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United Kingdom
London, 28 April 2009

• European cities dominate the top of the ranking
• Vienna scores highest for overall quality of living, Baghdad the lowest
• Singapore ranks top for city infrastructure; London ranks eighth

Vienna has passed Zurich to take the top spot as the world’s city with the best quality of living, according to the Mercer 2009 Quality of Living Survey. Geneva retains its position in third place, while Vancouver and Auckland are now joint fourth in the rankings.

Overall, European cities continue to dominate the top locations in this year’s survey. In the UK, London ranks at 38, while Birmingham and Glasgow are jointly at 56. In the US, the highest ranking entry is Honolulu at position 29. Singapore (26) is the top-scoring Asian city followed by Tokyo at 35. Baghdad, ranking 215, remains at the bottom of the table.

The rankings are based on a point-scoring index, which sees Vienna score 108.6, and Baghdad 14.4. Cities are ranked against New York as the base city with an index score of 100. Mercer’s Quality of Living ranking covers 215 cities and is conducted to help governments and major companies place employees on international assignments. See top 50 quality of living rankings below.

Slagin Parakatil, senior researcher at Mercer, commented: “As a result of the current financial crisis, multinationals are looking to review their international assignment policies with a view to cutting costs.”

“Many companies plan to reduce the number of medium to long-term international assignments and localise their expatriate compensation packages where possible though the hardship allowance, based on quality of living criteria, will remain an essential component of the package,” he added.

This year’s ranking also identifies the cities with the best infrastructure based on electricity supply, water availability, telephone and mail services, public transport provision, traffic congestion and the range of international flights from local airports.

Singapore is at the top of this index (score 109.1) followed by Munich in second place and Copenhagen in third. Japanese cities Tsukuba (4) and Yokohama (5) fill the next two slots, whilst Dusseldorf and Vancouver share sixth place. Baghdad ranks at the bottom of the table with a score of only 19.6. See top 50 infrastructure rankings below

Mr Parakatil commented: “Infrastructure has a significant effect on the quality of living experienced by expatriates. Whilst often taken for granted when functioning to a high standard, a city’s infrastructure can generate severe hardship when it is lacking. Companies need to provide adequate allowances to compensate their international workers for these and other hardships.”

Americas

There have been few changes in the rankings for North American cities. Canadian cities still dominate the top of the index for this region. Vancouver (4) retains the top spot and Honolulu (29) is the city in the United States with the highest quality of living. Washington and New York remain in positions 44 and 49 respectively.

In Central and South America, San Juan in Puerto Rico retains the highest ranking at 72, followed by Montevideo at 79. Port au Prince (206) in Haiti continues to rank lowest in the region and has gone down four places in the overall ranking due to food shortages experienced in 2008 and the subsequent riots.

Mr Parakatil commented: “A number of South and Central American countries have experienced positive changes. But on the whole, political and security issues, and the incidence of natural disasters, continue to hinder the improvement of quality of living in the region. Shortages of consumer goods have also contributed to a decline in quality of living in some cities.”

In terms of city infrastructure, Vancouver (6) again tops the ranking for the whole of the region, with Atlanta following in position 15. Santiago in Chile has the best city infrastructure in Central and South America, whereas Port au Prince is again the lowest ranking at 212.

Europe

Europe’s cities once more dominate the world’s top 10 for quality of living. Vienna is the city rated with the best quality of living worldwide, moving up one place in the rankings following improvements in Austria’s political and social environment. The rest of the top 10 for Europe are dominated by German and Swiss cities, most of them retaining last year’s ranking and scores. Zurich, in second place, is followed by Geneva (3), Dusseldorf (6), Munich (7), Frankfurt (8) and Bern (9).

Many Eastern European cities have seen an increase in quality of living. A number of countries which joined the European Union back in 2004 have experienced consistent improvement with increased stability, rising living standards and greater availability of international consumer goods. Ljubljana in Slovenia, for example, moves up four places to reach 78 while Bratislava moves up three places to 88. Zagreb moves three places to 103.

In the city infrastructure index, German cities fair particularly well with Munich (2) the highest ranked in the region, followed by Dusseldorf (6) and Frankfurt in joint eighth place with London. “German city infrastructure is amongst the best in the world, in part due to its first class airport facilities and connections to other international destinations” said Mr Parakatil.

London’s ranking in the infrastructure index reflects the high level of public services offered, with its extensive public transport network and wide variety of telecommunication services.

Middle East and Africa

Dubai (77) in the United Arab Emirates and Port Louis in Mauritius (82) are the region’s cities with the best quality of living. Dubai’s transport facilities have witnessed improvements, with the development of its road infrastructure and expansion of its international airport, and the city is up six places in the ranking.

Cape Town in South Africa, previously the city in the region with the best quality of living, has dropped substantially in this year’s ratings (from 80 to 87 in 2009). This move follows violent riots in South Africa’s main cities in 2008.

Baghdad (215) retains its position at the bottom of the table, though its index score has increased (from 13.5 to 14.4 in 2009) due to some slight improvements in its infrastructure and steps taken to encourage investment. Nevertheless, the lack of security and stability continue to have a large impact on quality of living and the city’s score remains far behind Bangui (29.3) in the Central African Republic, which is second to last.

