Ever since the recent financial crash and the economic crisis that followed, we have been living in far more volatile economic times. Last year was considered to be especially volatile with rising geopolitical tensions leading to: currency fluctuations, cost inflation for goods and services and volatility in accommodation prices. The knock-on effects of this can be felt within the talent management sphere, particularly in the relocating of talent nationally and internationally.
Hiring professionals need to have a firm grasp on the cost of living scenarios within their key national or global hiring destinations, as it is changing dramatically, according to city, and is having a significant year-on-year impact on your talent pricing, budgeting and placement strategy. A city that was a viable place for talent last year might not be economically right this year and vice versa.
And one way you can stay on top of the key cost of living changes for major cities with a view as to how they might affect starting salaries and relocation packages is the 2014 Mercer Cost Of Living survey, which I have reviewed and commented on in the context of hiring below.
London, you cannot be serious…
One of the first areas which drew my attention had to be the UK, which saw some extreme rises in the cost of living in specific cities. Are you planning to hire or send talent to London? Then you may need to up your budget, because in one year this has zoomed from the 25th most expensive city in the world to the 12th, thanks largely to massive increases in house prices which grew by a record 25 percent over the past year. Other fast rising cities to watch out for in the UK, but which are thankfully starting from a more modest cost base, are Birmingham (moving from 135 to 90), Glasgow (157 to 108) and the oil rich Aberdeen (moving from 128 to 94).
German cities have also seen some sharp rises in the cost of living with Munich (55) jumping 26 places, Frankfurt (59) climbing 24 places and Berlin rising 31 places.
New York never sleeps
The U.S. takes about 50 percent of all global expats, according to a Hiring Lab survey, and so the hiring climate in American cities will be of worldwide relevance. The U.S. dollar has been stable against other major currencies, which has led to many U.S. cities rising on the rankings for most expensive city. Rental price rises in New York pushed it from 16th place to 8th place. Los Angeles jumped 10 places to 62 and San Francisco (start-up country) has climbed 18 places. Boston, Cleveland, Miami all climbed up the rankings. So, expect upward price pressures on salaries and expatriate programs in these locations versus last year to meet the sharp rise in cost of living.
Asia Pacific moving further out of reach?
Let’s not forget Asia Pacific, another popular destination for expatriates and international hiring initiatives. The already expensive Hong Kong (3) and Singapore (4) climbed 3 and 1 places, respectively. So, these locations will be even more challenging to hire in than they were last year from a compensation point of view.
So, there you have it; these are the biggest climbers in terms of cost of living of the key global recruiting destinations. You can find more information about this and see who the biggest fallers are too on the Mercer Cost of Living survey press release.