- Auckland (3) and Wellington (15) continue to rank highly in quality of living
- Vienna ranks highest for 8th year in a row
- Infrastructure is pivotal in determining quality of living for expats and cities
- Auckland ranks in top 50 for infrastructure
Auckland has held on to its number three ranking in Mercer’s annual Quality of Living Survey, once again surpassing Sydney (10) and Melbourne (16).
However, despite increased political and financial volatility in Europe, many European cities offer the world’s highest quality of living and remain attractive destinations for expanding business operations to send expatriates on assignment and establish bases abroad.
Now in its 19th year, the independent survey benchmarked 450 cities against New York to assist multi-national organisations determine wages and conditions for their employees on overseas assignments. This year’s survey paid particular attention to city infrastructure, with Auckland ranking 43rd. Singapore led the charge in the city infrastructure ranking, followed by Frankfurt and Munich both in 2nd place. Baghdad (230) and Port au Prince (231) rank last for city infrastructure.
“Economic instability, social unrest, and growing political upheaval all add to the complex challenge multinational companies face when analysing quality of living for their expatriate workforce,” said Ilya Bonic, senior partner and president of Mercer’s Career business. “For multinationals and governments it is vital to have quality of living information that is accurate, detailed, and reliable. It not only enables these employers to compensate employees appropriately, but it also provides a planning benchmark and insights into the often-sensitive operational environment that surrounds their workforce.
“In uncertain times, organisations that plan to establish themselves and send staff to a new location should ensure they get a complete picture of the city, including its viability as a business location and its attractiveness to key talent,” Mr Bonic added.
The report provides a qualitative measure of living conditions around the world to enable organisations to apply relative incentives to motivate employees to accept foreign assignments, particularly in a compromised quality of living location. The success factors for foreign assignments is attributed to ease of travel and communication, health considerations, the local political environment, personal safety and access to public services.
Martin Lewington, CEO Mercer New Zealand said New Zealand, and in particular, Auckland, ranked so highly due to its political and social environment.
“New Zealand cities provide a safe and secure environment for their residents, particularly Auckland and Wellington, which achieve maximum scores for relationships with other counties and internal stability. Good quality housing was a contributing factor for Auckland retaining third spot in the global rankings. Both cities also performed exceptionally well for sport and leisure activities,” said Mr Lewington.
“In terms of infrastructure there is room for improvement as Auckland ranked 43rd. Factors such as the availability of international flights and traffic congestion contributed to the perhaps lower-than-expected results,” he said.
“The report provides a qualitative measure of living conditions around the world to enable organisations to apply relative incentives to motivate employees to accept foreign assignments, particularly in a compromised quality of living location. The success factors for foreign assignments is attributed to ease of travel and communication, health considerations, the local political environment, personal safety and access to public services.
“There is room for New Zealand to improve in the City Infrastructure rankings though, with factors such as Auckland’s traffic congestion and a nation-wide low score on availability of international flights and international schools contributing to perhaps lower-than-expected results,” said Mr. Lewington.
Mercer’s authoritative survey is one of the world’s most comprehensive and is conducted annually to enable multinational companies and other organisations to compensate employees fairly when placing them on international assignments. In addition to valuable data, Mercer’s Quality of Living surveys provide hardship premium recommendations for over 450 cities throughout the world; this year’s ranking includes 231 of these cities.
Australia and New Zealand
New Zealand and Australia continue to rank highly in quality of living: Auckland (3), Sydney (10), Wellington (15), and Melbourne (16) all remain in the top 20. However, when ranked for infrastructure, only Sydney (8) makes the top ten, with Perth (32), Melbourne (34), and Brisbane (37) also ranking well for infrastructure in Oceania. By and large, cities in Oceania enjoy good quality of living, though criteria such as airport connectivity and traffic congestion are among the factors that see them ranked lower in terms of city infrastructure.
Singapore (25) remains the highest ranking city in the Asia-Pacific region, where there is great disparity in quality of living; Dushanbe (215) in Tajikistan ranks lowest. In Southeast Asia, Kuala Lumpur (86) follows Singapore; other key cities include Bangkok (131), Manila (135), and Jakarta (143). Five Japanese cities top the ranking for East Asia: Tokyo (47), Kobe (50), Yokohama (51), Osaka (60), and Nagoya (63). Other notable cities in Asia include Hong Kong (71), Seoul (76), Taipei (85), Shanghai (102), and Beijing (119). There is also considerable regional variation in the city infrastructure ranking. The highest-ranked city is Singapore (1), whereas Dhaka (214) is near the bottom of the list.
