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Ilya Bonic, Mercer Career Business Senior Partner and President.

In a rapidly changing world, mobility has become a core component of multinational organizations global talent strategy.

To support the growing number of international assignees working in an increased number of locations, organizations are focusing on evaluating assignments from a cultural perspective, preparing for regional and lateral moves and modifying compensation approaches to stay competitive. As organizations grapple with these challenges, they are working hard to accommodate the needs of their workforce and to support employees’ careers.

According to Mercer’s 2017 Global Talent Trends Study, fair and competitive pay as well as opportunities for promotion are top priorities for employees this year – not surprising given the current climate of uncertainty and change.

As a result, multinational organizations are carefully assessing the cost of expatriate packages for their international assignees. Mercer’s 23rd annual Cost of Living Survey finds that factors like instability of housing markets and inflation for goods and services contribute to the overall cost of doing business in today’s global environment.

“Globalization of the marketplace is well documented with many companies operating in multiple locations around the world and promoting international assignments to enhance the experience of future managers,” says Ilya Bonic, Mercer Career Business Senior Partner and President.

“There are numerous personal and organizational advantages for sending employees overseas, whether for long- or short-term assignments, including career development by obtaining global experience, the creation and transfer of skills, and the re-allocation of resources.”

Mercer’s 2017 Cost of Living Survey finds Asian and European cities – particularly Hong Kong, Tokyo, Zurich, and Singapore – top the list of most expensive cities for expatriates. The costliest city, driven by cost of goods and security, is Luanda, the capital of Angola.

Mercer’s authoritative survey is one of the world’s most comprehensive, and is designed to help multinational companies and governments determine compensation allowances for their expatriate employees. New York is used as the base city and all cities are compared against it. Currency movements are measured against the US dollar. The survey includes over 400 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.

“While historically mobility, talent management, and rewards have been managed independently of one another, organizations are now using a more holistic approach to enhance their mobility strategies. Compensation is important to be competitive and must be determined appropriately based on the cost of living, currency, and location,” says Bonic.

“Despite moderate price increases in most of the European cities, European currencies have weakened against the US dollar, which pushed most Western European cities down in the ranking,” explains Constantin-Métral.

“Additionally, other factors like the Eurozone’s economy have impacted these cities.”

“Egypt’s decision to allow its currency to float freely in return for a 12 billion dollar loan over three years to help strengthen its economy resulted in the massive devaluation of the Egyptian Pound by more than 100% against the US dollar, pushing Cairo down the ranking” says Constantin-Métral.”

Quite a few African cities continue to rank high in this year’s survey, reflecting high living costs and prices of goods for expatriate employees.

Luanda takes the top spot as the most expensive city for expatriates across Africa and globally despite its currency weakening against the US dollar.

Luanda is followed by Victoria, Ndjamena, and Kinshasa.

Tunis falls six spots to rank 209 as the least expensive city in the region and overall.

“The strengthening of the Japanese yen along with the high costs of expatriate consumer goods and a dynamic housing market pushed Japanese cities up in the ranking,” says Constantin-Métral.

“However, the majority of Chinese cities fell in the ranking due to the weakening of the Chinese yuan against the US dollar.”

“Overall, US cities either remained stable in the ranking or have slightly increased due to the movement of the US dollar against the majority of currencies worldwide,” says Constantin-Métral.

“Inflationary concerns continued to cause some South American cities to rise in the ranking, whereas the weakening of the local currencies in some of the region’s cities caused them to drop in the ranking,” says Constantin-Métral.

“The Canadian dollar has appreciated in value triggering the major jumps in this year’s ranking,” concludes Constantin-Métral.

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