If you manage your company’s expatriate program, ask yourself:
- Just how cost-effective is your expatriate management process?
- Are you granting overly generous cost-of-living allowances? Is this really solving your mobility issues?
- Do you know what makes up your cost-of-living allowance recommendations? Does your supplier give you all the information you need to justify your decisions?
- Are your cost-of-living allowances based on prices gathered by expatriates or others who fly in and out?
- Are you able to keep your compensation approach consistent when managing a diverse group of assignees?
Mercer’s cost of living information provides all the key elements you need to set fair cost of living allowances, as well as the supporting information required so that all stakeholders can understand the compensation package.
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Mercer Employee Mobility Solutions
Multinational Approach
The Multinational approach to calculating cost of living differentials is based on a blended international spending pattern. The methodology assumes a convergence of spending patterns among expatriates from many different nationalities. With weighting of goods and services the same for all locations, this approach compares prices of similar brands from similar retail outlets in both the home city and host city. Mercer’s Cost of Living Reports provide differentials for more than 400 cities.
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Nationality-Specific Approach
The Nationality-specific approach to cost of living develops indices and differentials based on the unique spending patterns in assignees’ home locations. Using different weights for each home country or market, it ensures that expatriates can maintain their expenditure patterns in their host locations. This compares prices in the home country/market from a local-national perspective with prices in the host city from an expatriate perspective. Mercer uses the nationality-specific approach to provide cost-of-living data for more than 400 host and 190 home locations.
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