June 22, 2021 – COVID-19 continues to cause unparalleled disruption to international mobility, as countries continue to struggle with impact from economic, political and health fallout of the crises. As per the findings of Mercer’s 2021 annual Cost of Living Rankings for international employees, Ashgabat in Turkmenistan tops the ranking globally, displacing Hong Kong. More than half of the top 10 most expensive cities are located in Asia. In India, Mumbai (78) remains the most expensive city, but climbing down eighteen spots and Kolkata (181) is least expensive city for expatriates, among those surveyed.
“Cost of living has always been a factor for international mobility planning, but the pandemic has added a whole new layer of complexity, as well as long-term implications related to health and safety of employees, remote working and flexibility policies, among other considerations,” said Ilya Bonic, Career President and Head of Mercer Strategy. “As organizations rethink their talent and mobility strategies, accurate and transparent data is essential to compensate employees fairly for all types of assignments.”
Mercer’s 2020 Worldwide Survey of International Assignment Policies and Practices confirmed that many of the companies surveyed are offering more flexible options to accommodate diverse personal circumstances of the assignees. Another 2020/2021 Mercer survey found that over 50% of employers surveyed expected changes in terms of the number of one-way transfers, talent development, short-term and commuter assignments in their organizations due to the pandemic1.
Mercer’s latest Cost of Living Survey 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 helps employers determine and maintain compensation packages for employees on international assignments and when working abroad. Additionally, the cost of living in a location can have a significant impact on its attractiveness as a destination for talent, and influences site selection decisions for organizations expanding and transforming their geographic footprint.
Mercer’s 2021 Key India Findings
Mumbai (78) occupied its position in the top spot as the most expensive in Indian cities surveyed, followed by New Delhi (117) and Chennai (158), while Bengaluru (170) and Kolkata (181) are the least expensive Indian cities in ranking. While there is no change in the relative order of cities within India, all three cities of Mumbai, New Delhi and Chennai have climbed down in ranking by at least fifteen positions. “Despite change in price index movements, the INR weakened against the USD over the past year. The relative surge of local currencies of more expensive cities appreciating against the USD or having bigger price movements, have pushed our Indian cities down in the ranking,” explained Padma Ramanathan, India Global Mobility Practice Leader at Mercer.
Mumbai (78) dropping eighteen spots globally, moves down one spot to 20th position from previous year within Asian cities. The city has been jumped over by cities such as Perth (63) & Canberra (75), Auckland (70) and Madrid (67), boosted largely by strengthened local currencies in Europe and Australia. New Delhi (117), climbed down sixteen places but maintained it’s ranking among top 25 in Asia.
Chennai (158), moving down by fifteen spots in the list is most influenced by its position in the middle of the survey and movement of the neighboring pack. The city stays popular and attractive expatriate destination for its relative affordability in expatriate housing and living environment. Bengaluru (170) has risen only one position, being mostly stable. Kolkata (181) stays put as the least expensive among the surveyed Indian cities, but moving up the rankings by another four spots like previous year, indicating some strain on rising expatriate living costs.
Indian cities have been leapfrogged in ranking by the cities with stronger currencies against USD or with bigger price increases, hence their positions in it mostly lowered. While cities have experienced a push in price index, such as food and transportation related categories, they have been relatively slower to the change in currency. The expatriate rental housing market saw fluctuation downwards, impacted by the pandemic induced mobility slump, however Mumbai housing rental cost is still among the most expensive worldwide.
“The challenges posed by the pandemic demand resilience in managing business and talent. While companies are offering increased flexibility to traditional international employees and managing cost considerations, new realities are emerging in a skills-based future. Companies are responding by shifting priorities to evolving new mobility models with inclusive policies for international remote and freelancer workforces; rethinking pay for domestic moves; putting compliance and fair pay practices in focus, assimilating for repatriation and overall wellbeing at the core of their mobility agenda.”, added Ms. Padma.
Mercer’s 2021 Cost of Living City Ranking found Ashgabat the most expensive city for international employees, pushing Hong Kong to second place. Beirut ranked third, climbing 42 positions up the ranking as a result of a severe and extensive economic depression due to escalation of several crises — the country’s largest financial crisis, COVID-19 and the Port of Beirut explosion in 2020.
Tokyo and Zurich each dropped one spot from third and fourth respectively to fourth and fifth positions, and Shanghai ranked sixth, up one place from last year. Singapore moved from fifth place to seventh.2 Other cities appearing in the top 10 of Mercer’s most costly cities for international employees are Geneva (8), Beijing (9), and Bern (10).
Cities in the US have dropped in this year’s ranking mostly due to currency fluctuations between March 2020 and March 2021, despite the rising inflation of goods and services in the country. New York (14) ranked as most expensive city in the US, though it dropped eight positions since last year and moved out of top 10. On the other hand, the strengthening of local currency in Europe and Australia against the USD resulted several cities climbing up in the ranking, such as Paris climbing to 33 and Sydney (31), experienced a climb of 35 places. The United Arab Emirates continued to diversify its economy, showing negative price movement in both Dubai (42) and Abu Dhabi (56).
The world’s least expensive cities for international employees, according to Mercer’s survey, are Tbilisi (207), Lusaka (208), and Bishkek, which ranked as the least costly city at 209.
Notes for editors
Mercer's widely recognized ranking is one of the world’s most comprehensive, and is designed to help multinational companies and governments determine compensation strategies for their expatriate employees. 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 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. The data collected provides all of the key elements employers need to design efficient and transparent compensation packages for international assignees. Learn more here.
The figures for Mercer’s cost of living and rental accommodation cost comparisons are derived from a survey conducted in March 2021. Exchange rates from that time and Mercer’s international basket of goods and services from its Cost of Living Survey 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 demand for data from Mercer’s clients.
1 Mercer’s Alternative International Assignments survey
2 Mercer’s data was collected in March 2021; price variances in many locations were not significant at the time of the data gathering due to the pandemic as various measures were adopted by governments worldwide, such as refraining from collecting value-added tax for a period of time.
Source: Mercer’s 2021 Cost of Living Survey