COVID-19 continues to cause unparalleled disruption to international mobility, prompting companies to re-evaluate how they will manage a mobile workforce in a post-pandemic world. Cost of living data, mobility research conducted by Mercer and the learnings from Mercer’s work with clients demonstrates that after several years of organizations’ efforts to modernize mobility strategies, organizations are beginning to implement alternate forms of international assignments and cross-border working arrangements to sustain their overseas operations and workforces.
“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.”
Mobility is evolving from traditional long-term assignments – i.e., relocating an employee for a few years then repatriating them to their home location – to other kinds of mobility moves such as short-term assignees, international foreign hires, permanent transferees, commuters, international remote workers and international freelancers.
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 Cost of Living City Ranking
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). 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.
The Canadian dollar has appreciated in value in relation to the USD, triggering jumps in this year’s ranking. Vancouver (93) moved up one place and remains the most expensive Canadian city, followed by Toronto (98), and Montreal (129) which moved up eight places. Calgary (145) moved up one place and Ottawa (156) dropped five places and is the least expensive city in Canada.
“Globally, Canada remains a relatively affordable place to live and an attractive destination for remote workers,” said Gordon Frost, Partner at Mercer Canada. “As companies consider how they will manage an increasingly flexible workforce after the pandemic, cost of living is becoming an even more compelling employee value proposition – which is essential for retaining their current workforce and attracting new talent.”
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, followed by Los Angeles (20), San Francisco (25), Honolulu (43) and Chicago (45). Winston Salem (151) remains the least expensive US city surveyed for international employees. San Juan (89) dropped 23 positions due to deflation in the second part of 2020 and a very low inflation in the beginning of 2021 hence affecting the position in the ranking.
In South America, Port of Spain (91) ranked as the most expensive city, followed by Port-au-Prince (92) and Pointe-à-Pitre (107). Brasilia (205) is the least expensive city in South America.
Europe, the Middle East, and Africa
Three European cities are among the top 10 list of most expensive locations. Number five in the global ranking, Zurich remains the most costly European city, followed by Geneva (8) and Bern (10).
The strengthening of local currency resulted in several European cities climbing in the ranking, with Paris climbing to 33. Local currency in the United Kingdom remains strong with London (18), Birmingham (121) jumping one and eight places, respectively.
The United Arab Emirates continued to diversify its economy, which reduced the impact of the oil industry on GDP. With this ongoing process, there has been negative price movement in both Dubai (42) and Abu Dhabi (56). Beirut is the costliest city in the Middle East for international employees, jumping 42 positions to third in the global ranking. N’Djamena (13), Lagos (19) and Libreville (20) are first, second and third costliest cities in Africa for international employees. Lusaka ranked 208 is the least costly city in Africa.
More than half of the top 10 most expensive cities are located in Asia. Ashgabat climbed one position in this year’s ranking, making it the costliest city for international employees, both in Asia and globally. Hong Kong (2), Tokyo (4), Shanghai (6), Singapore (7) and Beijing (9) followed suit. Mumbai (78) is India’s most expensive city but dropped 18 places in this year’s ranking due to a relatively weak Indian rupee in comparison with other cities in the ranking.
Australian cities have climbed in this year’s ranking as the local currency significantly gained value against the USD. Sydney (31), Australia’s most expensive ranked city for international employees, experienced a climb of 35 places, followed by Melbourne (59) with a climb of 40 places.
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.
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 nearly $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.ca. Follow Mercer on LinkedIn and Twitter.
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.