Guest Contributor | Aug 30, 2019 | 0
Windhoek least expensive city in region
The city of Windhoek in the Mercer’s 22nd annual Cost of Living Survey was recently ranked as the least expensive city in the region and globally, with Johannesburg and Cape Town also dropping fourteen and eight places consecutively.
Despite dropping off the top spot on the global list, Luanda, Angola (2) remains the highest ranking city in Africa. Kinshasa (6) follows, rising seven places since 2015. Moving up one spot, N’Djamena (9) is the next African city on the list, followed by Lagos, Nigeria (13) which is up seven places.
As volatile global markets and growing security issues, organizations continue to leverage global expansion strategies to remain competitive and to grow. Yet, few organizations are prepared for the challenges world events have on their business, including the impact on cost of expatriate packages. Mercer’s 22nd annual Cost of Living Survey finds that factors including currency fluctuations, cost inflation for goods and services, and instability of accommodation prices, contribute to the cost of expatriate packages for employees on international assignments.
“Despite technology advances and the rise of a globally connected workforce, deploying expatriate employees remains an increasingly important aspect of a competitive multinational company’s business strategy,” said Ilya Bonic, Senior Partner and President of Mercer’s Talent business.
“However, with volatile markets and stunted economic growth in many parts of the world, a keen eye on cost efficiency is essential, including a focus on expatriate remuneration packages. As organizations’ appetite to rapidly grow and scale globally continues, it is necessary to have accurate and transparent data to compensate fairly for all types of assignments, including short-term and local plus status,” he added.
According to Mercer’s 2016 Cost of Living Survey, Hong Kong tops the list of most expensive cities for expatriates, pushing Luanda, Angola to second position. Zurich and Singapore remain in third and fourth positions, respectively, whereas Tokyo is in fifth, up six places from last year. Kinshasa, ranked sixth, appears for the first time in the top 10, moving up from thirteenth place.
Other cities appearing in the top 10 of Mercer’s costliest cities for expatriates are Shanghai (7), Geneva (8), N’Djamena (9), and Beijing (10). The world’s least expensive cities for expatriates, according to Mercer’s survey, are Windhoek (209), Cape Town (208), and Bishkek (207).
Mercer’s widely recognized survey is one of the world’s most comprehensive, and is designed to help multinational companies and governments determine compensation strategies for their expatriate employees. 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.
“Maximizing return on investment with fewer resources and talent shortages worldwide makes growth initiatives more difficult for multinationals,” said Mr. Bonic. “Organizations must ensure they can facilitate the moves they need to drive business results by offering fair and competitive compensation packages.”
Mr. Bonic added that costs of goods and services shift with inflation and currency volatility making overseas assignment costs sometimes greater and sometimes smaller. Low levels of inflation have translated into fairly steady cost increases around the world.
“Exchange rates’ volatility amongst most African currencies and the concomitant impact thereof on inflation, some sooner and some later, directly contributes to the varying results when compared against the 2015 findings. The excessive cost of rented expatriate type accommodation in Luanda is greatly contributing to its retained status as one of the most expensive cities in the world to live in.” explained Mr. Carl van Heerden Mercer’s Global Mobility Leader for Africa.