- Within India, Mumbai continues to be the most expensive city for expatriates
- Mumbai has moved up two spots (55) and is ranked higher and more expensive than cities like Melbourne (58), Frankfurt (68), Buenos Aires (76), Stockholm (89) and Atlanta (95) of the world.
- Hong Kong leads as the world’s costliest city to live in Mercer’s 2018 Cost of Living Survey, surpassing Luanda
- Only two European cities, Zurich (3) and Bern (10) are among the top 10 list of most expensive cities
Mercer, a global consulting leader in advancing health, wealth and careers, and a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC) today released its 2018 Cost of Living Survey. As a result of the digital era, aging populations, skills shortages, and unpredictable political and economic contexts, the landscape of global business is changing as are jobs that are critical for the future of work.
Mercer’s Global Talent Trends 2018 Study - India indicates that the C-suite considers improving the ability of moving jobs to people and people to jobs as among their top three priorities, which would have the biggest impact on business performance. Issues surrounding global talent mobility have become a central aspect of many organizational growth strategies, including on whom to mobilize, where and what to pay, in the context of assessing the cost of expatriate packages for their international assignees. According to Mercer’s 24th annual Cost of Living Survey, factors like instability of housing markets, low inflation and fluctuating prices for goods and services are impacting the cost of doing business in various cities around the world.
Mumbai is ranked higher and more expensive than cities like Melbourne (58), Frankfurt (68), Buenos Aires (76), Stockholm (89) and Atlanta (95) of the world. While cities such as Melbourne and Buenos Aires have fallen in their rankings, Mumbai’s jump in ranking is also attributable to continued surge in prices of food, alcohol and domestic supplies. Inflation, amongst the highest in Indian cities surveyed, remained at 5.57% for the surveyed set of expatriate goods, during this period. This is especially true for prices of expatriate food items such as, butter, meat & poultry as well premium farm produce which have increased significantly, along with prices of alcohol e.g. wine. Costs of sporting, leisure related activities have also played a role to rising prices, followed in part by transportation costs, which includes taxi fares and cost of registration and road taxes. Real estate prices in Mumbai remain among the highest in the world for residential purposes.
New Delhi (103), however has managed to claw its way out of the top 100 category this year, with a drop in the rankings by four positions. Chennai (144) has dropped the most by nine spots in the list, compared to other Indian cities. However, the rankings of cities are also impacted by the change in movement of other cities in the list. Similar to Mumbai, New Delhi shows a relative increase in cost of living due to rise in prices of transportation and sports & leisure related category of services. In Chennai, prices of alcohol and clothing remain on the higher side.
Bengaluru (170) has fallen in cost of living ranking, and driven significantly by relative drop in prices on transportation, which includes taxi fares, cost of auto and auto parts as well as running costs. Kolkata (182) remains the least expensive among the surveyed Indian cities, though has moved up two spots, led in part due to increase in costs of domestic supplies and home services.
“According to Mercer’s International Policies and Practices Report on India, 93% of companies do compensate through a Cost of Living Allowance for their expatriate assignee. This increase in prices of goods in our cities, viewed along with currency exchange rate, has a direct impact on the Indian assignee compensation when using a balance sheet approach, making overseas assignment costs sometimes greater and sometimes smaller. In this scenario, companies are reconsidering how frequently expatriate salaries are reviewed. In balancing assignee cost with assignee satisfaction, some companies prefer to let the assignee retain the benefit of windfall if applicable”, said Padma Ramanathan, India Practice Leader, Global Mobility at Mercer.
Multinationals are embracing this transformation by focusing on mobile talent and assessing the cost of expatriate packages for their international assignees.
“With technology advances and the importance of a globally connected workforce, deploying talent remains a key component of a multinational’s business strategy,” said Ilya Bonic, President of Mercer’s Career business. “While a mobile workforce allows organizations to achieve greater efficiency, utilize top talent, and be cost effective with international projects, volatile markets and slowing economic growth in many parts of the world require them to carefully assess expatriate remuneration packages.”
Other cities appearing in the top 10 of Mercer’s costliest cities for expatriates are Seoul (5), Luanda (6), Shanghai (7), N’Djamena (8), Beijing (9), and Bern (10). The world’s least expensive cities for expatriates are Tashkent (209), Tunis (208), and Bishkek (207).
“Aligning workforce and mobility strategies by ensuring the right employees are in the right place is more critical than ever for multinationals as they focus on new global business models,” said Mr. Bonic. “And, properly compensating employees on international assignments is as important as it can be costly.”
“While Indian multi-nationals are concerned about geo-political context in countries with high assignee population like in the Unites States and in the United Arab Emirates, they have been shifting focus on businesses in emerging markets, specifically geographies in Latin America & Africa to meet their business growth strategy. This is forcing companies to reassess their policies and examine whether their approaches are compatible and cost-effective for this new mobility pattern and to offer creative packages to attract assignees to the locations. It is not surprising that more than 75% of Indian companies in our survey have either reviewed or in the process of reviewing elements of their international assignment program, as a priority”, added Padma Ramanathan.
Mercer's widely recognized survey is one of the world’s most comprehensive, and is designed to help multinational companies and governments determine compensation strategies for their expatriate employees. For this survey of global rankings, 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 375 cities throughout the world; this year’s ranking includes 209 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.
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://mobilityexchange.mercer.com/cost-of-living-rankings or call Mercer Client Services in Warsaw on +48 22 434 5383.
Mercer delivers advice and technology-driven solutions that help organizations meet the health, wealth and career needs of a changing workforce. Mercer’s more than 22,000 employees are based in 44 countries and the firm operates in over 130 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), the leading global professional services firm in the areas of risk, strategy and people. With nearly 65,000 colleagues and annual revenue over $14 billion, through its market-leading companies including Marsh, Guy Carpenter and Oliver Wyman, Marsh & McLennan helps clients navigate an increasingly dynamic and complex environment. For more information, visit www.mercer.com. Follow Mercer on Twitter @Mercer.
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 https://mobilityexchange.mercer.com/ for details. Follow Mercer’s mobility news on Twitter @Mercer.
Source: Mercer’s 2018 Cost of Living Survey