Inflation, exchange rates and flexible work shaping employee mobility, according to Mercer Cost of Living ranking

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 7^th 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 17^th place and 112^th 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 (3^rd) and Basel (4^th). 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 60^th 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 209^th.

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.

Mercer 2022 Cost of Living Ranking

Rank		CITY		COUNTRY
1		HONG KONG		HONG KONG (SAR)
2		ZURICH		SWITZERLAND
3		GENEVA		SWITZERLAND
4		BASEL		SWITZERLAND
5		BERN		SWITZERLAND
6		TEL AVIV		ISRAEL
7		NEW YORK CITY, NY		UNITED STATES
8		SINGAPORE		SINGAPORE
9		TOKYO		JAPAN
10		BEIJING		CHINA
11		COPENHAGEN		DENMARK
12		SHANGHAI		CHINA
13		SHENZHEN		CHINA
14		SEOUL		SOUTH KOREA
15		LONDON		UNITED KINGDOM
16		NASSAU		BAHAMAS
17		LOS ANGELES, CA		UNITED STATES
18		GUANGZHOU		CHINA
19		SAN FRANCISCO, CA		UNITED STATES
20		HONOLULU, HI		UNITED STATES
21		VIENNA		AUSTRIA
22		QINGDAO		CHINA
23		BANGUI		CENTRAL AFRICAN REPUBLIC
24		LIBREVILLE		GABON
25		AMSTERDAM		NETHERLANDS
26		NANJING		CHINA
27		OSLO		NORWAY
28		TAIPEI		TAIWAN
29		WASHINGTON, DC		UNITED STATES
30		BOSTON, MA		UNITED STATES
31		DUBAI		UNITED ARAB EMIRATES
32		MIAMI, FL		UNITED STATES
33		MUNICH		GERMANY
34		BUSAN		SOUTH KOREA
35		PARIS		FRANCE
36		CHICAGO, IL		UNITED STATES
37		OSAKA		JAPAN
38		VICTORIA		SEYCHELLES
39		BRUSSELS		BELGIUM
40		SHENYANG		CHINA
41		DJIBOUTI		DJIBOUTI
42		ATLANTA, GA		UNITED STATES
43		HELSINKI		FINLAND
44		CHENGDU		CHINA
45		SEATTLE, WA		UNITED STATES
46		BERLIN		GERMANY
47		THE HAGUE		NETHERLANDS
48		MILAN		ITALY
49		DUBLIN		IRELAND
50		YOKOHAMA		JAPAN
51		NAGOYA		JAPAN
52		LUXEMBOURG		LUXEMBOURG
53		KINSHASA		THE DEMOCRATIC REPUBLIC OF THE CONGO
54		NOUMEA		NEW CALEDONIA
55		LAGOS		NIGERIA
56		CHONGQING		CHINA
57		ROME		ITALY
58		SYDNEY		AUSTRALIA
59		HAMBURG		GERMANY
60		PRAGUE		CZECH REPUBLIC
61		ABU DHABI		UNITED ARAB EMIRATES
62		FRANKFURT		GERMANY
63		XIAN		CHINA
64		LUANDA		ANGOLA
65		DAKAR		SENEGAL
66		EDINBURGH		UNITED KINGDOM
67		MELBOURNE		AUSTRALIA
68		ABIDJAN		CÔTE D'IVOIRE
69		SUZHOU		CHINA
70		PHILADELPHIA, PA		UNITED STATES
71		STUTTGART		GERMANY
72		SAN JUAN		PUERTO RICO
73		WUHAN		CHINA
74		BRAZZAVILLE		THE REPUBLIC OF CONGO
75		DALLAS, TX		UNITED STATES
76		CONAKRY		GUINEA REPUBLIC
77		DOUALA		CAMEROON
78		BARCELONA		SPAIN
79		RIGA		LATVIA
80		N'DJAMENA		CHAD
81		DUSSELDORF		GERMANY
82		PITTSBURGH, PA		UNITED STATES
83		MINNEAPOLIS, MN		UNITED STATES
84		BRISBANE		AUSTRALIA
85		HOUSTON, TX		UNITED STATES
86		GLASGOW		UNITED KINGDOM
87		STOCKHOLM		SWEDEN
88		POINTE-A-PITRE		GUADELOUPE (FRANCE)
89		TORONTO		CANADA
90		MADRID		SPAIN
91		PORTLAND, OR		UNITED STATES
92		TAICHUNG		TAIWAN
93		ABERDEEN		UNITED KINGDOM
94		BIRMINGHAM		UNITED KINGDOM
95		AUCKLAND		NEW ZEALAND
96		LYON		FRANCE
97		PERTH		AUSTRALIA
98		DHAKA		BANGLADESH
99		LEIPZIG		GERMANY
100		YAOUNDE		CAMEROON
101		ST. LOUIS, MO		UNITED STATES