Notes to Editors
Mercer produces worldwide quality-of-living rankings annually from its Worldwide Quality of Living Surveys. Individual reports are produced for each city surveyed. Moreover, comparative quality-of-living indexes between a base city and host city are available, as are multiple-city comparisons. Details are available from Mercer Client Services in Warsaw, at +48 22 434 5383 or at www.mercer.com/qualityofliving.
The data was largely analysed between September and November 2016, and it will be updated regularly to account for changing circumstances. In particular, the assessments will be revised to reflect significant political, economic, and environmental developments.The list of rankings is provided to media for reference, and should not be published in full. The top 10 and bottom 10 cities in either list may be reproduced in a table.
The information and data obtained through the Quality of Living reports are for information purposes only and are intended for use by multinational organisations, government agencies, and municipalities. They are not designed or intended for use as the basis for foreign investment or tourism. In no event will Mercer be liable for any decision made or action taken in reliance of the results obtained through the use of, or the information or data contained in, the reports. While the reports have been prepared based upon sources, information, and systems believed to be reliable and accurate, they are provided on an “as-is” basis, and Mercer accepts no responsibility/liability for the validity/accuracy (or otherwise) of the resources/data used to compile the reports. Mercer and its affiliates make no representations or warranties with respect to the reports, and disclaim all express, implied and statutory warranties of any kind, including, representations and implied warranties of quality, accuracy, timeliness, completeness, merchantability, and fitness for a particular purpose.
Expatriates in Difficult Locations: Determining Appropriate Allowances and Incentives
Companies need to determine expatriate compensation packages rationally, consistently, and systematically using reliable data. Providing incentives to reward and recognise the effort that employees and their families make when taking on international assignments remains a typical practice, particularly for difficult locations.
Two common incentives include a quality-of-living allowance and a mobility premium:
- A quality-of-living or “hardship” allowance compensates for a decrease in the quality of living between home and host locations.
- A mobility premium simply compensates for the inconvenience of being uprooted and having to work in another country.
A quality-of-living allowance is typically location-related, while a mobility premium is usually independent of the host location. Some multinational companies combine these premiums, but the vast majority provides them separately.
Quality of Living: City Benchmarking
Mercer also helps municipalities to assess factors that can improve their quality of living rankings. In a global environment, employers have many choices about where to deploy their mobile employees and set up new business. A city’s quality of living can be an important variable for employers to consider.
Leaders in many cities want to understand the specific factors that affect their residents’ quality of living and address those issues that lower a city’s overall quality-of-living ranking. Mercer advises municipalities by using a holistic approach that addresses the goals of progressing towards excellence and attracting both multinational companies and globally mobile talent by improving the elements that are measured in its Quality of Living survey.
Mercer Hardship Allowance Recommendations
Mercer evaluates local living conditions in more than 450 cities surveyed worldwide. Living conditions are analysed according to 39 factors, grouped in 10 categories:
- Political and social environment (political stability, crime, law enforcement, etc.).
- Economic environment (currency exchange regulations, banking services).
- Socio-cultural environment (media availability and censorship, limitations on personal freedom).
- Medical and health considerations (medical supplies and services, infectious diseases, sewage, waste disposal, air pollution, etc.).
- Schools and education (standards and availability of international schools).
- Public services and transportation (electricity, water, public transportation, traffic congestion, etc.).
- Recreation (restaurants, theatres, cinemas, sports and leisure, etc.).
- Consumer goods (availability of food/daily consumption items, cars, etc.).
- Housing (rental housing, household appliances, furniture, maintenance services).
- Natural environment (climate, record of natural disasters).
The scores attributed to each factor, which are weighted to reflect their importance to expatriates, permit objective city-to-city comparisons. The result is a quality of living index that compares relative differences between any two locations evaluated. For the indices to be used effectively, Mercer has created a grid that enables users to link the resulting index to a quality of living allowance amount by recommending a percentage value in relation to the index.
Mercer is a global consulting leader in talent, health, retirement and investments. Mercer helps clients around the world advance the health, wealth and careers of their most vital asset – their people. Mercer’s more than 20,000 employees are based in 43 countries and the firm operates in over 140 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global professional services firm offering clients advice and solutions in the areas of risk, strategy and people. With annual revenue of $13 billion and 60,000 colleagues worldwide, Marsh & McLennan Companies is also the parent company of Marsh, a leader in insurance broking and risk management; Guy Carpenter, a leader in providing risk and reinsurance intermediary services; and Oliver Wyman, a leader in management consulting. For more information, visit www.mercer.co.nz. Follow Mercer on Twitter @Mercer_NZ. In the UK, Mercer Limited is authorised and regulated by the Financial Conduct Authority.