Dubai has become a magnet for talent, becoming a key expat destination not just in the region but across the world – and it isn’t down to just a booming economy and business.
This year’s 2015 Mercer Quality of Living index ranks Dubai #1 in the region in terms of quality of living – for the tenth consecutive year – with Abu Dhabi right behind it.
According to the Mercer rankings, Dubai ranks at #74 globally (out of 230 global cities ranked by the consultancy), and is perched highest for quality of living across the Middle East and Africa (Mena) region.
Mercer says it conducts its Quality of Living survey annually to help multinational companies and other employers compensate employees fairly when placing them on international assignments.
A higher ranking, therefore, implies that companies need no go out of their way to attract expat talent by dangling a fatter paycheque.
Employee incentives include a quality-of-living allowance and a mobility premium. Mercer maintains its Quality of Living reports provide valuable information and hardship premium recommendations for over 440 cities throughout the world; the ranking covers 230 of these cities.
In the regional rankings, Dubai is followed by UAE capital Abu Dhabi (#77), and Port Louis (#82), Mauritius. In South Africa, Durban (#85) is an emerging city and ranks higher than the country’s traditional business centres, Cape Town (#91) and Johannesburg (#94).
Dubai has consistently topped the Mercer Quality of Living rankings over the past decade, and has maintained a steady improvement in its global rankings as well. The emirate ranked #85 in 2005 (out of 215 cities then ranked), and this year, it ranks at #74 in the world (#73 last year).
Once a sleepy trading port, Dubai today is a multicultural hub of social, economic, commercial business and tourism activity. The city boasts more than 200 nationalities among its residents, who have come to live and love this dynamic city.
“Taking a short- or long-term work assignment in a new country is both an exciting and challenging experience for employees and their families,” said Slagin Parakatil, Principal at Mercer.
“Cultures, societies, and comparatively different climates, as well as political instability, high crime rates, and poor infrastructure can be difficult to navigate and settle down in for employees and their families,” he said.
“Employers need to assess whether their staff and families will encounter any drop in quality of living when relocating and ensure they are fairly compensated for it,” he added.
Expatriates in difficult locations: Determining appropriate allowances
Mercer maintains that companies need to be able to determine their expatriate compensation packages rationally, consistently, and systematically. “Providing incentives to reward and recognise the efforts that employees and their families make when taking on international assignments remains a typical practice, particularly for difficult locations,” it notes.
Two common incentives include a quality-of-living allowance and a mobility premium, it explains. A quality-of-living or ‘hardship’ allowance compensates for a decrease in the quality of living between home and host locations.
A mobility premium simply compensates for the inconvenience of being uprooted and having to work in another country. A quality-of-living allowance is typically location-related, while a mobility premium is usually independent of the host location. Some multinational companies combine these premiums, but the vast majority provides them separately, Mercer maintains.
Moving to Dubai: Will you face a drop or rise in quality of life?
By that logic, of course, employees from European countries such as the United Kingdom face a potential drop in quality of living when they move to the UAE or anywhere else in the region, with the five English cities ranked in the report all positioned above Dubai in the list.
At #40, London is the top ranked UK city, followed by Birmingham (#52), Glasgow (#55), Aberdeen (#57) and Belfast (#63).
“UK cities overall enjoy high standards of quality of living and remain stable and attractive locations for businesses,” said Ellyn Karetnick, Leader of Mercer’s International Mobility Practice in the UK.
“Security has been tightened in many major European cities following the attacks in Paris and Copenhagen, and Mercer is closely monitoring any potential impact on the living standard for expatriates and their families in these locations,” she added.
Professionals who move base from Canada or the United States to this region too face a potential decline in quality of living, although the extent of the decline varies considerably in the three Canadian and 17 US cities ranked in the report.
Employees moving from Vancouver (#5), which tops the list for this region, face the biggest potential gap in the quality of living, followed by fellow Canadian cities Toronto (#15) and Ottawa (#16), whereas San Francisco (#27), Boston (#34), and Honolulu (#36) are the highest-ranking US cities. On the other hand, those from Detroit (#70) will perhaps not notice too much amiss when moving to Dubai (#74) or Abu Dhabi (#77).
However, staff moving base from the three Pakistani cities ranked in the report will potentially experience a massive improvement in the quality of living, with Islamabad ranked at #191, Lahore at #199, and Karachi at #202 out of 230 cities ranked.
It is a similar story with the seven Indian cities ranked in the report although the extent of potential improvement in the quality of life varies a bit between Hyderabad (#138), Pune (#145), Bangalore (#146), Chennai (#151), Mumbai (#152), New Delhi (#154) and Kolkata (#160).
The Mena region, nevertheless, is one of contrasts, with Baghdad (230) bringing up the rear of the rankings both regionally as well as globally.
