AUSTRALIA COULD BECOME REGIONAL TALENT HUB: MERCER’S 2016 COST OF LIVING SURVEY
Despite volatile global markets and growing security issues, organisations continue to leverage global expansion strategies to remain competitive and grow. Yet, few organisations are prepared for the challenges that world events have on their business, including the impact on the cost of expatriate packages.
Mercer's 22nd annual Cost of Living Survey confirms 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.
Australian cities have all dramatically dropped in the 2016 Cost of Living rankings, primarily due to currency fluctuations against the US dollar. Sydney was the highest ranking local city at 42, down from 31 in 2015. Perth (69) and Melbourne (71) followed, falling from 48 and 47 in 2015 respectively. Brisbane (96), Canberra (98) and Adelaide (102) all fell more than 30 places from 2015.
"However, dropping in the cost of living rankings is not all bad news for Australia," says Lorraine Jennings, Mercer's global mobility practice leader in Australia and New Zealand.
"The drop in rankings of Australian cities against Asian cities is particularly good news. Five of the top ten most expensive cities for expats are in Asia, which means Australia could be more cost-effective and attractive for businesses to send employees on international assignments, particularly those doing business in the Asia Pacific region.
"Companies are increasingly aligning their international assignment policies with career and succession planning strategies. They are looking for more opportunities to send early career, high-potential employees and strategic business leaders abroad as part of their career development. Being a more cost-effective option than some other cities in the region means Australian cities could become a rich breeding ground for talent for multi-national companies," said Ms Jennings.
"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 organisations' 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," said Mr Bonic.
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).