With globalisation and liberal economic structure, not only the developing but also the developed countries undergo several changes. For several years now, it is a common phenomena that MNCs are constantly hiring expatriates on the very senior and respectable posts.
Now these employees must be remunerated with due care to the international currency standards in order to retain them, because if you do not, some other company might take an advantage and rope in some of your best employees.
In the endeavour to get hold of these changing statistics, Mercer Human Resource Consulting conducts an annual survey measuring the comparative cost of more than 200 items such as housing, transportation and food in 144 cities around the world and ranks them. The survey is aimed at helping multinational employers determine compensation for their expatriate workers.
Rebecca Powers, a senior consultant at Mercer says, “with cities around the world getting increasingly expensive for expatriates, notably the cities in developing countries, employers may need to re-examine the way they provide compensation and benefits for their workers.”
This year the survey has revealed that Russian capital Moscow is world’s most expensive city and has replaced Tokyo.
A weaker Yen and booming property in Russia have taken Russia three spots above to the top. While South Korea’s Seoul ranked second on the list, up from fifth last year, Tokyo is now ranked third.
“As we see more and more movement into these emerging markets, a lot of those programs need to be looked at,” Powers said.
She further explains, “foreign exchange rate fluctuations became the cause of a majority of changes in ranking. Though, Moscow’s case was different. Here, the costs were buoyed by the surging price for large living accommodations. The demand for palatable housing in Russia is on the rise mainly due to expats. It seems they are trying to replicate the big homes they had in their home country. As a result, prices for big houses rose by almost 50 percent over the past year.”
After Moscow, Europe’s priciest cities were London, ranked #5 overall, and Geneva, ranked #7. European cities tended to fall in the rankings this year because of a weakening Euro.
As for America, New York ranked #10, up three spots from last year. It continues to its position as North America’s costliest city, followed by Los Angeles and San Francisco.
Yuan’s strength after being de-pegged from the US dollar, led the Chinese cities on the rise. Hong Kong ranked #4, Beijing #14, and Shanghai at #20.
With the Brazilian real rising about 20 percent versus the US dollar over the past year, Brazilian cities Sao Paolo and Rio de Janeiro surged to #34 and #40 from #119 and #124, respectively.
The least-expensive city surveyed was Asuncion in Paraguay.
As per Mercer, year after year, these fluctuations in rankings have been rising. The investment & flow of capital and businesses into developing countries has made these cities more expensive.
“Companies will likely have to pay expatriate employees more to retain them, and may want to consider working harder to hire staff locally in the long-term to help alleviate relocation costs,” Powers said.