102		ADELAIDE		AUSTRALIA
103		RIYADH		SAUDI ARABIA
104		CANBERRA		AUSTRALIA
105		BRATISLAVA		SLOVAKIA
106		BANGKOK		THAILAND
107		DETROIT, MI		UNITED STATES
108		VANCOUVER		CANADA
109		LISBON		PORTUGAL
110		TOULOUSE		FRANCE
111		JEDDAH		SAUDI ARABIA
112		CLEVELAND, OH		UNITED STATES
113		KAOHSIUNG		TAIWAN
114		BUENOS AIRES		ARGENTINA
115		AMMAN		JORDAN
116		NUREMBERG		GERMANY
117		MANAMA		BAHRAIN
118		BAMAKO		MALI
119		MUSCAT		OMAN
120		WELLINGTON		NEW ZEALAND
121		BELFAST		UNITED KINGDOM
122		MANILA		PHILIPPINES
123		MONTEVIDEO		URUGUAY
124		LOME		TOGO
125		MONTREAL		CANADA
126		ATHENS		GREECE
127		MUMBAI		INDIA
128		COTONOU		BENIN
129		HARARE		ZIMBABWE
130		SANTIAGO		CHILE
131		KUWAIT CITY		KUWAIT
132		OTTAWA		CANADA
133		DOHA		QATAR
134		PHNOM PENH		CAMBODIA
135		PORT OF SPAIN		TRINIDAD & TOBAGO
136		GUATEMALA CITY		GUATEMALA
137		OUAGADOUGOU		BURKINA FASO
138		NIAMEY		NIGER
139		SAN JOSE		COSTA RICA
140		TALLINN		ESTONIA
141		CALGARY		CANADA
142		HAVANA		CUBA
143		CASABLANCA		MOROCCO
144		BUJUMBURA		BURUNDI
145		LJUBLJANA		SLOVENIA
146		ACCRA		GHANA
147		ABUJA		NIGERIA
148		VILNIUS		LITHUANIA
149		MEXICO CITY		MEXICO
150		HANOI		VIETNAM
151		JAKARTA		INDONESIA
152		PANAMA CITY		PANAMA
153		KINGSTON		JAMAICA
154		CAIRO		EGYPT
155		NEW DELHI		INDIA
156		QUITO		ECUADOR
157		VIENTIANE		LAO PEOPLE'S DEMOCRATIC REPUBLIC
158		BUCHAREST		ROMANIA
159		ZAGREB		CROATIA
160		NAIROBI		KENYA
161		TIRANA		ALBANIA
162		RABAT		MOROCCO
163		HO CHI MINH CITY		VIETNAM
164		DAR ES SALAAM		TANZANIA
165		LIMASSOL		CYPRUS
166		KAMPALA		UGANDA
167		MAPUTO		MOZAMBIQUE
168		SAO PAULO		BRAZIL
169		NOUAKCHOTT		MAURITANIA
170		SOFIA		BULGARIA
171		PORT-AU-PRINCE		HAITI
172		LIMA		PERU
173		SANTO DOMINGO		DOMINICAN REPUBLIC
174		WARSAW		POLAND
175		BELGRADE		SERBIA
176		RIO DE JANEIRO		BRAZIL
177		CHENNAI		INDIA
178		BENGALURU		INDIA
179		BANDAR SERI BEGAWAN		BRUNEI
180		BUDAPEST		HUNGARY
181		KUALA LUMPUR		MALAYSIA
182		SAN SALVADOR		EL SALVADOR
183		COLOMBO		SRI LANKA
184		BLANTYRE		MALAWI
185		MONTERREY		MEXICO
186		BAKU		AZERBAIJAN
187		WROCLAW		POLAND
188		ANTANANARIVO		MADAGASCAR
189		TEGUCIGALPA		HONDURAS
190		KRAKOW		POLAND
191		PORT LOUIS		MAURITIUS
192		HYDERABAD		INDIA
193		JOHANNESBURG		SOUTH AFRICA
194		CAPE TOWN		SOUTH AFRICA
195		ASUNCION		PARAGUAY
196		LA PAZ		BOLIVIA
197		YEREVAN		ARMENIA
198		YANGON		MYANMAR
199		LUSAKA		ZAMBIA
200		BRASILIA		BRAZIL
201		PUNE		INDIA
202		BANJUL		GAMBIA
203		KOLKATA		INDIA
204		MINSK		BELARUS
205		BOGOTA		COLOMBIA
206		SKOPJE		MACEDONIA
207		MANAUS		BRAZIL
208		KIGALI		RWANDA
209		SARAJEVO		BOSNIA-HERZEGOVINA
210		BELO HORIZONTE		BRAZIL
211		JOHOR BAHRU		MALAYSIA
212		MANAGUA		NICARAGUA
213		WINDHOEK		NAMIBIA
214		ADDIS ABABA		ETHIOPIA
215		GABORONE		BOTSWANA
216		DURBAN		SOUTH AFRICA
217		TBILISI		GEORGIA
218		ALGIERS		ALGERIA
219		ALMATY		KAZAKHSTAN
220		TUNIS		TUNISIA
221		TASHKENT		UZBEKISTAN
222		ISTANBUL		TÜRKIYE
223		KARACHI		PAKISTAN
224		ISLAMABAD		PAKISTAN
225		DUSHANBE		TAJIKISTAN
226		BISHKEK		KYRGYZSTAN
227		ANKARA		TÜRKIYE

 

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