Shyamal Majumdar: Cities of costs and benefits

THE HUMAN FACTOR

Indian companies wanting to send executives abroad on a long-term assignment often have no clue about how to structure their salary packages.

Mercer Human Resource Consulting has stepped in to plug this information gap.

The HR consulting firm's worldwide cost of living survey 2004 covers 144 cities and measures the comparative cost of over 200 items in each location. These include housing, food, clothing and household goods as well as transportation and entertainment.

While Tokyo remains the world's most expensive city, London has moved up five places in the rankings from the 2003 survey to take the second position, followed by Moscow.

That's more or less predictable, but what is interesting, is that apart from Tokyo, three other Asian cities are among the world's 10 costliest. Osaka takes the fourth position followed by Hong Kong in fifth place and Seoul, ranked seventh.

With New York as the base city scoring 100 points, Tokyo scores 130.7 and is more than three times costlier than Asuncion in Paraguay "" the cheapest city in the world "" which has an index of 42.7.

Beijing is in the 11th position, followed by Shanghai in the 16th place. Two other Chinese cities are among the world's 50 costliest cities: Shenzen (30th) and Guangzhou (32nd).

Four Indian names figure in the 144-city list. They are Mumbai (109th), Delhi (116th), Chennai (133rd) and Bangalore in 137th place.

Seven world cities are cheaper than Bangalore: Manila in Philippines, Bogota in Colombia, Harare in Zimbabwe, Buenos Aires in Argentina, Santo Dominigo in Dominican Republic, Montevideo in Uruguay and Asuncion,

The best part of the survey is in the details. It found the cost of renting a luxury unfinished two-bedroom apartment in London at 1,950 pounds a month, compared with 840 pounds in Dublin, 1,311 pounds in Paris and 908 pounds in Rome.

The cost of a fast-food hamburger meal at $7.8 is more expensive in Dublin than in all but two of the 144-city sample. The cost in New York is $5.67; Sydney $4.37, and Beijing ($2.32). A cup of coffee with table service costs $3.30 in Dublin; $3.30 in New York; $5.48 in Tokyo and $1.10 in Buenos Aires.

If your are planning to post your executives in the UK and find London prohibitively expensive (Mercer says the scores are based on the cost of living for expatriates, who are more likely to stay in Central London where accommodation is most expensive), you can consider Glasgow and Birmingham, which rank lower at positions 41 and 51, respectively.

After London, Geneva is the next most expensive city in Europe ranked sixth, followed by Copenhagen in the eighth place. Other high scoring cities include Zurich ranked ninth, Milan (13th), Dublin (14th), Oslo (15th) and Paris in 17th position.

In the US, New York remains the most expensive city at 12th position in the rankings.

Other costly cities include Los Angeles ranked 27, Chicago(35th) and San Francisco (38th). Pittsburgh is the cheapest US city surveyed, ranked 112.

The point to note is that the cost of living differences within the US can be even more than those between the US and other popular destinations worldwide, mainly due to variations in accommodation costs, says Mercer.

Apart from the cost of living survey, Mercer, in another study, seeks to help company executives gauge differences in pay levels almost anywhere in the world.

According to this study, which examines the average salaries of senior managers in 50 countries worldwide, and calculates their purchasing power based on tax and social security deductions and the local cost of living, senior managers in Hong Kong score highest in the purchasing power rankings.

Switzerland and Ecuador follow in second and third place, respectively.

At the other extreme, senior managers in India, Bulgaria, and Vietnam, where salaries are comparatively low and taxes high, are the least financially well-off (ranked 48, 49, and 50).

The only consolation for managers in India is that the study does not account for the quality of life.

In case you are first looking for office locations before thinking of posting executives abroad, a BBC study offers some help. Central London is about 25 per cent more expensive than Paris, the next priciest city.

Washington DC, the City of London, Frankfurt, Tokyo, Dublin, New York and Munich make up the list, which reflects rent and maintenance costs.

The rankings are based on total occupancy costs per office workstation. London's annual cost is $19,330 and Washington's $14,250.

If the cost makes these cities out of your reach, there is still some hope. The cheapest office location is Ortigas in the Philippines, with an average cost of $710 a workstation.