Stephansdom ViennaWhich city in the world offers the best quality of living? According to the 2014 Mercer Quality of Living Survey, it’s Vienna, Austria, closely followed by Zurich, in Switzerland, Auckland, New Zealand, Munich in Germany, and Vancouver in Canada.

Why does quality of living matter?

Mercer’s annual Quality of Living survey is designed to help multinational companies compensate employees fairly, based on their location. Such companies often provide employees on international assignments with a ‘quality of living’ or ‘hardship’ allowance, which is designed to compensate for a decrease in the quality of life from their home location. For example, air pollution, high crime levels or political instability may affect the quality of living, and make cities less attractive.

The Mercer report provides information and recommendations about quality of life allowances for more than 450 cities around the world, and 223 of them are included in the ranking. The survey does not focus only on capital cities, but also includes those cities that are trying to ‘up their game’ and attract new foreign and multinational companies. These cities have made huge efforts to invest in infrastructure, and used tax and other incentives to attract foreign investment.

But the report is not just useful for multinational companies. Cities themselves can use the data to benchmark themselves against their peers. Many cities want to attract more foreign investment, which means being able to attract expatriate workers. The Mercer Index demonstrates what issues are important, and where individual cities may excel and also fall short when compared with others. This allows city governments to take action to improve, and also market themselves effectively.

Assessing quality of living

The Mercer survey looks at a wide range of issues across several categories, including:

  • Political and social environment, such as levels of crime and political stability;
  • Economic environment, such as currency exchange regulations, and availability of banking services;
  • Socio-cultural environment, including censorship and personal freedoms;
  • Health and healthcare issues, such as availability of medical care, air pollution, waste, and any infectious diseases;
  • Education issues, including availability of international schools;
  • Public services and transportation, including utilities, public transport and levels of congestion;
  • Recreation, including restaurants, theatres, sports and leisure;
  • Consumer goods, including availability of day-to-day items such as food, and also luxury goods;
  • Housing, including availability of rental housing; and
  • Natural environment, including climate, and record of natural disasters.

Each factor is given a score, weighted according to its importance  to expatriates. This score allows for direct comparisons between cities both individually and overall.

Differences within and between regions

The five top cities in Europe are all among the top ten globally. Vienna is in first place, followed by Zurich in second, Munich in fourth, Dusseldorf in sixth, and Frankfurt in seventh. But there are also many European cities that are much lower in the ranking, particularly those in the former Soviet republics such as Georgia and Belarus. Many of those with a low ranking are working hard to improve, making investments in infrastructure and improving internal stability.

Canadian cities dominate the North American list, with Vancouver ranked fifth globally, followed by Ottawa at 14, Toronto at 15 and Montreal at 23. San Francisco, the highest placed US city, is 27, but overall, North American cities are considered to be attractive destinations for expats, and this is reflected in their top 100 rankings. There is much more variation in Central and South America.

Asia, like Europe, shows wide variation between developed and developing countries. The highest placed cities in the Mercer survey, as in the Economist’s Safe Cities report, are the relatively wealthy ones, such as Singapore, and those in Japan. Rapid economic and industrial development in China has affected air quality, and therefore quality of life.

The Middle East and Africa dominates the lower end of the ranking, with five out of the bottom six cities in this region, including Baghdad, the lowest. The highest placed city from the region is Dubai, at 73, followed by Abu Dhabi at 78.

Good places to live

Whether cities are good places to live matters. People want to live in nice places, and companies do not want to have to pay too much to persuade people to move cities and continents. The Mercer index looks across a wide range of issues, giving a good overview of the issues valued by those living in cities. It is a good guide to which cities will be the most pleasant places in which to live, and therefore for both multinationals and cities themselves.


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