Auckland still ranks highly for liveability

Mercer has released their 2014 quality of life rankings and Auckland is third in them once again.

Top 5 Cities

1. Vienna, Austria

2. Zurich, Switzerland

3. Auckland, New Zealand

4. Munich, Germany

5. Vancouver, Canada

Vienna is the city with the world’s best quality of living, according to the Mercer 2014 Quality of Living rankings, in which European cities dominate. Zurich and Auckland follow in second and third place, respectively. Munich is in fourth place, followed by Vancouver, which is also the highest-ranking city in North America. Ranking 25 globally, Singapore is the highest-ranking Asian city, whereas Dubai (73) ranks first across Middle East and Africa. The city of Pointe-à-Pitre (69), Guadeloupe, takes the top spot for Central and South America.

Mercer conducts its Quality of Living survey annually to help multinational companies and other employers compensate employees fairly when placing them on international assignments. Two common incentives include a quality-of-living allowance and a mobility premium. A quality-of-living or “hardship” allowance compensates for a decrease in the quality of living between home and host locations, whereas a mobility premium simply compensates for the inconvenience of being uprooted and having to work in another country. Mercer’s Quality of Living reports provide valuable information and hardship premium recommendations for over 460 cities throughout the world, the ranking covers 223 of these cities.

“Political instability, high crime levels, and elevated air pollution are a few factors that can be detrimental to the daily lives of expatriate employees their families and local residents. To ensure that compensation packages reflect the local environment appropriately, employers need a clear picture of the quality of living in the cities where they operate,” said Slagin Parakatil, Senior Researcher at Mercer.

Mr Parakatil added: “In a world economy that is becoming more globalised, cities beyond the traditional financial and business centres are working to improve their quality of living so they can attract more foreign companies. This year’s survey recognises so-called ‘second tier’ or ‘emerging’ cites and points to a few examples from around the world These cities have been investing massively in their infrastructure and attracting foreign direct investments by providing incentives such as tax, housing, or entry facilities. Emerging cities will become major players that traditional financial centres and capital cities will have to compete with.”

Europe

Vienna is the highest-ranking city globally. In Europe, it is followed by Zurich (2), Munich (4), Düsseldorf (6), and Frankfurt (7). “European cities enjoy a high overall quality of living compared to those in other regions. Healthcare, infrastructure, and recreational facilities are generally of a very high standard. Political stability and relatively low crime levels enable expatriates to feel safe and secure in most locations. The region has seen few changes in living standards over the last year,” said Mr Parakatil.

Ranking 191 overall, Tbilisi, Georgia, is the lowest-ranking city in Europe. It continues to improve in its quality of living, mainly due to a growing availability of consumer goods, improving internal stability, and developing infrastructure. Other cities on the lower end of Europe’s ranking include: Minsk (189), Belarus; Yerevan (180), Armenia; Tirana (179), Albania; and St Petersburg (168), Russia. Ranking 107, Wroclaw, Poland, is an emerging European city. Since Poland’s accession to the European Union, Wroclaw has witnessed tangible economic growth, partly due to its talent pool, improved infrastructure, and foreign and internal direct investments. The EU named Wroclaw as a European Capital of Culture for 2016.

Americas

Canadian cities dominate North America’s top-five list. Ranking fifth globally, Vancouver tops the regional list, followed by Ottawa (14), Toronto (15), Montreal (23), and San Francisco (27). The region’s lowest-ranking city is Mexico City (122), preceded by four US cities: Detroit (70), St. Louis (67), Houston (66), and Miami (65). Mr Parakatil commented: “On the whole, North American cities offer a high quality of living and are attractive working destinations for companies and their expatriates. A wide range of consumer goods are available, and infrastructures, including recreational provisions, are excellent.”

In Central and South America, the quality of living varies substantially. Pointe-à-Pitre (69), Guadeloupe, is the region’s highest-ranked city, followed by San Juan (72), Montevideo (77), Buenos Aires (81), and Santiago (93). Manaus (125), Brazil, has been identified as an example of an emerging city in this region due to its major industrial centre which has seen the creation of the “Free Economic Zone of Manaus,” an area with administrative autonomy giving Manaus a competitive advantage over other cities in the region. This zone has attracted talent from other cities and regions, with several multinational companies already settled in the area and more expected to arrive in the near future.

“Several cities in Central and South America are still attractive to expatriates due to their relatively stable political environments, improving infrastructure, and pleasant climate,” said Mr Parakatil. “But many locations remain challenging due to natural disasters, such as hurricanes often hitting the region, as well as local economic inequality and high crime rates. Companies placing their workers on expatriate assignments in these locations must ensure that hardship allowances reflect the lower levels of quality of living.”

