Measuring Expatriate Quality of Living By Slagin Parakatil At first, “quality of life” may sound like a synonym of “quality of living,” but it is not. “Quality of life” is a highly personalized term, often used in a medical or psychological context. It is an appraisal of an individual’s subjective emotional state and personal life. You can live in a city that ranks high in terms of quality of living and still suffer from a low quality of life because of unfortunate personal circumstances (illness, unemployment or loneliness, etc). By contrast, “quality of living” embodies objective aspects of daily living that most people agree on as being important for having good living standards, such as personal safety and security, health, transport infrastructure, availability of consumer goods, and adequate housing, schooling, and recreation opportunities. What Exactly Is QOL? Is quality of life affected by air pollution and chaotic traffic congestion? Access to good health care or to modern sports facilities? Or maybe affected by all of the above? When we quantify quality of living, we consider these aspects and many more. Employers moving executives from one country to another need clear, objective information that establishes differences in the quality of living between cities. When an employee is being moved to a city with a lower quality of living, many employers try to compensate for that loss with a hardship allowance. Mercer’s Quality of Living Reports provide quantitative values for such qualitative perceptions to establish effective, objective assessments of city-specific quality of living measures around the world. Quality of Living Reports provide an objective, consistent, comprehensive evaluation of the relative differences in quality of living between two cities. Quality-of-Living Reports aim to overcome the weaknesses of “traditional hardship” ratings. We cover over 450 cities in over 80 countries. Data for our QOL reports is gathered using detailed research. We evaluate each city on 39 criteria, on a scale of 0 to 10 (low to high), then cluster those criteria into ten main categories. The resulting reports are objective, neutral, and consistent. They avoid cultural or national comparisons, and are pertinent to the issues expatriates care about, whether they are alone or accompanied by family. Ten evenly weighted categories would, obviously, have 10% each. But, based on these categories’ importance to expatriates, we have weighted the top four categories more heavily than the mean, constituting almost two-thirds of the total); together, the top five categories constitute three-fourths of the total). Somewhat surprisingly, housing and education – which can be emotional issues for expats – are both weighted well below the mean, at 5.1% and 3.4%, respectively: Clients using our QOL data can either use the standard Mercer weightings or customize to suit their needs. For example, they might re-allot a percentage of the medical category to Natural Environment or Housing if they make special medical provisions for their employees. In Mercer’s Worldwide Survey of International Assignment Policies and Practices (2012), we asked participants (almost 520 companies worldwide) whether they always provide hardship premiums when expats are being sent to host cities with lower qualities of living. Worldwide, 64% of employers always provide a hardship premium and 20% more do so case by case. By region, North America and Europe shadowed these percentages, but Latin American and Asia Pacific employers take a different approach: Only half of the Latin American employers surveyed provide hardship premiums based on quality-of-living differentials, and only about 70% of APAC employers do so. Shifts in QOL Scores Obviously, a city’s quality of living can change over time – sometimes significantly. Here are eight cities and Mercer’s recommended hardship premiums for 1998 and 2012. Remember, the higher the recommended hardship premium, the lower a city’s quality-of-living score: Some cities’ quality of living was dramatically worse in 2012 than in 1998 – due to many reasons, including political turmoil (Abidjan) or a combination of factors including natural disasters (Port-au-Prince). In others, as in Dubai and Seoul, the changes are significantly for the better. Usually big improvements are due to major investments in infrastructure such as schools, public transport, electricity, and telephones services, as well as improvements to political stability, and increased measures to curb pollution. In each case, employers should check on relative changes in quality of living for all their major host cities to ensure that they are compensating their expatriates fully – based, of course, on employers’ own philosophies toward hardship premiums. Slagin Parakatil, based in Geneva, is a Principal who leads the team that produces Mercer's Quality of Living & Location Evaluation Reports within the Career Mobility business. In his role, Slagin is responsible for ensuring these reports' consistency, accuracy, and transparency.