Jennings said, “Japanese cities have continued to drop in the ranking this year as a result of the Japanese yen weakening against the US dollar.  However, Chinese cities jumped in the ranking due to the strengthening of the Chinese yuan along with the high costs of expatriate consumer goods.”

New Zealand cities, Auckland and Wellington, both dropped in the rankings, three and four places respectively.  Similar to Australian cities, this was driven by a strengthening USD against the NZD.

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.

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.

Nathalie Constantin-Métral, Principal at Mercer with responsibility for compiling the survey ranking, 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 Ms. Constantin-Métral.

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 Ms. Constantin-Métral. “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.

  1. 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.
     

 

Mercer Cost of Living Survey – Worldwide Rankings 2015
(Mercer international basket, including rental accommodation costs)
Rank as of March
City
Country
2014
2015
1
1
Luanda Angola
3
2
Hong Kong Hong Kong
5
3
Zurich Switzerland
4
4
Singapore Singapore
6
5
Geneva Switzerland
10
6
Shanghai China
11
7
Beijing China
14
8
Seoul South Korea
8
9
Bern Switzerland
2
10
N'Djamena Chad
7
11
Tokyo Japan
12
12
London United Kingdom
20
13
Kinshasa Congo, Democratic Republic of 
17
14
Shenzhen China
24
15
Guangzhou China
16
16
New York City United States
13
17
Victoria Seychelles
18
18
Tel Aviv Israel
86
19
Buenos Aires Argentina
25
20
Lagos Nigeria
54
21
Shenyang China
34
22
Conakry Guinea
67
23
Dubai United Arab Emirates
15
24
Copenhagen Denmark
48
24
Qingdao China
47
26
Nanjing China
50
27
Tianjin China
66
28
Yangon Myanmar
71
29
Chengdu China
19
30
Libreville Gabon
26
31
Sydney Australia
23
32
Osaka Japan
68
33
Abu Dhabi United Arab Emirates
46
33
Baku Azerbaijan
36
35
Abuja Nigeria
62
36
Los Angeles United States
74
37
San Francisco United States
20
38
Oslo Norway
22
39
Noumea New Caledonia
49
40
Sao Paulo Brazil
61
41
Taipei Taiwan
85
42
Chicago United States
28
42
Brazzaville Congo, Republic of
63
44
Beirut Lebanon
88
45
Bangkok Thailand
27
46
Paris France
33
47
Melbourne Australia
37
48
Perth Australia
51
49
Dublin Ireland
92
50
Washington, D.C. United States
9
50
Moscow Russia
97
52
Honolulu United States
30
53
Milan Italy
103
54
Amman Jordan
101
55
Djibouti Djibouti
32
56
Vienna Austria
98
56
Miami United States
43
58
Abidjan Côte d'Ivoire
31
59
Rome Italy
44
60
Yaounde Cameroon
58
61
Auckland New Zealand
128
62
Accra Ghana
117
63
Dhaka Bangladesh
109
64
Boston United States
53
65
Canberra Australia
52
66
Brisbane Australia
42
67
Helsinki Finland
65
67
Rio de Janeiro Brazil
39
69
Amsterdam Netherlands
88
70
Santiago Chile
59
71
Adelaide Australia
111
71
Riyadh Saudi Arabia
81
71
White Plains United States
140
74
Mumbai India
125
75
Manila Philippines
149
76
Port of Spain Trinidad and Tobago
125
77
Dallas United States
44
78
Douala Cameroon
81
79
Bandar Seri Begawan Brunei
40
80
Nagoya Japan
90
80
Birmingham United Kingdom
94
82
Aberdeen United Kingdom
40
83
Dakar Senegal
79
83
Wellington New Zealand
114
83
Montevideo Uruguay
131
86
Hanoi Vietnam
55
87
Munich Germany
132
88
Morristown United States
139
89
San Juan Puerto Rico
135
90
Ho Chi Minh City Vietnam
150
91
Manama Bahrain
143
92
Houston United States
122
93
Maputo Mozambique
111
94
Almaty Kazakhstan
56
94
Luxembourg Luxembourg
81
96
Port-au-Prince Haiti
146
97
Kigali Rwanda
59
98
