Global consulting firm Mercer released its 2018 Cost of Living Survey. As a result of the digital era, aging populations, skills shortages, and unpredictable political and economic contexts, the landscape of global business is changing as are jobs that are critical for the future of work.
Mercer’s Global Talent Trends 2018 Study - India indicates that the C-suite considers improving the ability to move jobs to people and people to jobs as among their top three priorities, which would have the biggest impact on business performance. Issues surrounding global talent mobility have become a central aspect of many organizational growth strategies, including on whom to mobilize, where and what to pay, in the context of assessing the cost of expatriate packages for their international assignees. According to Mercer’s 24th annual Cost of Living Survey, factors like the instability of housing markets, low inflation and fluctuating prices for goods and services are impacting the cost of doing business in various cities around the world.
Mumbai is ranked higher and more expensive than cities like Melbourne (58), Frankfurt (68), Buenos Aires (76), Stockholm (89) and Atlanta (95) of the world. While cities such as Melbourne and Buenos Aires have fallen in their rankings, Mumbai’s jump in ranking is also attributable to a continued surge in prices of food, alcohol and domestic supplies.
New Delhi (103), however, has managed to claw its way out of the top 100 categories this year, with a drop in the rankings by four positions. Chennai (144) has dropped the most by nine spots in the list, compared to other Indian cities. However, the rankings of cities are also impacted by the change in movement of other cities in the list. Similar to Mumbai, New Delhi shows a relative increase in the cost of living due to rise in prices of transportation and sports & leisure related category of services. In Chennai, prices of alcohol and clothing remain on the higher side.
Bengaluru (170) has fallen in the cost of living ranking and driven significantly by a relative drop in prices on transportation, which includes taxi fares, cost of auto and auto parts as well as running costs. Kolkata (182) remains the least expensive among the surveyed Indian cities, though has moved up two spots, led in part due to increase in costs of domestic supplies and home services.
“According to Mercer’s International Policies and Practices Report on India, 93% of companies do compensate through a Cost of Living Allowance for their expatriate assignee. This increase in prices of goods in our cities, viewed along with currency exchange rate, has a direct impact on the Indian assignee compensation when using a balance sheet approach, making overseas assignment costs sometimes greater and sometimes smaller. In this scenario, companies are reconsidering how frequently expatriate salaries are reviewed. In balancing assignee cost with assignee satisfaction, some companies prefer to let the assignee retain the benefit of a windfall if applicable”, said Padma Ramanathan, India Practice Leader, Global Mobility at Mercer.
Multinationals are embracing this transformation by focusing on mobile talent and assessing the cost of expatriate packages for their international assignees. “With technology advances and the importance of a globally connected workforce, deploying talent remains a key component of a multinational’s business strategy,” said Ilya Bonic, President of Mercer’s Career business. “While a mobile workforce allows organizations to achieve greater efficiency, utilize top talent, and be cost effective with international projects, volatile markets and slowing economic growth in many parts of the world require them to carefully assess expatriate remuneration packages.”
Other cities appearing in the top 10 of Mercer’s costliest cities for expatriates are Seoul (5), Luanda (6), Shanghai (7), N’Djamena (8), Beijing (9), and Bern (10). The world’s least expensive cities for expatriates are Tashkent (209), Tunis (208), and Bishkek (207).
For this survey of global rankings, New York City is used as the base city for all comparisons, and currency movements are measured against the US dollar. The survey includes over 375 cities throughout 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.
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