Four most expensive cities are in Europe
21st September 2009, 0 comments
Zurich/Basel – UBS's 2009 Prices and Earnings study has dubbed Oslo, Zurich, Copenhagen, Geneva, Tokyo and New York as the world's most expensive cities based on a standard set of 122 goods and services. When rent prices are taken into the equation, New York, Oslo, Geneva and Tokyo emerge as especially pricey places to live. The goods set costs the least in Kuala Lumpur, Manila, Delhi and Mumbai. The study data was collected in 73 cities around the world between March and April 2009.
The UBS survey is in contrast with the latest Cost of Living survey by Mercer, which recently indicated Tokyo as the world’s priciest city for expats, while European cities had generally become substantially cheaper. Both surveys, however, found Geneva to be the fourth most expensive city.
UBS survey highlights
- Oslo, Copenhagen, Zurich, Geneva and Tokyo are the world's priciest cities.
- London plummets nearly twenty places from second place because of crisis-driven currency fluctuations.
- The UK and Germany have the most expensive rail travel.
- Employees in Zurich and Geneva have the highest net wages in the world.
- Workers in Zurich and New York can buy an iPod nano after nine hours’ work, compared to 20 nine-hour days for workers in Mumbai.
- People in Cairo and Seoul work the longest: roughly 600 hours more per year than Western European peers.
Earnings highest in Switzerland, Denmark and the US
The survey of 73 cities found that employees in Copenhagen, Zurich, Geneva and New York have the highest gross wages. Zurich and Geneva—the two Swiss cities in the study—top the rankings in the international comparison of net wages. By contrast, the average employee in Delhi, Manila, Jakarta and Mumbai earns less than one fifteenth of Swiss hourly wages after taxes.
Zurich and New York: nine hours of work for an iPod nano
To illustrate the relative purchasing power of wages, the study compared how long an employee in each city would have to work to be able to afford a specific, highly uniform product that is available everywhere with the same quality: the 8GB iPod. An average worker in Zurich and New York can buy a nano from an Apple store after nine hours of work. In stark contrast, workers in Mumbai, need to work 20 nine-hour days and spend roughly one month's salary to purchase the same device.
The study determined that employees have to work a global average of 37 minutes to earn enough to pay for a Big Mac, 22 minutes for a kilo of rice and 25 minutes for a kilo of bread.
Long working hours in the Middle East and Asia; shortest in France
People work an average of 1,902 hours per year in the surveyed cities but those in in Asian and Middle Eastern cities work much longer, averaging 2,119 and 2,063 hours per year respectively. The most hours are worked in Cairo (2,373 hours per year), followed by Seoul (2,312 hours). People in Lyon and Paris spend the least time at work according to the global comparison: 1,582 and 1,594 hours per year.
Europe: London plummets twenty places
Prices in Eastern and Western Europe have converged little despite the EU's enlargement in 2004 and Slovenia's adoption of the euro as its official currency in January 2007 and Slovakia's in January 2009. A set of 95 goods and 27 services was roughly 35 percent cheaper in the cities of Eastern European EU member states than in Western European metropolises. In 2006, this price differential was around 38 percent.
On average, workers in Western European cities receive gross wages more than three times higher than their colleagues in Eastern Europe. The lowest incomes are paid in Bulgaria (Sofia) and Romania (Bucharest). The wage level in these two countries, which joined the EU in January 2007, is comparable to that of Colombia or Thailand.
London, the second most expensive city in the 2006 review, plummeted nearly twenty places following the British pound's precipitous devaluation in March and April 2009 (when the survey data was collected), landing in the middle in terms of Western European countries. During this time the pound reached a low point of roughly 1.40 against the US dollar from which it recently appreciated to around 1.70. The subsequent rebound in the pound exchange rate increased London's price level by 21 percent in US dollar terms, which would lift London from twenty-first to fifth in the global price ranking.
Rail travel is most expensive in the UK and Germany. A second class, one way ticket for a 200 km rail journey in Germany (average price EUR 51.40 or USD 67.20) costs approximately 1.5 times as much as in the rest of Western Europe. Only the UK is more expensive: passengers in London must pay EUR 68.20 (USD 89.10)—double the fare charged in other Western European cities.
Switzerland: More expensive, more take-home income
Residents of Geneva and Zurich in Switzerland pay around 20 percent more on average for products, services and accommodation than people in other Western European cities. With its extremely high gross wages and comparatively low tax rates, Switzerland is an employee-friendly country: no other city’s workers have more take-home income than Zurich and Geneva. Average gross hourly wages (before taxes and social security contributions) can purchase the most in Copenhagen, Zurich and Geneva.
Bringing up the tail are Jakarta, Manila, Mumbai and Nairobi, where average gross hourly wages have between 11 percent and 15 percent of the purchasing power of a salary in Zurich. The set of 39 food products is priciest in Tokyo. Food prices are only marginally lower in Switzerland: Zurich occupies second place, Geneva third. Food prices in Switzerland are around 45 percent more expensive than the average in the rest of Western Europe.
Americas: US dollar worth more than Canadian
A dollar earned in the US is worth more after taxes and social security contributions than in neighbouring Canada. While the set of 122 goods and services is somewhat cheaper in Montreal and Toronto, the net hourly wage in these Canadian cities is also lower than in the surveyed US cities of New York, Los Angeles, Miami and Chicago.
Asia-Pacific: Biggest difference between cities
The intra-continent difference between the most expensive and the cheapest city is greatest in Asia: Tokyo is one of the world's five costliest cities, while Kuala Lumpur, Manila, Delhi and Mumbai are at the bottom of the ranking. Workers in Tokyo earn the highest wages in Asia. Likewise, consumers in Tokyo, Hong Kong and Taipei have the greatest purchasing power in the continent. Sydney ranks among the top ten cities in the international comparison.
UBS's ‘Prices and Earnings’ studies can be downloaded from ubs.com/research.
UBS / Anna Ritchie / Expatica