Frankfurt Germany
135
99
Istanbul Turkey
158
99
Doha Qatar
119
99
Jakarta Indonesia
56
102
Brussels Belgium
147
103
Atlanta United States
145
104
Panama City Panama
117
104
Nairobi Kenya
68
106
Berlin Germany
153
106
Seattle United States
38
106
Stockholm Sweden
108
109
Glasgow United Kingdom
132
110
San Jose Costa Rica
75
111
Riga Latvia
70
111
Pointe-a-Pitre Guadeloupe
115
113
Kuala Lumpur Malaysia
73
114
Dusseldorf Germany
156
115
Minneapolis United States
63
115
Madrid Spain
168
117
Muscat Oman
147
117
Kuwait City Kuwait
96
119
Vancouver Canada
153
120
Cairo Egypt
29
120
Bamako Mali
160
122
Detroit United States
135
122
Lima Peru
71
124
Barcelona Spain
76
124
Hamburg Germany
101
126
Toronto Canada
198
127
Ashkhabad Turkmenistan
120
127
Belfast United Kingdom
164
129
Colombo Sri Lanka
161
130
St. Louis United States
162
130
Pittsburgh United States
157
132
New Delhi India
167
133
Cleveland United States
87
133
Cotonou Benin
166
135
Portland, United States
78
136
Athens Greece
84
137
Bratislava Slovakia
150
137
Mexico Mexico
91
139
Stuttgart Germany
107
140
Casablanca Morocco
123
140
Montreal Canada
169
142
Phnom Penh Cambodia
92
142
Prague Czech Republic
105
144
Lome Togo 
94
145
Lisbon Portugal
125
146
Calgary Canada
79
147
Lyon France
98
148
Bogota Colombia
170
149
Guatemala City Guatemala
144
150
Brasilia Brazil
175
151
Jeddah Saudi Arabia
35
152
St. Petersburg Russia
105
153
Ouagadougou Burkina Faso
177
154
Quito Ecuador
103
155
Niamey Niger
110
155
Tallinn Estonia
185
157
Chennai India
182
157
Winston-Salem United States
113
159
Limassol Cyprus
178
160
Kingston Jamaica
116
161
Ljubljana Slovenia
180
162
Tashkent Uzbekistan
152
162
Ottawa Canada
186
162
Addis Ababa Ethiopia
176
165
Asuncion Paraguay
173
165
Santo Domingo Dominican Republic
120
167
Zagreb Croatia
181
168
Harare Zimbabwe
129
169
Nurnberg Germany
135
170
Budapest Hungary
130
171
Vilnius Lithuania
141
172
Leipzig Germany
191
173
Nouakchott Mauritania
165
174
Port Louis Mauritius
142
175
Warsaw Poland
163
175
Rabat Morocco
190
177
San Salvador El Salvador
159
178
Bucharest Romania
178
179
Dar es Salaam Tanzania
174
180
Lusaka Zambia
124
181
Algiers Algeria
183
182
Monterrey Mexico
196
183
Bangalore India
194
184
Kampala Uganda
98
184
Kiev Ukraine
201
186
Blantyre Malawi
172
187
Sofia Bulgaria
208
188
Islamabad Pakistan
197
188
Gaborone Botswana
200
190
Tegucigalpa Honduras
203
191
Johannesburg South Africa
187
192
Yerevan Armenia
205
193
Kolkata India
189
193
Tirana Albania
204
195
La Paz Bolivia
184
196
Belgrade Serbia
188
196
Sarajevo Bosnia and Herzegovina
194
198
Tbilisi Georgia
207
199
Managua Nicaragua
205
200
Cape Town South Africa
191
200
Minsk Belarus
199
202
Banjul Gambia
193
203
Skopje Macedonia
202
204
Tunis Tunisia
211
205
Karachi Pakistan
210
206
Windhoek Namibia
209
207
Bishkek Kyrgyzstan
Source: Mercer’s 2015 Cost of Living Survey  


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 @MercerAu 

Mercer also provides advice and market data on international and expatriate compensation management, and works with multinational companies and governments worldwide. It maintains one of the most comprehensive databases on international assignment policies; compensation practices; and data on worldwide cost of living, housing, and hardship allowances. Its annual global mobility conferences and other events provide companies with the latest trends and research on mobility issues. Visit www.imercer.com/mobility for details. Follow Mercer’s mobility news on Twitter @Mercer_Talent

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