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Inflation, exchange rates and flexible work shaping employee mobility, according to Mercer Cost of Living ranking
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New York City (7) remains the most expensive city in the United States, with Hong Kong SAR (1) taking the top spot globally
Inflation, exchange rates, and the war in Ukraine has had a material impact on employees’ pay and savings
Mercer’s annual Cost of Living Survey provides a reference point and helps shape multinational organizations’ approach to calculating appropriate compensation packages for employees on international assignments
NEW YORK--(BUSINESS WIRE)--
Today, Mercer announced the results of its 2022 Cost of Living Survey with New York City remaining the most expensive city in the US for expatriates, ranking 7th worldwide, while Hong Kong SAR took the top spot globally. In addition to cost of living data, employee mobility research conducted by Mercer and the learnings from Mercer’s work with clients demonstrates that the war in Ukraine, exchange rate variations and widespread inflation are shrinking employees’ pay and savings.
Both inflation and exchange rate fluctuations directly influence the purchasing power of expatriate employees. The rise of remote and flexible working has also caused many employees to reconsider their priorities, work-life balance and the choice of location to live in. These conditions have serious consequences for employers, who need to rethink their approach to managing a globally distributed workforce, particularly in light tight labor markets. According to a June 2022 survey by Mercer, labor shortages rank as a significant or moderate HR priority for 82% of US employers.
Mercer’s cost of living data 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 help employers determine and maintain compensation packages for employees on international assignments and when working abroad.
“The volatility triggered by COVID-19 and further worsened by the crisis in Ukraine has fueled global economic and political uncertainty. This uncertainty, coupled with significant rising inflation in most of the countries around the world, has international assignees concerned about their purchasing power and socio-economic stability,” said Yvonne Traber, Partner at Mercer and Global Head for the Mobility Business.
“Failing to adopt competitive international compensation strategies in times of uncertainty and adapt to this new world of work will undermine an organization’s ability to attract and retain top talent,” added Traber.
Conversely, this situation also offers an opportunity for cities and governments looking to attract foreign business, and for businesses looking to attract talent. The cost of living in a location can have a significant impact on its attractiveness as a destination for talent, and it can influence site selection decisions for organizations expanding and transforming their geographic footprint.
“After years of low inflation, the US is now seeing price increases in goods and services at greater rates compared to many other countries. This inflation is also manifesting itself at different levels across cities and regions in the US,” said Vince Cordova, Partner in Mercer’s Career practice. “Given the increased flexibility organizations and individuals have around work location options, understanding these differences and being able to measure how they change over time will be important in designing effective and responsive compensation and talent strategies.”
Regional insights
The Americas New York City (7) remains the most expensive city in the region, followed by Nassau, Bahamas (16). The remaining US cities are ranked between 17th place and 112th place, Los Angeles (17), San Francisco (19), Honolulu (20), Washington (29), Chicago (36) and Cleveland (112).
The most expensive Canadian city is Toronto (89) followed by Vancouver (108), Montreal (125), Ottawa (132), and least expensive city in Canada is Calgary (141).
In South America, Buenos Aires, Argentina (114) is ranked as the most expensive city in region, followed by Montevideo, Uruguay (123), Santiago, Chile (130), Quito, Ecuador (156), Sao Paulo, Brazil (168). Belo Horizonte (210) is the least expensive city in South America. Managua (212) the capital of Nicaragua is the least expensive city in the Americas.
Asia-Pacific Four out of 10 most expensive cities to live in for the international assignees are located in Asia, including the single most expensive city in the world – Hong Kong SAR (ranked 1). Singapore (8), Tokyo, Japan (9) and Beijing, China (10) are all on the top 10. The most expensive city in India is Mumbai ranked 127.
The most expensive city in Pacific is Noumea, New Caledonia (54) closely followed by Sydney, Australia (58). Auckland, New Zealand (95) is the most expensive city in New Zealand, and Wellington (120) the least expensive in the Pacific.
Europe Four European cities are among the top 10 list of most expensive locations. All of those four are based in Switzerland, and Zurich being ranked second within the global ranking, as being the costliest within the European cities, closely followed by Geneva (3rd) and Basel (4th). Other cities in Europe are Copenhagen, Denmark (11), London, United Kingdom (15), Vienna, Austria (21) and Amsterdam, The Netherlands (25).
The most expensive city in Eastern Europe is Prague (Czech Republic) ranked 60th out 227 cities. It is followed by Riga, Latvia (79), Bratislava, Slovakia (105) and Tallinn, Estonia (140). The least expensive city in Eastern Europe is Sarajevo in Bosnia-Herzegovina ranked 209th.
Middle East and Africa Tel Aviv (Israel) is the costliest city in the Middle East for international employees, ranked on the sixth position within the global ranking. The next in line for this region are cities from the United Arab Emirates, namely Dubai (31) and Abu Dhabi (61). Saudi cities such as Riyadh (103) and Jeddah (111) rank in the middle, closely followed by Amman, Jordan (115) and Manama, Bahrain (117).
In Africa, Bangui (23), Libreville, Gabon (24) and Victoria, Seychelles (38) are the three costliest cities. High in the ranking for this region we find also Djibouti (41), Kinshasa (53) and Lagos (55). The cheapest city in Africa is Tunis, Tunisia ranked 220th.
About Mercer’s Cost of Living Survey Mercer's widely recognized Cost of Living ranking is one of the world’s most comprehensive and is designed to help multinational companies and governments determine compensation strategies for their international assignees. 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 227 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. The data collected provide all of the key elements employers need to design efficient and transparent compensation packages for international assignees. Learn more here.
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 approximately 25,000 employees are based in 43 countries and the firm operates in 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 83,000 colleagues and annual revenue of approximately $20 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 mercer.com. Follow Mercer on LinkedIn and Twitter.
