Madrid and Barcelona improve their competitiveness by reducing their living costs and being among the most attractive cities in the world for expatriate professionals. The two cities Spanish down, in the case of the capital five places, from 82 to 87, and in the city of Barcelona, 11 steps and it goes from 91 to 102, with respect to 2019.
The data is included in the annual report on Cost of Living 2020, prepared by the consulting firm Mercer, in order to serve as a document to design the compensation strategy of multinationals for their expatriates. “These two Spanish cities are now more competitive, and that is a factor to be taken into account by companies when it comes to expatriate professionals, who usually have to compensate with salary supplements when they move them to cities with a high cost of living ”, explains Juan Vicente Martínez, head of Mercer’s career area. This is the case of Hong Kong, which is at the top of the list of the most expensive cities for expats, and among the top 10 in the ranking remain Tokyo, Zurich, Singapore, New York or Beijing.
The report uses New York City as a benchmark and compares the currency movements of other cities compared to the US dollar, and includes in this year’s edition data from 209 cities on five continents, measuring the comparative cost of more 200 items at each location, including housing, transportation, food, clothing, household items, and entertainment.
The crisis derived from the pandemic caused by Covid-19 is conditioning in the short term the decisions of international mobility of workers. In the medium term, organizations will seek to transfer their executives to regionalize their operations and reduce costs, but at the same time they will have to ensure the well-being of their professionals.
“There will be a reduction in expatriates, but not only because of the circumstances of the companies, but also because there are destinations that you will not want to go to for safety and well-being issues,” says Martínez, who also highlights the fact that that the health crisis has made digitization explode, so that physical mobility is no longer so necessary. “It has been seen that remote work works and that can affect international mobility, which will also be necessary to continue developing business,” says the consultant.
In second place in the ranking is Asjabad, the capital of Turkmenistan, which has climbed five places due to hyperinflation in its economy. Behind her are Tokyo, Zurich, Singapore, New York, Shanghai, Bern, Geneva and Beijing. By contrast, the cheapest cities in the world are Tunisia, Windhoek, in Namibia, in addition to the capitals of Uzbekistan and Kyrgyzstan, Tashkent and Biskek. At the European level, Zurich (4th), Bern (8th) and Geneva (9th) remain among the 10 most expensive cities, while others such as Paris (50), Milan (47) and Frankfurt (76) have dropped several places.
All this, affirms the consultant, as a consequence of the weakening of the euro against the US dollar and a growth of the eurozone close to zero. Despite these circumstances, no risk of increased inflation has been observed.
To adequately adapt international mobility programs and adjust expatriate compensation plans to the new reality, companies must take into account currency fluctuations, the cost of inflation of goods and services, and price volatility. of the accommodation.
“The drastic changes in exchange rates are causing great volatility in the markets, which, in turn, can reduce the purchasing power of expatriates. Organizations must value the reassignment of their international employees to other destinations and empathize with the reality that some do not want to change their place of residence again, “adds Martínez, who stresses that in Europe, if the de-escalation process is done well and the virus is controlled, certain guarantees can be given and the coming months may be key for the continent to become attractive and to attract professionals from multinationals. “If you analyze the cost and quality of life of some cities, among which are Madrid, Barcelona or Lisbon, the balance is good,” concludes the consultant.
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