Asset manager Mercer has published its cost of living city ranking, showing the most expensive places for expats to live in around the world.
This year’s ranking includes 209 cities across five continents and measures the comparative cost of more than 200 items in each location, including housing, transportation, food, clothing, household goods, and entertainment.
The rankings provide important insight for multinationals on the cost of recruiting or relocating an expatriate in Africa, and also help human resources leaders to structure a remuneration package to attract the right skills for an assignment, said senior associate at Mercer Africa Stevens Kawoubouga.
“This is because a more expensive destination for expatriates makes it costly to multinationals, since the cost of sending an employee on an assignment increases,” he said.
“Importantly, given the impact of Covid-19 pandemic on African economies, organisations could use the cost of living rankings to consider implementing regional pay structures to enable talents to move more efficiently across borders by mitigating some of the key challenges when it comes to cost of living, pay competitiveness and purchasing parity.”
Globally, Mercer’s 2021 ranking found that Ashgabat in Turkmenistan is the most expensive city for international employees, pushing Hong Kong to second place.
Beirut ranked third, climbing 42 positions up the ranking as a result of a severe and extensive economic depression due to the escalation of several crises — the country’s largest financial crisis, Covid-19, and the Port of Beirut explosion in 2020.
Tokyo and Zurich each dropped one spot from third and fourth respectively to fourth and fifth positions, and Shanghai ranked sixth, up one place from last year. Singapore moved from fifth place to seventh.
Other cities appearing in the top 10 of Mercer’s most costly cities for international employees are Geneva (8), Beijing (9), and Bern (10).
The world’s least expensive cities for international employees, according to Mercer’s survey, are Tbilisi in Georgia (207), Lusaka in Zambia (208), and Bishkek in Kyrgyzstan, which ranked as the least costly city at 209th.
Africa and South Africa
Kawoubouga says N’Djamena in Chad remains the most expensive city in Africa again.
“The Chadian economy is still recovering from pressures from a plummeting oil price, growing internal and external debts and a relatively small expat market.
“Despite relatively low inflation, rentals in N’Djamena remain one of the highest on the continent. In some instances, accommodation prices are similar to what one could expect to pay in much more developed cities such New York and London,” he said.
Johannesburg (184) is seen as a cheaper place to live than Cape Town (178). However, both cities have become less affordable destinations for expats in 2021 mainly due to a stronger rand against the US dollar.
“In September 2020, the rand was trading around R17 against the US dollar as the economy was experiencing a decline in growth of 7% resulting from the impact of the pandemic,” said Kawoubouga.
“The government started implementing stricter lockdown laws, which in turn limited prospects of economic recovery and growth. Various key local sectors of the economy suffered a decline in economic activity, the worst the country has experienced in a century,” he said.