Financial Centres among the World’s Costliest Cities
Currency fluctuations driven by economic and political unrest have pushed up the cost of living in some of the world’s major cities while pegging or even reducing it in others, reports Mercer.
The consulting group’s 21st annual
Cost of Living Survey
finds that the strength of the Swiss franc (CHF) contributes to making Zurich and Geneva respectively the third and fifth most expensive cities, while the Angolan capital of Luanda takes top position, followed by Hong Kong and with Singapore in fourth place.
Mercer says it “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,” and in turn the cost of expatriate packages for those on the front line of globalisation of their organisations.
“As the global economy has become increasingly interconnected, close to 75% of multinational organisations 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.”
Luanda is ranked as the costliest city for the third consecutive year, as the cost of imported goods and safe living conditions in Angola are available only 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 annual survey uses New York – stable at 16th position this year – as the base city and all cities are compared against it. Currency movements are measured against the US dollar (USD).
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.
Aside from cities in the UK, Western European cities dropped in the rankings mainly due to the weakening of local currencies against the USD. While London (12) remained steady, Birmingham (80) and Aberdeen (82) rose in the ranking and Glasgow (109) and Belfast (127) dropped. Paris (46), Vienna (56), and Rome (59) fell in the 2015 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).
Moscow (50) and St. Petersburg (152) dropped 41 and 117 spots, respectively, as a result of Russia’s ruble (RUB) losing significant value against the USD, lower oil prices, and a lack of confidence in the currency following Western sanctions over the crisis in Ukraine.
“Aligning workforce and mobility strategies by ensuring the right employees are in the right places is more critical than ever to manage globalization,” said Bonic. “Properly compensating employees on international assignments is as important as it is costly.”
He adds that this is especially important for emerging mobility programmes with smaller pools of candidates and higher business needs for sending employees on international assignments. It is essential that these organisations have accurate and transparent data as they consider how to compensate fairly and in line with market demands.