“As with last year’s survey, we continue to recognise emerging cities that are increasingly becoming competitors to traditional business and finance centres. These so called ‘second-tier emerging cites’ are investing, particularly in infrastructure to improve their quality-of-living standards and ultimately attract more foreign companies,” Parakatil added.
Globally, Vienna has the world’s best quality of living, with European cities dominating the top of the ranking along with major cities in Australia and New Zealand.
Zurich, Auckland, and Munich are in second, third, and fourth places, respectively. In fifth place, Vancouver is the highest-ranking city in North America and the region’s only city in the top 10.
Singapore (26) is the highest-ranking Asian city, whereas Dubai (#74) ranks first across the Middle East and Africa. Montevideo in Uruguay (#78) takes the top spot for South America. In the UK, London (#40) is the highest ranking city.
Despite concerns about economic growth, the cities of Western Europe continue to offer a stable environment for employees and employers. Vienna (#1) is followed by Zurich (#2), Munich (#4), Düsseldorf (#6), and Frankfurt (#7). With Geneva and Copenhagen occupying #8 and #9 places, respectively, Western European cities take seven places in the top 10.
The lowest-ranking cities in Western Europe are Belfast (#63) and Athens (#85). Cities in Central and Eastern Europe have a wider range of quality-of-living standards. The highest-ranking cities are Prague (#68), Budapest, and Ljubljana (both ranked #75).
Emerging city Wroclaw (#100), Poland, has a thriving cultural and social environment and good availability of consumer goods. The region’s lower-ranking cities are Kiev (#176), Tirana (#180), and Minsk (#189), with Kiev experiencing a considerable drop in the rankings following political instability and violence in Ukraine overall. In the UK, London (#40) is the highest-ranking city.
In North America, Canada and the United States continue to offer a high standard of living. Vancouver (#5) tops the list for this region, followed by fellow Canadian cities Toronto (#15) and Ottawa (#16), whereas San Francisco (#27), Boston (#34), and Honolulu (#36) are the highest-ranking US cities.
Mexico’s highest ranking city is Monterrey (#109), while Mexico City is ranked #126. The lowest-ranking cities in the North American region are Havana (#193) and Port-au-Prince (#228).
In South America, Montevideo (#78), Buenos Aires (#91), and Santiago (#93) are the highest-ranked cities, whereas La Paz (#156) and Caracas (#179) rank lowest. In Brazil, Mercer has identified Manaus as an emerging city – it is ranked #127. The city is already a thriving industrial centre and has a free economic zone – its good supply of consumer goods and relatively advanced infrastructure partially counteract the impact of Manaus’ lack of international schooling options for expatriates and remote location.
Asia is the region with the largest range in quality-of-living standards, with the highest-ranking city, Singapore, at #25 and the lowest-ranking, Dushanbe, Tajikistan, in 214th place. Topping the ranking across East Asian cities is Tokyo in 44th place.
Other key cities in this part of the region include Hong Kong (#70), Seoul (#72), Taipei (#83), Shanghai (#101), and Beijing (#118). Notable emerging cities in this part of Asia include Cheonan (#98), South Korea, and Taichung (#99) in Taiwan.
Chinese cities Xi’an and Chongqing (both ranked 142nd) are also emerging as business destinations, the report states. It adds that their main challenges to improving quality-of-living standards are clean water provision and air pollution. However, advances in the telecommunications and consumer sectors have had some positive offsetting effects on their Mercer ranking.
Behind Singapore, the second highest-ranking city in Southeast Asia is Kuala Lumpur (#84); other major cities here include Bangkok (#117), Manila (#136), and Jakarta (#140).
In South Asia, Colombo (#132), ranks highest and is followed by emerging Indian cities Hyderabad (#138) and Pune (#145). Both cities rank higher for quality of living than the country’s more traditional business centres, Mumbai (#152) and New Delhi (#154).
Mercer says that considerable population increases in Mumbai and New Delhi in recent decades have increased existing problems, including access to clean water, air pollution, and traffic congestion.
In the Pacific, New Zealand and Australian cities are some of the highest-ranked cities globally, with Auckland at #3, Sydney at #10, Wellington at #12, and Melbourne at #16.
Middle East and Africa
In 74th place, Dubai ranks highest for quality of living across the Middle East and Africa region. It is followed by Abu Dhabi (#77), also in the UAE, and Port Louis (#82), Mauritius. In South Africa, Durban (#85) is an emerging city and ranks higher than the country’s traditional business centres, Cape Town (#91) and Johannesburg (#94).
Mercer says that Durban’s higher ranking is mainly due to its high-quality housing, plentiful recreational offerings and good consumer goods availability. However, the city’s crime problems keep it from reaching the top 50, it notes.
Ranking 230th, Baghdad is the lowest-ranking city in the region and on the overall list.
Quality of Living – How GCC cities stack up
#77 Abu Dhabi
#125 Kuwait City
Source: 2015 Mercer Quality of Living index