EU membership puts CEE cities in the cost of living top tier
New research by human resource firm Mercer on the cost of living in cities around the world shows a massive jump from last year's standings for most of the region's cities.
Budapest is the most expensive city in CEE, and is at 25th place overall. Warsaw is hot on its heels, in 27th position, with Prague right behind it, and Bratislava in Slovakia coming in at 31st.
Every one of the cities has leaped up the rankings since joining the EU last year. Budapest jumped nine places from 34th, and Prague was in 49th place. Warsaw saw one of the most dramatic increases in the cost of living, climbing from 76th to 27th place in just 12 months.
"Many cities in the new EU accession countries have risen sharply in the rankings this year, as they make strides to bring their economic infrastructure up to EU standards. Central and Eastern Europe is becoming increasingly attractive for investment by multinationals," said Marie-Laurence Sepede, a research manager at Mercer.
However, it would be foolish to think that this means a better life for everyone living in the city. For example, Moscow is in fourth place overall, down one place from last year, and few could argue that the wealth is spread evenly there. St Petersburg made it into 15th place.
For the most expensive city in the world, you have to look to the Far East. Tokyo retained its position as the world's costliest place to live, with Osaka coming in second, just beating London into third place, making it Europe's most expensive city. "Steep accommodation and transport costs together with the appreciation of the pound against the US dollar have contributed to the city's high ranking," said Sepede.
Bucharest in Romania is the least expensive European city in 103rd place, followed by Limassol in Cyprus, which was ranked 100th.
The figures for Mercer's cost of living comparisons are based on a survey conducted in March 2005, and many companies use the rating when deciding what to pay employees who are living or have been transferred temporarily abroad.
New York City is used as a base, and scores a round 100 points. Other cities are then ranked in terms of how more or less expensive they are when compared to the Big Apple. Tokyo scored 134.7 in the top spot, while bottom-placed Asuncion in Paraguay scored 40.3. The survey covers 144 cities across six continents and measures the comparative cost of over 200 items in each location, including housing, transport, food, clothing, household goods and entertainment.
"Currency fluctuations can have a huge impact on how much expatriates receive and what they can buy with that money," says Yvonne Sonsino, a partner at Mercer. "The challenge for multinational companies is to ensure their expatriate compensation packages remain fair and attractive enough to retain key employees, while making sure they do not pay over the odds.
"While there has been significant investment by multinationals in traditionally 'low-cost' countries, the gap appears to be closing and local salaries are shooting up," she said. "Companies need to keep pace with the changes, and we find that many are now seeking guidance as they make regular reviews of their expatriate compensation packages a standard procedure." Mercer says that many of the major changes in the list can be ascribed to large currency fluctuations between the euro and the dollar.
Budapest is the most expensive city in CEE, and is at 25th place overall. Warsaw is hot on its heels, in 27th position, with Prague right behind it, and Bratislava in Slovakia coming in at 31st.
Every one of the cities has leaped up the rankings since joining the EU last year. Budapest jumped nine places from 34th, and Prague was in 49th place. Warsaw saw one of the most dramatic increases in the cost of living, climbing from 76th to 27th place in just 12 months.
"Many cities in the new EU accession countries have risen sharply in the rankings this year, as they make strides to bring their economic infrastructure up to EU standards. Central and Eastern Europe is becoming increasingly attractive for investment by multinationals," said Marie-Laurence Sepede, a research manager at Mercer.
However, it would be foolish to think that this means a better life for everyone living in the city. For example, Moscow is in fourth place overall, down one place from last year, and few could argue that the wealth is spread evenly there. St Petersburg made it into 15th place.
For the most expensive city in the world, you have to look to the Far East. Tokyo retained its position as the world's costliest place to live, with Osaka coming in second, just beating London into third place, making it Europe's most expensive city. "Steep accommodation and transport costs together with the appreciation of the pound against the US dollar have contributed to the city's high ranking," said Sepede.
Bucharest in Romania is the least expensive European city in 103rd place, followed by Limassol in Cyprus, which was ranked 100th.
The figures for Mercer's cost of living comparisons are based on a survey conducted in March 2005, and many companies use the rating when deciding what to pay employees who are living or have been transferred temporarily abroad.
New York City is used as a base, and scores a round 100 points. Other cities are then ranked in terms of how more or less expensive they are when compared to the Big Apple. Tokyo scored 134.7 in the top spot, while bottom-placed Asuncion in Paraguay scored 40.3. The survey covers 144 cities across six continents and measures the comparative cost of over 200 items in each location, including housing, transport, food, clothing, household goods and entertainment.
"Currency fluctuations can have a huge impact on how much expatriates receive and what they can buy with that money," says Yvonne Sonsino, a partner at Mercer. "The challenge for multinational companies is to ensure their expatriate compensation packages remain fair and attractive enough to retain key employees, while making sure they do not pay over the odds.
"While there has been significant investment by multinationals in traditionally 'low-cost' countries, the gap appears to be closing and local salaries are shooting up," she said. "Companies need to keep pace with the changes, and we find that many are now seeking guidance as they make regular reviews of their expatriate compensation packages a standard procedure." Mercer says that many of the major changes in the list can be ascribed to large currency fluctuations between the euro and the dollar.
