MANILA zoomed from the 109th to the 80th spot on the list of most expensive cities in the world for expatriates, the 2020 “Cost of Living Survey” by Mercer Llc. reveals.
The country’s capital shares the spot with Detroit, United States, which jumped from 90 among 200 cities included in the survey conducted prior to the coronavirus disease 2019 (Covid-19) pandemic.
Mercer said the survey helps employers reassess global mobility programs amid uncertainty from pandemic. It measured the comparative cost of more than 200 items in each location, including housing, transportation, food, clothing, household goods and entertainment.
According to Mercer, the data for this year’s survey was collected in March; price variances in many locations were not significant due to the pandemic.
“The Covid-19 pandemic has posed complex challenges to businesses and the Asian Development Bank estimates global economic impact to be between $5.8 trillion and $8.8 trillion this year. The situation remains fluid and uncertain; organizations need to plan, observe and be agile in their response and more importantly, keep their global workforce engaged throughout,” Mercer Asia CEO Renee McGowan was quoted in a statement as saying. “As countries in Asia now begin to review the travel restrictions that have been put in place, companies will have to further assess its impact on employee mobility and their strategies.”
Asia leads
Six of the top 10 cities in this year’s ranking are in Asia. Hong Kong retained its spot for the third consecutive year as the most expensive city for expatriates both in Asia and globally due to currency movements measured against the US dollar, driving up the cost of living locally.
The global financial center is followed by Ashgabat, Turkmenistan, which overtook Tokyo, now ranked third.
Singapore is in fifth, down from two places last year, while Shanghai and Beijing are sixth and 10th, respectively.
Other cities in the top 10 costliest cities for expatriates are Zurich (4), New York (6), Bern (8) and Geneva (9).
The survey saw a dip in rankings across Chinese cities due to the currency depreciation against the US dollar. The most notable drop was for Shenyang, down 18 places from last year, ranking at 63.
Currency appreciation and price increases for goods and services saw Southeast Asian cities like Manila and Jakarta climb in rankings this year. Manila (80) is up 29 spots from last year, while Jakarta (86) climbed 19 places. Mumbai (60) is India’s most expensive city, while Kolkata (185) is the least expensive Indian city ranked.
Covid-19
The company said the Covid-19 pandemic has spurred organizations to reassess their global mobility programs with a focus on the well-being of their expatriate employees.
“As they leverage new working arrangements, changing technology and adaptive ways of thinking, organizations are considering alternate forms of international assignments in addition to traditional mobility programs to sustain their overseas operations and workforces,” Mercer said.
“Reductions in staff and salaries as well as changes to benefit programs have challenged overseas expansion strategies, despite an appetite to grow and scale globally while navigating the uncharted waters of a health and economic crisis,” it added.
According to Mercer, as organizations re-examine talent portfolios, mobility programs and remuneration packages, accurate and transparent data is essential to compensate fairly for all types of mobility assignments, taking into account changes resulting from the current pandemic and subsequent market volatility.
Due to the timing of the Covid-19 outbreak, Mercer said it conducted further analysis on availability of goods in April and May to verify pricing.
Mercer’s survey uses New York City as the base city for all comparisons and currency movements are measured against the greenback. The survey includes over 400 cities throughout the world; this year’s ranking includes 209 cities across five continents.
Specific factors
Mercer’s survey finds that specific factors such as currency fluctuations, cost inflation for goods and services, and instability of accommodation prices are essential to determining the cost of expatriate packages for employees on international assignments.
“The Covid-19 pandemic reminds us that sending and keeping employees on international assignments is a huge responsibility and a difficult task to manage,” Ilya Bonic, career president and head of Mercer strategy, was quoted in the statement as saying.
“Rather than bet on a dramatic resurgence of mobility, organizations should prepare for the redeployment of their mobile workforces, leading with empathy and understanding that not all expatriates will be ready or willing to go abroad,” Bonic added.
In the short term, preparation for this new approach to global mobility may involve re-relocating assignees who have been repatriated. In the medium term, the priority will be about realigning the mobile workforce with new economic models centered on shortened supply chains, more regional moves and a renewed need to train talent.
Greater, smaller
In addition to these concerns, relevant information about the cost and location of assignments worldwide will be a critical factor post-crisis.
“Border closings, flight interruptions, mandatory confinements and other short-term disruptions have affected not only the cost of goods and services, but also the quality of living of assignees,” Bonic said. “Climate change, issues related to environmental footprint, and health system challenges have pushed multinationals to consider how a city’s efforts around sustainability can impact the living conditions for their expatriate workers. Cities with a strong sustainability focus can greatly improve living standards, which can in turn improve employee well-being and engagement.”
Properly vetting locations and compensating employees on international assignments is as important as it can be costly. Mercer’s survey shows that costs of goods and services shift with inflation and currency volatility, making overseas assignment costs sometimes greater and sometimes smaller.
“Sudden changes to exchange rates have been mainly driven by the impact Covid-19 is having on the global economy,” Yvonne Traber, global mobility product solutions leader at Mercer, was quoted in the statement as saying. “This volatility can affect mobile employees in a variety of ways, from shortages and price adjustments for goods and services, to supply chain disruptions or when employees are paid in home country currency and need to exchange funds into the host country for local purchases.”
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