Asia takes the top two spots of the world’s most expensive city rankings for employees working abroad: Mercer’s 2023 Cost of Living Survey
- Hong Kong SAR and Singapore take the first and second spot respectively
- Mainland China cities make up five out of 10 priciest places to live in Asia
- Pakistan’s Karachi and Islamabad round out the last two spots in both the Asia and global rankings
Asia, 20 June 2023 – Hong Kong SAR and Singapore are the world’s two most expensive cities for employees working abroad, according to Mercer’s 2023 Cost of Living survey. Hong Kong SAR retained its top spot from last year, while Singapore jumped six spots to come in second this year.
Four cities in Switzerland – Zurich (3rd), Geneva (4th), Basel (5th) and Bern (7th) – along with New York (6th) in the United States, Tel Aviv (8th) in Israel, Copenhagen (9th) in Denmark and Nassau (10th) in Bahamas rounded off the Top 10 list. This year’s ranking includes 227 cities across five continents, comparing the cost of more than 200 items and rental accommodation in each location in March 2023.
Tracey Ma, Regional Mobility Leader, Asia Pacific, said, “Across the region, we have experienced high inflation in majority of the key markets, such as Singapore. In addition to the local market position, the ranking also compares across different markets over a 12-month period. Singapore’s significant jump was mainly due to its strong currency position, as well as high inflation caused by supply chain disruptions and rising fuel costs.”
Within Asia, all but nine out of 49 cities either retained or received lower rankings this year, and this includes Beijing (13) and Tokyo (19) which were part of the Top 10 in 2022. In fact, the three cities with the highest drop in rankings are from Japan, namely Yokohama (-65 to 115th), Nagoya (-62 to 113rd) and Osaka (-56 to 93rd).
Ms Ma added, “Almost all the cities in Mainland China and Japan have dropped their rankings by between 40 to 60 places. The key reasons are relatively slower consumer demand, and their weaker currency position against the US Dollar. Japan has also been experiencing low domestic consumption and that has affected its recovery from the pandemic.”
Cost of living in 2023
The key factors that have shaped the world’s economy in 2022 will continue to exert an influence into 2023. Due to the recent introduction of aggressive national monetary policies and the tightening of global financial conditions, many economies are likely to see slower income growth this year, along with rising unemployment. Debt levels among many countries remain high and core inflation has not yet peaked in many markets. Inflation and exchange-rate fluctuations are directly impacting the pay and savings of employees who are internationally mobile.
Moreover, the extensive use of remote working is causing many employees to reconsider their priorities, assess their work-life balances, and think about the places in which they have chosen to live. This is also driving many organizations to reimagine their work setups. Many employers are having to rethink how they manage a globally distributed workforce, especially for those that operate in tight labor markets.
Ms Ma said, “Equity and transparency are also increasingly important factors, and Mercer’s consistent data and transparent methodologies help employers ensure these when designing and communicating international employee compensation packages. Another priority for HR leaders to work on would be to enhance employees’ experience. This is critical not only to attract and retain talent but for overall employer branding too. Organizations need to regularly review their existing policies and practices to make sure that their provisions remain competitive and relevant in the current climate.”
Almost all locations in Mainland China placed lower on the ranking as compared to 2022, with the only exception being Shanghai which kept its 12th position. This could be attributed to the shrinking housing market as well as declining demand in rental properties. But despite their overall drop in rankings, five of the top 10 most expensive cities in Asia still came from Mainland China, namely Shanghai (12), Beijing (13), Shenzhen (20), Guangzhou (36) and Qingdao (55).
In Southeast Asia, Bangkok (105) is the second most expensive city, after Singapore. Other cities featured in the ranking are Phnom Penh (132), Manila (133), Jakarta (151), Hanoi (156), Ho Chi Minh City (164), Bandar Seri Begawan (172), Kuala Lumpur (180), Yangon (204), Vientiane (209), and Johor Bahru (212), the least expensive city in Southeast Asia.
