Cost of sending staff abroad highlighted in new research
THE COST of sending staff on foreign assignments is a necessary evil for most businesses that do business overseas, but companies working in Luanda, Angola, should be particularly careful with expense management.
That's because the African city has just been revealed as the most costly city for expats, according to new research by Mercer.
Its study examined 214 cities across five continents, measuring the comparative cost of over 200 items like housing, food and transportation.
It analysed the cost of maintaining a relatively high, international living standard, rather than the local cost of living.
Three European cities made the top 10, all of them Swiss, despite decreasing or stable accommodation costs in Switzerland and a robust Swiss franc.
Luanda took the top spot because of the costly personal security required for foreign people living in the city.
"Despite being one of Africa's major oil producers, Angola is a relatively poor country yet expensive for expatriates since imported goods can be costly," said Mercer partner Barb Marder.
"In addition, finding secure living accommodation that meets the standards of expatriates can be challenging and quite costly."
The number of international assignments is growing every year as globalisation continues and international transportation improves. "Given the increasing numbers of business travellers, global commuters and longer-term expatriates, companies are keeping a close eye on the cost of living for international assignees in different cities around the world.
"Organisations need to evaluate the impact of currency fluctuations, inflation, and political instability when sending employees on overseas assignments, while ensuring they can facilitate the moves they need to drive the business results by offering fair and competitive compensation packages", added Ms Mardner.
The cost of expat housing is typically the biggest expense for employers, and it plays an important part in determining the rankings.
The Russian capital of Moscow followed Luanda as the second most expensive city because of high costs for rental accommodation, as well as the high premium charged on imported goods and services commonly purchased by expats.
A luxury two bedroom unfurnished apartment rental for one month in Moscow is $4,600 (€3,478) a month, or 14 times as expensive as the same accommodation in Karachi, Pakistan.
Food costs also play a big part. A cup of coffee in Moscow costs as much as $8.29 compared to $1.54 in Managua, Nicaragua, while a fast food hamburger meal in Caracas, Venezuala, can cost $13.49 compared to $3.62 in Kolkata, India.
The main reason employees want to work abroad is "broadening their horizons and gaining life experience," followed by "better quality of life," according to a HSBC survey.