Human resources firm, ECA International, have issued research findings that reveal Tokyo is the most expensive city in the world in which to live.
Expatriates throughout Asia are facing increased living expenses as a result of a weak US dollar, the latest survey from ECA International reveals. The findings, which are published by ECA on a bi-annual basis, are based upon a comparison of a basket of 128 different consumer goods and services (excluding housing, cars and education expenses) that are purchased by expatriates throughout the world in over 390 locations. The results are then used by multinational companies to calculate overseas assignment compensation; something that can have a large influence on expatriate remuneration offers.
The most expensive city in Asia in which to live was revealed as being Tokyo, with such rising costs being attributed to the strength of their currency, the yen, in comparison with the US dollar, which recently hit a 14-year low against the Japanese monetary unit. Commenting on the results Lee Quane, an ECA regional director who is based in Hong Kong said, “the ongoing appreciation of the Yuan has impacted the purchasing power of the employee (…)The recent major swings in exchange rates underline the need for companies to manage expatriate pay carefully.”
Singapore moved further up the list of countries during the second half of 2009 and is now a much more expensive city for expatriates to live in. This being attributed to both rising inflation and exchange rate fluctuations, with the Singapore dollar gaining 10% on the US dollar since March 2009. This has helped push up the cost of living in Singapore, compared with some neighboring cities whose currencies are pegged to the US dollar. Hong Kong, for example, has seen a rising cost of living that is more relative to that observed in other locations.
Despite such increases in living costs throughout Asia, Quane forecasts that this will not have a significant impact on the amount of expatriates who are relocated here as part of company’s multinational strategies: “While such increases are unlikely to deter companies from relocating staff (…), the cost of doing do is now higher than it was a year ago,” he said. “Assignees are likely to be paying higher cost of living allowances to ensure that their employees continue to maintain their purchasing power while on assignment.”
The cheapest place in Asia for expatriates was named as Ulaanbaatar, with costs in this city being just a third of those in Tokyo.