Despite recent security issues, social unrest, and concern about the region’s economic outlook, European cities continue to offer some of the world’s highest quality-of-living, according to Mercer’s 18th annual Quality of Living survey. Several of Canada’s major metropolitan cities continue to dominate the North American rankings. Safety, in particular, is a key factor for multinationals to consider when sending expatriate workers abroad, both because it raises concerns about the expat’s personal safety and because it has a significant impact on the cost of global compensation programmes.
“Heightened domestic and global security threats, population displacement resulting from violence, and social unrest in key business centres around the world are all elements adding to the complex challenge facing multinational companies when analysing the safety and health of their expatriate workforces,” said Ilya Bonic, Senior Partner and president of Mercer’s Talent business. "Multinational companies need accurate data and objective methods to determine the cost implications of deteriorating living standards and personal safety issues when compensating expatriates.”
Vienna continues its reign in the top spot for overall quality of living, followed by Zurich (2), Auckland (3), and Munich (4). Vancouver (5) is North America’s highest ranking city and the region’s only city in the top 10. Toronto at 15 and Ottawa at 17 are the next highest ranking North American cities with San Francisco (28) as the top city in the US. Singapore is the highest ranking Asian city, holding 26th place. For the first time, Mercer’s survey also identifies the personal safety ranking for the full list of cities; it is based on internal stability, crime levels, performance of local law enforcement, and the home country’s relationship with other countries. Luxembourg tops the personal safety list and is followed by Bern, Helsinki, and Zurich – all tied in 2nd place. Baghdad (230) is the world’s least safe city according to the ranking. All five Canadian cities in the ranking – Vancouver, Toronto, Ottawa, Montreal and Calgary – share equal status, ranking 16th on the personal safety list.
“Quality of living continues to be high in Canada with a stable political environment and positive social benefits, offering a very desirable and safe place to live and work for residents and expatriate employees,” said Gordon Frost, Leader of Mercer’s Talent Business in Canada. “Our sustained high ranking is attractive to multinational corporations and their employees as they look to expand in Canada and provide significant opportunities to both Canadians and workers from abroad.”
Mercer’s authoritative survey is one of the world’s most comprehensive, and is conducted annually to enable multinational companies and other employers to compensate employees fairly when placing them on international assignments. Employee incentives include a quality-of-living allowance and a mobility premium.* Mercer’s Quality of Living surveys provide valuable data as well as hardship premium recommendations for over 450 cities throughout the world; this year’s ranking includes 230 of these cities.
“Ensuring that the needs of expatriates and their families are met wherever work takes them is an essential part of talent retention and recruitment strategies for most multinationals,” said Slagin Parakatil, Principal at Mercer and responsible for the quality-of-living research. “Managing safety and health issues is of utmost importance, especially for employees who relocate with a family. Our surveys enable companies to take adequate precautions for them.
Mr Parakatil added: “Other elements that add to safety costs in the host location are obtaining suitable and well secured accommodation; having an in-house comprehensive expatriate security programme and providing access to reputable professional evacuation services and medical support firms, and finally, providing security training and guarded office premises.”
Quality of Living remains high in North America, where Canadian cities dominate the top of the list. Vancouver (5) is the highest ranking city, followed by Toronto (15), Ottawa (17), Montreal (23) and Calgary (32). In the United States, San Francisco (28) ranks highest for quality of living, followed by Boston (34), Honolulu (35), Chicago (43), and New York City (44). In Mexico, Monterrey (108) is the highest ranking city, whereas Mexico City ranks 127th. The lowest ranking cities in North America are Monterrey (108) and Mexico City (127) and for the Caribbean, Havana (191) and Port-au-Prince (227). In South America, Montevideo (78), Buenos Aires (93), and Santiago (94) remain the highest ranking cities for quality of living, whereas Bogota (130), La Paz (156), and Caracas (185) rank lowest.
Canadian cities all rank high for personal safety at 16th, whereas no US cities make the top 50. Kingston (199), Tegucigalpa (201), and Port-au-Prince (211) have the lowest levels of personal safety in the region. In 96th place, Montevideo is South America’s highest ranking city for personal safety; Caracas (214) is the lowest.
