Luanda, Angola’s capital city, is world’s the costliest location for expatriates, ahead of such cities as New York, Tokyo, Hong Kong, Geneva, Switzerland, according to the 2013 Cost of Living Survey published by Mercer LLC, the global consulting talent, health, retirement and investments subsidiary of Marsh & McLennan Companies. N’Djamena, Chad, ranked number four, the second of two African cities on Mercer’s top ten list.
Other cities rounding out the top ten are Moscow (2nd), Tokyo (3rd), Singapore (5th), Hong Kong (6th), Geneva (7th), Zurich, Switzerland (8th), Bern, Switzerland (9th) and Sidney, Australia (10th).
Currency fluctuations resulting from such events as economic and political upheavals, and the impact of inflation on goods and services have affected the cost of expatriate programs as well as the city rankings. The cost of expatriate housing is typically the biggest expense for employers.
“Despite being one of Africa’s major oil producers, Angola is a relatively poor country yet expensive for expatriates since imported goods can be costly. In addition, finding secure living accommodations that meet the standards of expatriates can be challenging and quite costly,” Barb Marder, senior partner and Mercer’s global mobility practice leader, said in an official statement.
Marder said recent world events, including economic and political upheavals, which resulted in currency fluctuations, cost inflation for goods and services, and volatility in accommodation prices have impacted the top ten cities on the list, making them expensive.
The Cost of Living Survey helps 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 U.S. dollar. The survey covers 214 cities across five continents and measures the comparative cost of over 200 items in each location, including housing, transportation, food, clothing, household goods, and entertainment. It produces individual cost of living and rental accommodation cost reports for each city surveyed.
With many of its global clients expanding operations in Africa and demanding reliable data, Mercer has been keeping close tabs on costs in local cities while deepening its footprint on the continent as a whole. The firm’s top executives see Africa as a potential talent hub, containing a critical mass of individuals with the skills and expertise required by employers in a specific company, industry or collection of industries. They note that, because of a youth bulge, Africa‘s labor force will be larger than China‘s by 2035.
“If Africa can leverage its competitive advantage in having a younger workforce and can prepare and equip them for the future by focusing on the four accelerators to create employment and talent opportunities, the continent may be the next location where employers seek for talent,” argues Orlando Ashford, president of Mercer’s Talent business.
At the beginning of September, Mercer acquired Global Remuneration Solutions (Pty) Ltd., a leading compensation and benefits survey data and rewards information provider headquartered in South Africa, and with which Mercer has had a strategic alliance since 1999. The transaction strengthens Mercer’s position not only in South Africa, but also in 36 other sub-Saharan countries where GRS conducts compensation and benefits surveys and provides a range of rewards and mobility products and consulting to local and international organizations.
“Africa is an important and expanding market for Mercer. The acquisition of GRS is tangible evidence of our commitment to invest in the continent,” said Gaurav D. Garg, Mercer’s regional president, Growth Markets. “We believe GRS’ knowledge of Africa will complement Mercer’s expertise in pensions, health and benefits, investment and talent consulting.”
South Africa, with its large and growing economy, is a particularly significant market for the firm. “South Africa is experiencing a major shift from state to private pensions and facing rising healthcare premiums, creating significant opportunities for Mercer to consult in benefits, investment, and the talent and rewards sectors,” Garg said.