In the city infrastructure index, most of the region’s cities rank below 100. The exceptions are Dubai (35),Tel Aviv (55) Jerusalem (70), Abu Dhabi (72), Port Louis in Mauritius (92) and Cairo (93). Baghdad (215) is again at the bottom of the list with a city infrastructure score of 19.6, while Port Harcourt in Nigeria is at 214, scoring 30.5.

Mr Parakatil continued: “Many countries on the African continent are experiencing continued political and economic unrest, making life for expatriates very difficult. This is generally reflected in the higher compensation and benefits packages offered there by multinationals, compared to other regions of the world.”

Asia Pacific

Auckland (4) retains its position as the highest ranking city for quality of living in the region. Sydney follows at 10 and Wellington in New Zealand at 12. While the majority of the region’s cities retain a similar ranking to last year, Singapore (26) is the region’s highest riser, up six places since 2008. The city has gained importance as a financial centre and offers a wide range of international and private schools to cater to its expatriate community. Beijing has also moved three places in the ranking, up from 116 to 113, mainly due to improvements in public transport facilities from the Olympic Games last August.

Dropping down in the rankings, mainly due to a decline in stability and security are Bangkok (from 109 in 2008 to 120) and Mumbai (from 142 to 148). Thailand’s political turmoil continued throughout 2008 and 2009 with frequent and violent demonstrations and rallies taking place in Bangkok. Terrorist attacks in Mumbai have led to the city’s decline in quality of living for expatriates. Dhaka in Bangladesh holds the lowest ranking in the region at 205.

Mr Parakatil commented: “As a region, Asia Pacific is highly diverse. Recent political unrest and terrorist attacks in some cities in the region have negatively impacted the quality of living there. In addition to providing an appropriate hardship allowance, companies need to make sure they review their expatriate strategies by implementing specific safety measures such as ensuring their expatriates’ accommodation is under surveillance and providing effective channels of communication should evacuation be necessary.”

For city infrastructure, Singapore has the highest score world-wide (109.1). The city boasts an airport with excellent facilities and connections, as well as an efficient and extensive public transport network. Other high rankers in the region include Hong Kong (8), Sydney (11) and Tokyo (12). Dhaka ranks lowest in the region at 197.

Notes for Editors

The worldwide rankings are produced from the most recent Worldwide Quality of Living Survey, conducted by Mercer. Individual reports are produced for each city surveyed. Comparative quality of living indexes between a base city and a host city are available, as are multiple city comparisons.

Further information is available from Mercer Client Services, on tel. +48 22 434 5383. Alternatively, please visit www.mercer.com/qualityofliving

Data was largely collected between September and November 2008 and is regularly updated to take account of changing circumstances. In particular, the assessments are revised in the case of any new developments. The Mercer database contains more than 420 cities, however only 215 cities have been considered for the quality of living 2008 ranking in order to compare them from one year to the next.

Compensating expatriates to live and work in difficult locations: determining appropriate allowances and incentives

The provision of incentives to reward and recognise the efforts that employees and their families make when taking on international assignments remains a typical practice, particularly for difficult locations. Common incentives include a quality of living allowance and mobility premium. Companies need to be able to determine their compensation package in a rational, consistent and systematic way.

Quality of living or hardship allowances are designed to compensate expatriates for differences in the quality of living between their home and host locations. The mobility premium is more intended to compensate for the inconvenience of being uprooted and having to work in another country. The former is typically location-related whilst a mobility premium is usually independent of the host location. A number of major international companies combine these premiums but the vast majority of international companies provide them separately. The latter approach has the advantage of clarity and transparency.

Mercer hardship allowance recommendations

Mercer evaluates local living conditions in all the 420 cities it surveys worldwide. Living conditions are analysed according to 39 factors, grouped in 10 categories:

• Political and social environment (political stability, crime, law enforcement, etc)
• Economic environment (currency exchange regulations, banking services, etc)
• Socio-cultural environment (censorship, limitations on personal freedom, etc)
• Health and sanitation (medical supplies and services, infectious diseases, sewage, waste disposal, air pollution, etc)
• Schools and education (standard and availability of international schools, etc)
• Public services and transportation (electricity, water, public transport, traffic congestion, etc)
• Recreation (restaurants, theatres, cinemas, sports and leisure, etc)
• Consumer goods (availability of food/daily consumption items, cars, etc)
• Housing (housing, household appliances, furniture, maintenance services, etc)
• Natural environment (climate, record of natural disasters)

The scores attributed to each factor allow for city-to-city comparisons to be made. The result is a Quality of Living Index which compares the relative differences between any two locations. For the indices to be used in a practical manner, Mercer has created a grid that allows companies to link the resulting index to a Quality of Living Allowance amount by recommending a percentage value in relation to the index.

Top 50 cities: Quality of living

Base City: New York, US (=100)

Top 50 rankings - City infrastructure

* City Infrastructure Ranking 2009 includes the following criteria: electricity, water availability, telephone, mail, public transport, traffic congestion and airport.

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Tel: +44 20 7178 3143