Hong Kong still costliest for expats
For the second time in a month, a major survey of living costs in cities across the globe has identified Hong Kong as the most expensive location for employees sent abroad to live and work.
1 July 2022However, unlike last month's report from ECA International, the latest assessment of 227 cities by American asset management firm Mercer puts four Swiss cities - Zurich, Geneva, Basel and Bern – as the next most expensive places for expats. Only Geneva made it into ECA's top five.
Mercer’s 'Cost of Living Index 2022' is based on comparative costs of more than 200 goods and services in each location, including housing, transportation, food, clothing, household products and entertainment. New York is used as the base city for the analysis.
Hong Kong has occupied top spot in Mercer's rankings four times in the past five years but was in second place last year behind Ashgabat, Turkmenistan. It returned to first place this year partly because of inflationary pressures.
But Vince Cordova, a Mercer partner, told CNBC that continuing Covid restrictions and increased political volatility had made it more expensive to compensate staff posted there.Mr Cordova added that the Hong Kong real estate market had become more expensive, adding to the cost of expat packages. “The other part is the cost of goods and services and also the political uncertainty. The people who are going to be there will need to spend more to live well,” he said.
On the rise of Swiss cities up the table, Mr Cordova said this was mainly due to the strength of the Swiss franc, which - unlike many other currencies - had held steady against the US dollar.
Unlike previous years, Mr Cordova said the 2022 report included the increasing prevalence of remote work, with more companies using it as a tool when deciding their flexible working policies.“One of the consequences of the pandemic was this concept of work from anywhere, with more employees now asking employers if they can support that,” he said.
“Companies now want some information on what the economic impact of that relocation would be, and that’s how we’re seeing mobility expand."Tel Aviv, New York, Singapore, Tokyo and Beijing rounded out Mercer's top ten, with London coming in at 15th place. At the other end of the table, Ankara was rated as the cheapest expat base, with Bishkek in Kyrgyzstan and Dushanbe in Tajikistan not far behind.
The report pointed out: “The rise of remote and flexible working, the war in Ukraine, currency fluctuations and widespread inflation are having a material impact on employee compensation, which can have serious consequences for companies in the global battle for talent.”
Tiago Borges, a career business leader at Mercer, said global economic and political uncertainty and significant rises in inflation around the world were causing major concerns among expatriates about their purchasing power and socio-economic stability.
“Both inflation and exchange rate fluctuations directly influence the purchasing power of employees working outside their country of origin," he said, adding that the increase in remote and flexible work had also led to many expats reconsidering their priorities on work-life balances and the choice of places to live.
The report also pointed out that, over the past 18 months, the number of professionals relocating to Asia had fallen amid escalating costs and pandemic lockdowns.
Tracey Ma, Mercer’s regional mobility leader for Asia Pacific, said a talent shortage in developed countries, which rely heavily on foreign workers, could become an issue exacerbated by higher living costs.
“International assignment patterns are evolving faster than before,” she said, adding that the rise in remote working meant companies needed to rethink their approach to managing a global workforce to attract and retain talent while ensuring cost efficiency.
Mercer's top 20 most expensive cities for expats:
1. Hong Kong
2. Zurich
3. Geneva
4. Basel
5. Bern
6. Tel Aviv
7. New York
8. Singapore
9. Tokyo
10. Beijing
11. Copenhagen
12. Shanghai
13. Shenzhen
14. Seoul
15. London
16. Nassau
17. Los Angeles
18. Guangzhou
19. San Francisco
20. Honolulu
Read more news and views from David Sapsted, July articles.
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Mercer’s 'Cost of Living Index 2022' is based on comparative costs of more than 200 goods and services in each location, including housing, transportation, food, clothing, household products and entertainment. New York is used as the base city for the analysis.
Hong Kong has occupied top spot in Mercer's rankings four times in the past five years but was in second place last year behind Ashgabat, Turkmenistan. It returned to first place this year partly because of inflationary pressures.
But Vince Cordova, a Mercer partner, told CNBC that continuing Covid restrictions and increased political volatility had made it more expensive to compensate staff posted there.Mr Cordova added that the Hong Kong real estate market had become more expensive, adding to the cost of expat packages. “The other part is the cost of goods and services and also the political uncertainty. The people who are going to be there will need to spend more to live well,” he said.
On the rise of Swiss cities up the table, Mr Cordova said this was mainly due to the strength of the Swiss franc, which - unlike many other currencies - had held steady against the US dollar.
Unlike previous years, Mr Cordova said the 2022 report included the increasing prevalence of remote work, with more companies using it as a tool when deciding their flexible working policies.“One of the consequences of the pandemic was this concept of work from anywhere, with more employees now asking employers if they can support that,” he said.
“Companies now want some information on what the economic impact of that relocation would be, and that’s how we’re seeing mobility expand."Tel Aviv, New York, Singapore, Tokyo and Beijing rounded out Mercer's top ten, with London coming in at 15th place. At the other end of the table, Ankara was rated as the cheapest expat base, with Bishkek in Kyrgyzstan and Dushanbe in Tajikistan not far behind.
The report pointed out: “The rise of remote and flexible working, the war in Ukraine, currency fluctuations and widespread inflation are having a material impact on employee compensation, which can have serious consequences for companies in the global battle for talent.”
Tiago Borges, a career business leader at Mercer, said global economic and political uncertainty and significant rises in inflation around the world were causing major concerns among expatriates about their purchasing power and socio-economic stability.
“Both inflation and exchange rate fluctuations directly influence the purchasing power of employees working outside their country of origin," he said, adding that the increase in remote and flexible work had also led to many expats reconsidering their priorities on work-life balances and the choice of places to live.
The report also pointed out that, over the past 18 months, the number of professionals relocating to Asia had fallen amid escalating costs and pandemic lockdowns.
Tracey Ma, Mercer’s regional mobility leader for Asia Pacific, said a talent shortage in developed countries, which rely heavily on foreign workers, could become an issue exacerbated by higher living costs.
“International assignment patterns are evolving faster than before,” she said, adding that the rise in remote working meant companies needed to rethink their approach to managing a global workforce to attract and retain talent while ensuring cost efficiency.
Mercer's top 20 most expensive cities for expats:
1. Hong Kong
2. Zurich
3. Geneva
4. Basel
5. Bern
6. Tel Aviv
7. New York
8. Singapore
9. Tokyo
10. Beijing
11. Copenhagen
12. Shanghai
13. Shenzhen
14. Seoul
15. London
16. Nassau
17. Los Angeles
18. Guangzhou
19. San Francisco
20. Honolulu
Read more news and views from David Sapsted, July articles.
Subscribe to Relocate Extra, our monthly newsletter, to get all the latest international assignments and global mobility news.Relocate’s new Global Mobility Toolkit provides free information, practical advice and support for HR, global mobility managers and global teams operating overseas.
Access hundreds of global services and suppliers in our Online Directory ©2024 Re:locate magazine, published by Profile Locations, Spray Hill, Hastings Road, Lamberhurst, Kent TN3 8JB. All rights reserved. This publication (or any part thereof) may not be reproduced in any form without the prior written permission of Profile Locations. Profile Locations accepts no liability for the accuracy of the contents or any opinions expressed herein.
