While the global economy is experiencing a welcome period of relative stability and growth, there is no respite for global mobility professionals. The continuation of the trend of a weaker US dollar and a stronger euro between ECA’s September 2017 and March 2018 surveys will, no doubt, have led to lots of questions from expatriates about why their indices are falling - those experiencing rising indices don’t tend to be heard from as often. Crucially, whether indices are rising or falling, they are designed to ensure the assignee is no worse or better off. If you need a reminder of why a falling index will not leave assignees worse off take a look at our recent blog on cost of living adjustments.
ECA has prepared this interactive map to help you understand and explain to assignees how key events around the world have affected cost of living indices during our survey period. This should act as a useful guide when considering whether to amend assignee cost of living allowances to ensure that spending power is maintained.
If you require any assistance or would like additional information or data on the 475 locations included in our survey, or need advice regarding currency fluctuations, please get in touch with your ECA representative.
Unfortunately, the world economy does not run to ECA’s cost of living publication schedule so here is a summary of some of the key changes since the survey data was collected. You can also stay up-to-date with the latest inflation and exchange rate news through ECA’s blogs.
Iran, as mentioned above, revalued its currency which had the effect of being an effective appreciation of the currency against the commonly used floating exchange rate. This unusual step will likely lead to further problems in the future as market forces put pressure on the government’s fixed overvalued exchange rate but for your assignees being paid in hard currency it means that they may be losing out and ECA would generally advise using the latest exchange rate when calculating salaries for assignees in Iran.
Five countries (Argentina, Brazil, Sudan, Turkey and Venezuela) have already seen their currency depreciate by more than 10% against the euro since the March 2018 survey exchange rates were set. Assignees in these countries could be particularly affected and may be losing out depending on how their pay is delivered.
ECA’s interim surveys
We are currently undertaking interim surveys for the following countries due to high inflation expectations: Argentina, South Sudan, Sudan, Uzbekistan, Venezuela and Zimbabwe. The results will be available in July 2018.
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Please contact us to speak to a member of our team directly.
ECA publishes cost of living data for 475 cities around the world. It is available from ECA in several forms: as part of a subscription in a calculator which allows you to experiment with different types of index and review the outputs; in reports, providing background detail for specific indices; and as part of the Build-up Calculator for performing balance-sheet calculations. Cost of living data is also pre-populated in ECAEnterprise, our Assignment Management System, and in our Net-to-Net Calculator.