“Canada’s major cities continue to be much safer than every US counterpart. This is extremely appealing for ex-patriate employees looking to bring their families with them as they move abroad for work,” adds Gordon Frost.
Most North American cities remain fairly safe for expatriates. But Mexican cities are ranked relatively low, mainly because of drug-related violence. The recent increase of unemployment in Latin America and Caribbean countries, along with the economic downturn and political instability in some of these countries, explains relatively low rankings in personal safety across the region.
Despite economic uncertainties, Western European cities continue to enjoy some of the highest quality of living worldwide; they fill seven places in the top-10 list. Vienna continues to lead the ranking and has done so in the last seven published rankings. It is followed by Zurich (2), Munich (4), Dusseldorf (6), Frankfurt (7), Geneva (8), and Copenhagen (9). In 69th place, Prague is the highest ranking city in Central and Eastern Europe, followed by Ljubljana (76) and Budapest (77). The lowest ranking cities in Europe are Kiev (176), Tirana (179), and Minsk (190).
European cities also dominate the top of the personal safety ranking with Luxembourg in the lead, followed by Bern, Helsinki, and Zurich, which are tied for the number-two spot. Vienna ranks 5th; Geneva and Stockholm are placed jointly in 6th; and Copenhagen, Dusseldorf, Frankfurt, Munich, and Nurnberg all share 11th place. A number of key or capital cities do rank considerably lower as many suffered either terrorist attacks or social unrest in the last few years; examples include Paris (71), London (72), Madrid (84), and Athens (124).The recent political and economic turmoil in Greece, which resulted in violent demonstrations in Athens and other cities in the country, has undermined its safety ranking. Kiev (189), St. Petersburg (197), and Moscow (206) rank lowest for personal safety in the region.
The vast region of Asia has considerable variation in quality of living. In 26th place, Singapore remains its highest ranking city, whereas Dhaka (214) is the lowest. Following Singapore in Southeastern Asia is Kuala Lumpur (86). Other key cities include Bangkok (129), Manila (136), and Jakarta (142). Japanese cities rank highest in Eastern Asia, with Tokyo in 44th place. Other notable cities here are Hong Kong (70), Taipei (84), Shanghai (101), and Beijing (118).
For personal safety, the rankings for Asian cities again vary greatly. Singapore (8) ranks highest overall and is followed by five Japanese cities—Kobe, Nagoya, Osaka, Tokyo, and Yokohama—that are tied for 32nd place. Other key cities include Hong Kong (37), Taipei (78), Beijing (97), Seoul (115), New Delhi (142), and Jakarta (172). Following considerable political unrest and terrorist attacks in several tourist areas over the last few years, Bangkok ranked 173rd for personal safety.
New Zealand and Australia have some of the highest quality of living worldwide. Auckland ranks 3rd globally, Sydney 10th, Wellington 12th, and Melbourne 15th. For personal safety, Pacific cities also rank high, with Auckland and Wellington sharing 9th place. Canberra, Melbourne, Perth, and Sydney share 25th place.
Middle East and Africa
Dubai (75) continues to rank highest for quality of living across Africa and the Middle East, followed by Abu Dhabi (81) and Port Louis (83) in Mauritius. The South African cities of Durban, Cape Town, and Johannesburg rank 85th, 92nd, and 95th respectively. Baghdad (230) ranks lowest regionally and worldwide.
Only a handful of cities in this region place in the top 100 for personal safety—with Abu Dhabi ranking highest in 23rd place, followed by Muscat (29), Dubai (40), and Port Louis (59). Upcoming host of the 2022 FIFA World Cup, Doha, ranks 70th for personal safety. Regional geopolitics is highly volatile and characterised by safety concerns, political turmoil, and an elevated risk of terrorism. The lowest ranking cities in the region are Damascus (229) and Baghdad (230), both of which have witnessed continual violence and terrorist attacks that weigh upon the daily life of locals and expatriates.
Notes to Editors
Mercer produces worldwide quality-of-living rankings annually from its Worldwide Quality of Living Surveys. Individual reports are produced for each city surveyed. Moreover, comparative quality-of-living indexes between a base city and host city are available, as are multiple-city comparisons. Details are available from Mercer Client Services in Warsaw, at +48 22 434 5383 or at www.mercer.com/qol.
