Behind the latest Economist Intelligence Unit Liveability Ranking, by report editor Jon Copestake.
With the latest Economist Intelligence Unit Liveability Ranking freshly released, attention in the press and public will focus on Vancouver falling back to third place and Melbourne taking the coveted position of the world's most liveable city.
However, in the world of Human Resources a very different perspective will be taken. In fact, most HR professionals will have little interest when scrolling down the ranking until they reach Bratislava in Slovakia. This isn't because the city itself should enjoy any special prominence, but because this is the first city where, according to the survey methodology, some form of additional hardship remuneration should be a consideration when deciding an expatriate relocation package.
The liveability survey, which originated around a decade ago as a hardship survey precisely for use in expatriate remuneration, divides liveability into five tiers, depending on the score a city receives:
Rating Description Suggested allowance
80–100 There are few, if any, challenges to living standards 0 % of salary
70–80 Day–to–day living is fine, in general, but some aspects of life may entail problems 5% of salary
60–70 Negative factors have an impact on day-to-day living 10% of salary
50–60 Liveability is substantially constrained 15% of salary
50 or less Most aspects of living are severely restricted 20% of salary
From an HR perspective the 63 most liveable locations are largely irrelevant. Postings to these locations do not require any form of additional remuneration, although the ranking will be useful in justifying why an expatriate doesn't receive such an allowance for such locations.
It is with Bratislava, with a score of 79.8 (just 0.2 below the first threshold) that expatriates will need to have an additional allowance rolled into the package. For this tier the recommended allowance is just 5% of post-tax, adjusted salary. How firms interpret this depends on their own policy. Some will double the suggested allowance while others will apply to gross salary. Others still may have a fixed hardship allowance regardless of salary for each scale of hardship.
Of the 140 cities included in the Economist Intelligence Unit's Liveability survey 77 would require some form of liveability or hardship remuneration. Of these, 25 fall into the highest tier, where Day–to–day living is fine, but some aspects of life may entail problems. Of these a surprise addition is Athens in Greece, where unrest prompted by austerity measures has made the city less attractive to expatriates.
Twenty two cities fall into the next category where negative factors have an impact on day-to-day living, and 17 cities fall into the penultimate category where liveability is substantially constrained. These two categories will contain many cities in the Middle East and North Africa, where the Arab Spring has seen a pan-regional deterioration in stability. Finally, 13 cities have the unenviable position of coming in the very bottom tier, where most aspects of living are severely restricted. In some cases these will be locations where expatriates are leaving rather than arriving, notably Tripoli in Libya and Abidjan in Cote D'Ivoire.
For any HR professional the liveability ranking should be considered a bottom-up proposition, where the size of the allowance involved in locating people is a greater consideration than whether a location offers the best degree of liveability.
A summary of the full report is available at www.eiu.com/Liveability
