Erratic economies pose expat posting problems

Economic volatility has continued to provide headaches for international HR managers, the latest cost of living survey by William M Mercer shows.

Expatriate postings in eastern Asia have rapidly become more costly with the recovery of the region from the economic downturn in 1997-98. The region dominates the upper end of the index, with Tokyo, Osaka and Hong Kong taking the top three places.

“Asia’s cities may be affordable to the indigenous population, but expatriates pay a premium for imported products,” said Mercer researcher Rehan Mustafa.

Mark Childs, director of global compensation and benefits for Fidelity Investments, said HR managers must explain risks fully in advance of an assignment. Failing to do this can mean the employee expects an automatic increase when a city becomes more expensive due to currency changes.

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“If you provide choice about the currency in which they receive payments then you tend to cut the number of grievances,” said Childs.

The strong pound has put London at the top of the league table of pricey cities for Europe.