2023 Mercer Cost of Living survey 

• For the second year in a row, Toronto (90) is the most expensive city in Canada, followed by Vancouver (116) with Hong Kong topping the global rankings.
• Montreal (135) and Ottawa (137) are closely ranked, with Calgary (145) listed as the least expensive of the five Canadian cities listed in the global ranking.
• Canadian cities are at the cheaper end of the ranking for North America with all having modest drops in the ranking since last year’s survey.
• Mercer’s annual Cost of Living Survey provides a reference point and helps shape organizations’ approach to calculating appropriate compensation packages on cross country and international assignments.  

 

Toronto, Canada, June 14, 2023 – For the second year in a row Toronto is the most expensive city in Canada according to the results of Mercer’s Cost of Living Survey, released today. Of the 227 global cities across five continents ranked, Toronto sits 90^th globally, having dropped one spot from last year’s ranking. Vancouver remains the second most expensive city and slid eight places to 116^th in the ranking. Montreal fell 10 spots to 135^th, Ottawa moved down five spots to 137^th and Calgary, the last Canadian city on the list dropped four spots to 145^th. Compared to Canadian cities, the cost of living has increased more year over year in the U.S. with all American cities surveyed having gone up in the rankings since last year.

Mercer’s Cost of Living Survey is one of the most recognized and comprehensive of its kind, helping employers design efficient and equitable compensation packages for assignment locations worldwide. 

“Through the Cost of Living Survey, we see that despite domestic inflationary pressures that are affecting overall quality of living, Canada continues to be an attractive destination for remote workers,” said Nicole Stewart, Principal, Career at Mercer Canada. “Extensive remote work flexibility is causing many employees to re-shift their priorities and think differently about where they want to work and live, and this will continue to force organizations to develop effective compensation strategies for their globally distributed workforces.”

Canada is experiencing a slight period of economic stagnation, with the GDP contracting 0.1% in Q4 of 2022, and its total growth reduced to 3.5% over the entire year (from 5% in 2021). Additionally, the country experienced a slight decrease in the inflation rate in 2023, with inflation lowering to 5.2% in February 2023 (it was 5.7% a year before and had peaked at 8.1% in June 2022).

Key factors that shaped the world’s economy last year, such as inflation and key interest rate hikes, will continue to directly impact the pay and savings of employees who are internationally mobile, so flexibility is key.

Overall, the survey ranked Hong Kong as the most expensive city for international employees for another year in a row, with Singapore in second and three Swiss cities – Zurich, Geneva, and Basel – taking the third, fourth and fifth spots respectively.  

Other cities appearing in the top 10 of Mercer’s most costly cities for international employees are New York, United States (6), Bern, Switzerland (7), Tel Aviv, Israel (8), Copenhagen, Denmark, (9) and Nassau, Bahamas (10).

The world’s least expensive cities for international employees, according to Mercer’s survey, are Havana, Cuba (225), Karachi, Pakistan (226) and Islamabad, Pakistan (227).

“The recent COVID-19 pandemic and political tensions around the globe accelerated widespread use of remote working, which, in turn, has prompted multinational employers to reassess how they manage their workforces. Competition in the global talent market is fierce, and with the cost of living crisis affecting both employees and organizations, employers need to be flexible. The structure of their compensation strategies for internationally mobile and remote workers must be not only clear but also backed by reliable data,” said Yvonne Traber, Partner and Global Head of the Mobility business at Mercer.

New York City (number six in the global ranking) continues to be the most expensive city in North America, followed by Los Angeles (11) and San Francisco (14). All US cities in the ranking have gone up since last year, with the largest changes being for Detroit (+27 positions), Houston and Cleveland (both +24 positions).

Canadian cities are at the cheaper end of the ranking for North America. All of them having dropped since last year. Toronto is ranked the most expensive in the Canada (90 in the global ranking), followed by Vancouver (116), Montreal (135), Ottawa (137 and Calgary (145).

Almost all locations in the People’s Republic of China placed lower on the ranking than in 2022, with the only exception being Shanghai which kept its 12th position. Beijing ranked next to Shanghai at number 13. Xian (108 in the global ranking), Suzhou (112) and Wuhan (122) close the list of Chinese locations, all having dropped by between 40 and 50 positions since last year. Similar drops were seen for Nanjing, Chengdu and Chongqing.

Compared to previous periods, China achieved a relatively low GDP growth rate of 4.5% in the first quarter of 2023. However, retail sales grew above expectations, and the country’s unemployment rate fell by 0.3 percentage points.

China continues to have a shrinking housing market. This is a sector that used to be a crucial pillar of the country’s economic strategy. Prices in residential rental markets in Chinese cities have continued to decrease over the past couple of months, possibly due to the effects of the COVID-19 pandemic. Declining demand for rental properties has also been observed.

Five European cities are in the global top ten of the world’s most expensive locations. The first four cities are in Switzerland, with the fifth being Copenhagen. Other most expensive cities in Europe include London, Vienna, Amsterdam, Prague (up 27 spots in the global ranking since last year) and Helsinki.

Sarajevo is the least expensive European location. It sits at number 203 in the global ranking. Other low cost cities in Europe include Skopje, Krakow, Wroclaw and Minsk (which recorded the second highest jump up the European list after Prague, climbing 22 spots). 

Inflation in the Eurozone area of the EU peaked at 10.6% in October of 2022. Since then it has subsided, reaching 6.9% in March 2023. Growth in this zone halted in the last quarter of 2022. March 2023 was the fifth consecutive month during which there was a slowdown in price growth (which stood at 6.9% year-on-year). However, growth in the region is expected to pick up, as the economic projections for most European national and regional institutions continue to improve.

The United Kingdom continues to battle against what is currently the highest persistent inflation rate in Western Europe, with Britain reporting an annual rate of 10.1% in March 2023. 

However, when considered against the global picture, the UK locations in the ranking have all dropped since last year. London is, predictably, the most expensive city in the country (number 17 in the global ranking), followed, at a large distance, by Edinburgh (86), Glasgow (109), Birmingham (118), Aberdeen (119) and Belfast (125). 

Within Central and South America, Nassau ranks as the most expensive location for international employees (number 10 globally), followed by San Juan (44) and Buenos Aires (45). It is worth noting that several locations within the region rank significantly higher than last year, with a move up of 76 spots for San Jose and 70 spots for Mexico City. 

On the other end of the regional list, Havana (225) ranks the lowest — with a drop of 83 spots since last year. The city follows Bogota (214) and Managua (201) in the list.

Tel Aviv remains the costliest city in the Middle East for international employees, ranked 8th on the global ranking. The next most costly cities in this region are in the United Arab Emirates, namely Dubai (18) and Abu Dhabi (43), both of which have seen fairly significant increases in their rankings since last year. Saudi cities such as Riyadh (85) and Jeddah (101) have also jumped up the global list, by 18 and 10 spots respectively. 

The least expensive cities for international employees in the region include Tbilisi (181) and two Turkish locations — Istanbul (185) and Ankara (221).

Mercer's widely recognized Cost of Living ranking is one of the world’s most comprehensive studies and is designed to help multinational companies and governments determine compensation strategies for their international assignees. New York City is used as the base city for all city ranking comparisons and currency movements are measured against the US dollar. The survey includes 400+ cities throughout the world; this year’s ranking includes 227 cities across five continents and measures the comparative cost of more than 200 items in each location, including housing, transportation, food, clothing, household goods, and entertainment. The data collected provides all of the key elements employers need to design efficient and transparent compensation packages for international assignees. Learn more here.

Source: Mercer’s 2023 Cost of Living Survey