Of the 49 Asian cities that were included in this year’s survey, the Pakistan cities of Karachi (226) and Islamabad (227) are the least expensive places both in Asia and globally for international employees to live in.
Regarding Asia’s overall growth trajectory and what employers should consider when moving employees to the region, Ms Ma said, “Growth in Asia's emerging economies has shown resilience in 2023, but governments must ensure they manage risks moving forward. The region is also set to contribute a significant amount of global growth this year. However, the pandemic has impacted the service accounts of some of Asia’s regional economies, and full recovery to pre-pandemic levels might still take some time.
“At the same time, employers should get updated data and research on currency fluctuations, and assess inflationary and deflationary pressures on goods, services and accommodation in all operating locations.
With countries and cities continuously striving to attract international businesses and mobile employees, organizations should look out for locations that can successfully combine flexible governance for mobile talent, a high quality of life and a reasonable cost of living.”
Rankings for Other Regions
Europe
Five European cities are in the global top ten of the world’s most expensive locations. The first four cities, Zurich (3), Geneva (4), Basel (5) and Bern (7), are in Switzerland, with the fifth being Copenhagen. Other most expensive cities in Europe include London (17), Vienna (25), Amsterdam (28), Prague (33) and Helsinki (34).
Sarajevo (203) is the least expensive European location. Other low cost cities in Europe include Skopje (200), Krakow (190), Wroclaw (186) and Minsk (182).
India, Middle East and Africa
Mumbai (147) is the most expensive city in India. The other India cities in the list are New Delhi (169), Chennai (184), Bengaluru (189), Hyderabad (202), Kolkata (211) and Pune (213).
Tel Aviv (8) is the costliest city in the Middle East for international employees. The next most costly cities in this region are in the United Arab Emirates, namely Dubai (18) and Abu Dhabi (43). Saudi cities such as Riyadh (85) and Jeddah (101) have also made the global list.
In Africa, Bangui (26), Djibouti (27) and Luanda (30) are the three costliest cities. High in the rankings for this region are also Kinshasa (32) and Conakry (39). The cheapest city in Africa is Windhoek (222).
The Americas
New York City (6) is the most expensive city in North America, followed by Los Angeles (11) and San Francisco (14). Toronto is ranked the most expensive in the Canada (90), followed by Vancouver (116), Montreal (135), Ottawa (137 and Calgary (145).
Within Central and South America, Nassau ranks as the most expensive location for international employees (10), followed by San Juan (44) and Buenos Aires (45). Havana (225) ranks the lowest, followed by Bogota (214) and Managua (201).
Pacific
Sydney (56) ranks as the costliest city in the Pacific region, outrunning Noumea (70). Auckland (111) and Wellington (139) in New Zealand are the least expensive locations for international employees in the region.
About Mercer’s Cost of Living Survey
Mercer's widely recognized Cost of Living ranking is one of the world’s most comprehensive studies and is designed to help multinational companies and governments determine compensation strategies for their international assignees. New York City is used as the base city for all city ranking comparisons and currency movements are measured against the US dollar. The survey includes 400+ cities throughout the world; this year’s ranking includes 227 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 data collected provides all of the key elements employers need to design efficient and transparent compensation packages for international assignees. Learn more here.
About Mercer
Mercer believes in building brighter futures by redefining the world of work, reshaping retirement and investment outcomes, and unlocking real health and well-being. Mercer’s approximately 25,000 employees are based in 43 countries and the firm operates in 130 countries. Mercer is a business of Marsh McLennan (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people, with 85,000 colleagues and annual revenue of over $20 billion. Through its market-leading businesses including Marsh, Guy Carpenter and Oliver Wyman, Marsh McLennan helps clients navigate an increasingly dynamic and complex environment. For more information, visit www.mercer.com. Follow Mercer on Twitter @Mercer.