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The rising cost of living is placing strain on workers across the globe. New data has revealed the cities that are worst affected, which leaders in major Australian cities can leverage to provide support for struggling staff.
The rise of globalisation and the ease of long-distance communication has made it far simpler for people to work across borders. In fact, reports show globalisation is at an all-time high, with some experts claiming that a “global mindset” may become a business necessity in the coming years.
This breaking down of barriers has made way for people working across borders. The benefits this can bring to flexibility and wellbeing are clear; however, it’s important to recognise the trends driving this working model.
Cost of living has quickly become a top concern for families across the world and may be influencing where people call home.
According to Mercer’s Cost of Living City Ranking 2024, the most expensive cities for international workers are:
- Hong Kong
- Singapore
- Zurich
- Geneva
- Basel
- Bern
- New York City
- London
- Nassau
- Los Angeles
Contrasting this were the 10 least expensive cities:
- Abuja
- Lagos
- Islamabad
- Bishkek
- Karachi
- Blantyre
- Dushanbe
- Durban
- Windhoek
- Havana
A variety of factors influenced the rankings of these cities, including:
- Inflation and exchange-rate fluctuations are directly affecting the pay and savings of internationally mobile employees (or those executing an international assignment).
- Heightened economic and geopolitical volatility, as well as local conflicts and emergencies, have led to additional expenses in areas such as housing, utilities, local taxes and education.
- In the case of the higher-ranking cities (Hong Kong, Singapore, and Zurich), factors such as expensive housing markets, high transportation costs and higher costs of goods and services have all contributed to high living costs.
- Conversely, in Islamabad, Lagos, and Abuja the demonstrably lower costs of living for international assignees have, in part, been driven by currency depreciations.
For the Pacific region, Sydney tops the list at 58th place, followed by Noumea (60), Melbourne (73), and Brisbane (89). Auckland and Wellington remain the least expensive Pacific locations, coming in at 111th and 145th, respectively.
These trends are not only helpful for employees but also for employers looking to identify cost-effective locations for operating.
“Cost-of-living challenges have had a significant impact on multinational organisations and their employees. It is important for organisations to stay informed about cost-of-living trends and inflation rates and seek input from employees on these issues to effectively manage their effects,” said Yvonne Traber, Mercer’s global mobility leader.
Employers should look to support employees through financially stressful periods as the flow-on effects extend beyond the wellbeing of the individual.
Traber said: “High living costs may cause assignees to adjust their lifestyle, cut back on discretionary spending, or even struggle to meet their basic needs. To offset these challenges, employers can offer compensation packages that include housing allowances or subsidies or provide other support services. They can also explore alternative talent sourcing strategies.”
These themes have become so severe that even travelling to work has become an expensive prospect. The number of people working is steadily rising too, as people cannot afford not to.
Employers can benefit by keeping their ear to the ground and assisting employees through hardship. This can positively influence retention and attraction, bolstering organisational efficiency.
However, businesses are also feeling the pressure of the cost-of-living crisis and may not be able to afford pay rises. This is where benefits come in and can help drive business outcomes without breaking the bank.
