Lisbon is 100th most expensive city for expats
Lisbon climbed 17 places in the yearly, global ranking.
Lisbon has climbed 17 places in Mercer's global ranking of the most expensive cities for expatriate workers, now occupying 100th place in a list that compares the cost of living in 226 cities around the world. At European level, the Portuguese capital remains in 39th place, as it was in last year's edition.
Mercer's 2023 analysis ranked Lisbon as the 117th most expensive city for expats, down eight places on the previous year, when it ranked 109th, a drop of 26 places on the 2021 ranking. This year's rise, however, doesn't necessarily mean an increase or decrease in the cost of living in absolute terms, it just means that it has become more expensive or cheaper compared to other cities in the ranking.
Even so, the Portuguese capital's rise of 17 places can be explained by some specific factors. Tiago Borges, Mercer Portugal's career business leader, gave ECO an example: the slight appreciation of the euro against other currencies, "which led to a general increase in the rankings of European cities".
The factors that particularly justify Lisbon's movement include, according to Borges, "the greater resilience and even the increase in housing prices compared to other comparable geographies, as well as the growth in the prices of accommodation and catering services driven by the constant influx of tourists in Portugal, and especially in Lisbon".
This year, the list - drawn up by comparing the cost of more than 200 items, included in the categories of housing, transport, food, clothing, household products and entertainment - continues to be led by Hong Kong, followed by another Asian city: Singapore.
Housing costs and inflation among the main factors
If, on the one hand, the rising cost of housing in many cities has made mobility a challenge for organisations, on the other, high inflation is reducing purchasing power and putting pressure on compensation policies.
According to Mercer, this situation "is likely to make it more difficult to attract and retain key talent" and could lead to an increase in "benefits/remuneration costs" and "operating costs" and the creation of "limitations on employee mobility".
"The challenges of the cost of living have a significant impact on the mobility of multinational companies and their employees," says the career business leader of Mercer Portugal, quoted in a statement. He argues that organisations should be attentive to “trends and take employee feedback into account so that they can effectively manage the impact of these issues”.
At the same time, the rise in the cost of living is causing workers to rethink their routines and cut back on expenses, “which may even force them to make an additional effort to meet their basic needs”.
Faced with these challenges, he admits that companies should reconsider the compensation associated with mobility, pointing to examples such as "including or reinforcing housing support, providing support services or exploring alternative strategies for attracting and retaining talent".