The data was largely analysed between September and November 2015, and it will be updated regularly to account for changing circumstances. In particular, the assessments will be revised to reflect significant political, economic, and environmental developments.
The information and data obtained through the Quality of Living reports are for information purposes only and are intended for use by multinational organisations, government agencies, and municipalities. They are not designed or intended for use as the basis for foreign investment or tourism. In no event will Mercer be liable for any decision made or action taken in reliance of the results obtained through the use of, or the information or data contained in, the reports. While the reports have been prepared based upon sources, information, and systems believed to be reliable and accurate, they are provided on an “as-is” basis, and Mercer accepts no responsibility/liability for the validity/accuracy (or otherwise) of the resources/data used to compile the reports. Mercer and its affiliates make no representations or warranties with respect to the reports, and disclaim all express, implied and statutory warranties of any kind, including, representations and implied warranties of quality, accuracy, timeliness, completeness, merchantability, and fitness for a particular purpose.
Expatriates in Difficult Locations: Determining Appropriate Allowances and Incentives
Companies need to determine expatriate compensation packages rationally, consistently, and systematically using reliable data. Providing incentives to reward and recognise the effort that employees and their families make when taking on international assignments remains a typical practice, particularly for difficult locations.
*Two common incentives include a quality-of-living allowance and a mobility premium:
A quality-of-living or “hardship” allowance compensates for a decrease in the quality of living between home and host locations.
A mobility premium simply compensates for the inconvenience of being uprooted and having to work in another country.
A quality-of-living allowance is typically location-related, while a mobility premium is usually independent of the host location. Some multinational companies combine these premiums, but the vast majority provides them separately.
Quality of Living: City Benchmarking
Mercer also helps municipalities to assess factors that can improve their quality of living rankings. In a global environment, employers have many choices about where to deploy their mobile employees and set up new business. A city’s quality of living can be an important variable for employers to consider.
Leaders in many cities want to understand the specific factors that affect their residents’ quality of living and address those issues that lower a city’s overall quality-of-living ranking. Mercer advises municipalities by using a holistic approach that addresses the goals of progressing towards excellence and attracting both multinational companies and globally mobile talent by improving the elements that are measured in its Quality of Living survey.
Mercer Hardship Allowance Recommendations
Mercer evaluates local living conditions in more than 450 cities surveyed worldwide. Living conditions are analysed according to 39 factors, grouped in 10 categories:
Political and social environment (political stability, crime, law enforcement, etc.).
Economic environment (currency exchange regulations, banking services).
Socio-cultural environment (media availability and censorship, limitations on personal freedom).
Medical and health considerations (medical supplies and services, infectious diseases, sewage, waste disposal, air pollution, etc.).
Schools and education (standards and availability of international schools).
Public services and transportation (electricity, water, public transportation, traffic congestion, etc.).
Recreation (restaurants, theatres, cinemas, sports and leisure, etc.).
Consumer goods (availability of food/daily consumption items, cars, etc.).
Housing (rental housing, household appliances, furniture, maintenance services).
Natural environment (climate, record of natural disasters).
The scores attributed to each factor, which are weighted to reflect their importance to expatriates, permit objective city-to-city comparisons. The result is a quality of living index that compares relative differences between any two locations evaluated. For the indices to be used effectively, Mercer has created a grid that enables users to link the resulting index to a quality of living allowance amount by recommending a percentage value in relation to the index.
Mercer is a global consulting leader in health, wealth and careers. Mercer helps clients around the world advance the health, wealth and performance of their most vital asset – their people. Mercer’s more than 20,000 employees are based in more than 40 countries and the firm operates in over 130 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global professional services firm offering clients advice and solutions in the areas of risk, strategy and people. With 57,000 employees worldwide and annual revenue exceeding $13 billion, Marsh & McLennan Companies is also the parent company of Marsh, a leader in insurance broking and risk management; Guy Carpenter, a leader in providing risk and reinsurance intermediary services; and Oliver Wyman, a leader in management consulting. For more information, visit www.mercer.ca. Follow Mercer on Twitter @MercerCanada.