Hong Kong, Zurich and Geneva are the three most expensive cities in the world for foreign workers in 2022, according to the annual Cost of Living survey by global consultancy Mercer.
Four cities in Switzerland — Zurich, Geneva, Basel and Bern — ranked second to fifth place, respectively, in the survey.
Tel Aviv in Israel was ranked the sixth most expensive city for international workers, making it the costliest in the Middle East, according to Mercer. New York City, ranked seventh globally, is the most expensive city in the Americas, according to the survey, which compared the prices of 200 goods and products in more than 400 cities.
Three other Asian cities — Singapore, Tokyo and Beijing — round out the top 10, ranking eighth, ninth and 10th, respectively. The high rankings for many Asian cities were driven by inflation and strong currencies, the report said.
“With the recent return of high inflation across the globe, employees are increasingly concerned about their purchasing power, resulting in salary increase expectations,” Mercer said.
“Companies, on the other hand, need to strike a delicate balance between controlling their costs while struggling to attract and retain talent.”
Global issues, including the Covid-19 pandemic, the war in Ukraine, exchange rate fluctuations and widespread inflation were affecting expatriate salaries and savings, the report found.
Fuel is one of the major contributing factors to the rising cost of living around the world as demand for oil surges ahead of supply.
Russia’s military offensive in Ukraine has stoked the global commodities cycle, adding to economic uncertainty, denting global growth and exacerbating inflationary pressures.
Inflation rose to 9.2 per cent in Organisation for Economic Co-operation and Development countries in April, and was at 40-year highs in the US and the UK, driven by an increase in the cost of services and food.
Dubai was ranked the 31st most expensive city for expatriates, up from 42nd last year, while Abu Dhabi dropped to 61st from 56th place during the reporting period, according to Mercer.
In the Middle East, the Saudi Arabian cities of Riyadh and Jeddah were ranked 103rd and 111th, respectively. They were closely followed by Amman in Jordan at 115, Manama in Bahrain (117), Muscat in Oman (119) and Doha in Qatar (133).
The survey also helps to determine the cost of packages for employees on international assignments, which depend on factors such as currency fluctuations, cost inflation for goods and services and accommodation expenses.
Mercer measured the comparative cost of more than 200 components — including housing, transport, utilities, food, domestic supplies and entertainment, among others — to come up with its ranking.
Copenhagen was ranked the 11th most expensive city for expatriates and London was in 15th place, Mercer said. In the US, Los Angeles, San Francisco and Honolulu also ranked in the top 20 most expensive cities.
Four cities in China also made the top 20 rankings, propelled by the strong yuan, while cities in Japan and Korea became relatively more affordable because of their weaker currencies, Mercer said.
At the other end of the spectrum, the cheapest places for expatriates to live include Ankara in Turkey, Bishkek in Kyrgyzstan and Dushanbe in Tajikistan, Mercer said. Karachi and Islamabad in Pakistan were also ranked among the cheapest cities in 2022.
A shortage of talent in developed countries, which rely heavily on foreign workers, could be exacerbated by higher living costs, Tracey Ma, Mercer’s regional mobility leader for Asia Pacific, said, according to a Bloomberg report.
The rise of remote and flexible work means companies need to rethink their approach to managing a global workforce to attract and retain talent while ensuring cost efficiency, Ms Ma said.
“The volatility triggered by Covid-19 and further worsened by the crisis in Ukraine has fuelled global economic and political uncertainty. This uncertainty, coupled with significant rising inflation in most of the countries around the world, has international assignees concerned about their purchasing power and socio-economic stability,” said Yvonne Traber, partner at Mercer and global head for the mobility business.
“Failing to adopt competitive international compensation strategies in times of uncertainty and adapt to this new world of work will undermine an organisation’s ability to attract and retain top talent.”
Top 10 most expensive cities for expatriates in 2022
- Hong Kong
- Zurich
- Geneva
- Basel
- Bern
- Tel Aviv
- New York City
- Singapore
- Tokyo
- Beijing
