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Mercer’s annual Cost of Living Survey has become the primary reference point for many multinational organizations when calculating appropriate compensation packages for employees on international assignments.
Mercer has announced the results of its 2021 Cost of Living, with Dubai (42), and Abu Dhabi (56) moving significantly in the rankings compared to 2020, increasing the attractiveness and affordability of the UAE for global talent. The results reflect the UAE’s commitment to implementing policies that supported in mitigating the impact of the COVID-19 pandemic, coupled with its drive to attract top global talent to the Emirates.
Globally the Cost of Living Survey experienced vast fluctuations as compared to 2020, with Dubai moving a staggering 19 places from its position as the 23rd most expensive city in 2020 to 42nd in 2021 and Abu Dhabi moving a remarkable 17 places from 39th most expensive city in 2020 to 56th in 2021. Both Dubai and Abu Dhabi are now cheaper for expatriates amidst the push to attract critical talent, more remote workers and freelancers on the back of the cheaper real estate, deflation and dollar movements. This makes the location attractive from a cost perspective compared to some of the global hubs for digital and creative talent like London (19), San Francisco (26), Paris (34), Dublin (40).
“For over two years, we have been witnessing deflation across Dubai and Abu Dhabi. This can be attributed to a range of factors including a decline in the real estate sector which has made expatriate accommodation cheaper. Moreover, a drive to enable remote and flexible working is driving mobility and cementing the UAE’s reputation as a destination of choice for expatriate workers.”
Across the Middle East and Africa, the most notable increase in the cost of living for expatriates as compared to 2020 is Beirut which rose 42 places as compared to 2020, to rank as the third most expensive city on a global scale. The hyperinflation in Lebanon has been caused by its currency collapsing after political and financial crises. Riyadh (29) moved two spots up compared to last year primarily due to the increase caused by the 15% VAT implementation in July 2020. N’Djamena (13), Lagos (19) and Libreville (20) are first, second and third costliest cities in Africa for international employees.
“Cost of living has always been a factor for international mobility planning, but the pandemic has added a whole new layer of complexity, as well as long-term implications related to health and safety of employees, remote working and flexibility policies, among other considerations. As organizations rethink their talent and mobility strategies, accurate and transparent data is essential to compensate employees fairly for all types of assignments.”
More than half of the top 10 most expensive cities are located in Asia. Ashgabat climbed one position in this year’s ranking, making it the costliest city for international employees, both in Asia and globally. Hong Kong (2), Tokyo (4), Shanghai (6), Singapore (7) and Beijing (9) followed suit. Mumbai (78) is India’s most expensive city but dropped 18 places in this year’s ranking due to a relatively weak Indian rupee in comparison with other cities in the ranking.
Mercer's widely recognized survey is one of the worlds most comprehensive and is designed to help multinational companies and governments determine compensation allowances for their expatriate employees. New York City is used as the base city for all comparisons, and currency movements are measured against the US dollar. The survey includes over 500 cities throughout the world; this year’s ranking includes 209 cities across five continents and measures the comparative cost of more than 200 items in each location, including housing, transportation, food, clothing, household goods, and entertainment.
Download the full 2021 Cost of Living ranking here.