A tale of 2 cities

Quality-of-living surveys guide compensation of expatriates
By Sarah Dobson
|Canadian HR Reporter|Last Updated: 07/14/2014

Canadian cities rank among the world’s best when it comes to Mercer’s Quality of Living survey — an annual ranking that helps multinational companies in compensating employees on international assignments.

Only one city in the United States — San Francisco — ranked in North America’s top five for quality of living in 2014. The rankings on this continent are dominated by Canadian cities — Vancouver, Ottawa, Toronto and Montreal — all of which ranked in the top 10 per cent globally.

The political and social environment is stable in Canada, says Luc Lalonde, principal at Mercer in Montreal.

“Relatively speaking, for large cities, I think we can say that the crime rates are lower, again on a relative basis — these are large cities we’re talking about. The general standard of health care is high, we have decent public services, a variety of restaurants and recreation options, so it’s an across-the-board thing where Canadian cities do well pretty much on all elements or all factors,” he says.

“There would not be issues to deal with or explain with potential assignees or people accepting a job, even if temporary in Canada, because the quality of living is high.”

The lowest-ranked cities include Baghdad, Iraq; Bangul, Central African Republic; and Port au Prince, Haiti.

“These locations, unfortunately, usually score low across the board,” says Lalonde.

“It’s fair to say that these locations have challenges or certainly multinational and expatriates going there are faced with some challenges — we’re talking about internal instability, poor infrastructure, safety issues and also poor health-care standards… Those are certainly major things for expats or employees or even employers sending employees there.”

The highest ranked cities globally are:

•Vienna, Austria

•Zurich, Switzerland,

•Auckland, New Zealand

•Munich, Germany

•Vancouver

The lowest ranked cities globally are:

•Baghdad, Iraq

•Bangui, Central African Republic

•Port au Prince, Haiti

•N’Djamena, Chad

•Sana’a, Yemen

The Mercer rankings are meant to assist employers both in encouraging employment mobility and staying abreast of the competition by calculating fair, consistent expatriate allowances. The quality-of-living reports are based on 39 factors within 10 categories, so organizations can figure out hardship allowances — premium compensation paid to expatriates who should expect to experience a significant deterioration in living conditions in their host location — for transfers to more than 460 cities worldwide.

The total index is based on the following categories:

•consumer goods

•economic environment

•housing

•medical and health care

•natural environment

•political and social environment

•public services and transport

•recreation

•schools and education

•socio-cultural environment.

“Those who use this information are typically multinational companies or they may be governments or public organizations that send employees on international assignments, so they need tools to make comparisons to see to what extent quality of living is similar or not, in different cities, and this way they can use indices and determine hardship allowances, if needed,” says Lalonde.

“There are many, many assignments where the difference is not significant enough for a company to provide a hardship allowance.”

Some of the details in a report about a particular city can include: availability of rental accommodations; ease of public transportation; availability of private and international schools; health insurance options; approaches to freedom of speech and religion; restrictions on the import and export of currency; and visa requirements.

Emerging cities

Some of the emerging cities in Mercer’s rankings include Wroclaw, Poland, where “there is a good talent pool and improved infrastructure,” said Lalonde, along with Manaus, Brazil, which has a major industrial sector, Cheonan, South Korea, which is “strategically located in an area where several technology companies have operations,” and Durban, South Africa, which “has seen some growth in the manufacturing industries and also it has a shipping port that has increased in importance,” he said.

European cities enjoy a high overall quality of living compared to those in other regions, with very high standards of infrastructure and health care as well as political stability and low crime levels, according to Mercer.

Those cities that received the lowest rankings in the region are found mostly in Eastern Europe, although these locations are trying to improve their infrastructure and internal stability: Tbilisi, Georgia; Minsk, Belarus; Yerevan, Armenia; Tirana, Albania; and St. Petersburg, Russia.

Asian cities are improving in quality though some, such as ones in China, continue to struggle with pervasive air pollution that impacts living quality, found Mercer. Singapore, Tokyo, Kobe, Yokohama and Osaka are among the top-ranked locations in the region while in Australasia, Sydney ranks 10th overall, with Wellington, New Zealand, at 12th.

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