Wealth Solutions & Wealth Planning

The Sovereign Group unveil the latest Sovereign Worldwide Cost of Living Index

The Sovereign Group, one of the largest independent corporate and trust service providers globally, has unveiled the output of its latest Worldwide Cost of Living Survey.

The Report presented by The Sovereign Group provides businesses with invaluable information to allow the formulation of compensation packages for overseas staff, factoring in not only the comparative prices of goods and services in cities around the world but how much an individual living and earning in a particular city would need to earn to afford these goods and services after paying local taxes, the report explicates in its introduction.

In its introduction to the Report, Sovereign said:

The Economist Intelligence Unit have just published their new cost of living index which rates cities across the world according to the Cost of Living there. This is designed to assist companies in deciding how much their staff in those cities should be paid. 

We believe their methodology is deeply flawed as it does not take into account taxation which is one of the biggest costs. Adjusting the costs to take this into account gives a totally different result as the tables within the report illustrate.

We also note that the cost of accommodation is also absent but understand why. It is virtually impossible to come up with an average cost of accommodation as those costs will vary wildly depending on a whole number of factors such as: 1. Size: 2. Proximity to the city centre or other sought after districts/areas; 3. Standard of accommodation; 4.Facilities within the building or nearby etc. etc.

Both the EIU and ourselves don’t attempt to deal with this issue but it would surely have a marked effect. For example, Hong Kong appears in the EIU top ten but falls out of our charts altogether due to the very low taxes.  However, Hong Kong has very high accommodation costs so would surely move upwards if there was a way of costing accommodation into the mix. 

We hope you will find these statistics useful or at least interesting.

Please CLICK HERE to read the full report.