Asia Pacific

Singapore (25) has the highest quality of living in Asia, followed by four Japanese cities: Tokyo (43), Kobe (47), Yokohama (49), and Osaka (57). Dushanbe (209), Tajikistan, is the lowest-ranking city in the region. Mr Parakatil commented: “Asia has a bigger range of quality-of-living standard amongst its cities than any other region. For many cities, such as those in South Korea, the quality of living is continually improving. But for others, such as some in China, issues like pervasive poor air pollution are eroding their quality of living.”

With their considerable growth in the last decade, many second-tier Asian cities are starting to emerge as important places of business for multinational companies. Examples include Cheonan (98), South Korea, which is strategically located in an area where several technology companies have operations. Over the past decades, Pune (139), India has developed into an education hub and home to IT, other high-tech industries, and automobile manufacturing. The city of Xian (141), China has also witnessed some major developments, such as the establishment of an “Economic and Technological Development Zone” to attract foreign investments. The city is also host to various financial services, consulting, and computer services.

Elsewhere, New Zealand and Australian cities rank high on the list for quality of living, with Auckland and Sydney ranking 3 and 10, respectively.

Middle East and Africa

With a global rank of 73, Dubai is the highest-ranked city in the Middle East and Africa region. It is followed by Abu Dhabi (78), UAE; Port Louis (82), Mauritius; and Durban (85) and Cape Town (90), South Africa. Durban has been identified as an example of an emerging city in this region, due to the growth of its manufacturing industries and the increasing importance of the shipping port. Generally, though, this region dominates the lower end of the quality of living ranking, with five out of the bottom six cities; Baghdad (223) has the lowest overall ranking.

“The Middle East and especially Africa remain one of the most challenging regions for multinational organisations and expatriates. Regional instability and disruptive political events, including civil unrest, lack of infrastructure and natural disasters such as flooding, keep the quality of living from improving in many of its cities. However, some cities that might not have been very attractive to foreign companies are making efforts to attract them,” said Mr Parakatil.

That’s a good result for Auckland although no change from previous years. The next highest Australasian city was Sydney at 10 followed by Wellington at 12. It’s also important to remember what these rankings are actually designed for which is to help large companies work out how much of a premium to pay employees they send to work in foreign countries i.e. you would have to pay someone a lot more to go and work in one of the bottom 5 countries than you would to work in one of the top 5. The bottom 5 is:

219. Sana’a, Yemen Arab Republic

220. N’Djamena, Chad

221. Port-Au-Prince, Haiti

222. Bangui, Central African Republic

223. Baghdad, Iraq

The rankings are done by scoring cities across 39 different criteria across 10 different categories. They are:

  • Political and social environment (political stability, crime, law enforcement, etc.)
  • Economic environment (currency exchange regulations, banking services)
  • Socio-cultural environment (media availability and censorship, limitations on personal freedom)
  • Medical and health considerations (medical supplies and services, infectious diseases, sewage, waste disposal, air pollution, etc)
  • Schools and education (standards and availability of international schools)
  • Public services and transportation (electricity, water, public transportation, traffic congestion, etc)
  • Recreation (restaurants, theatres, cinemas, sports and leisure, etc)
  • Consumer goods (availability of food/daily consumption items, cars, etc)
  • Housing (rental housing, household appliances, furniture, maintenance services)
  • Natural environment (climate, record of natural disasters)

You have to buy the full report at US$499 to see all of the rankings but in the past it has been noted that while Auckland ranks 3rd overall, the one area we fell way behind on wass infrastructure for which we ranked 43rd. I don’t know if that ranking has changed at all but I suspect not that much (it will probably be a few years before the current tranche of transport projects are completed before that happens).

Also I note that Mercer have provided the top and bottom 5 cities for each region. For North America one in the bottom 5 is one that a few commenters have been bringing up recently saying that we should emulate. That city is of course Houston which ranks at 66th overall.

The Sun rising over the CBD

Photo is credited to Craig

Almost the world’s most liveable city

The 2012 Mercer Quality of Living Ranking survey has Auckland as the world’s third most liveable city – retaining the same ranking as 2011. The survey is designed to assist employers in the placement of expatriate staff and how much they should receive in living allowances, so the results tend to indicate quality of living if you’re really well off, however they give a useful guide. Here are the top 20:The explanation for how the results are collated is helpful in making sense out of them:

Mercer evaluates local living conditions in more than 460 cities it surveys worldwide. We analyze living conditions according to 39 factors, grouped in 10 categories:

Political and social environment (political stability, crime, law enforcement)
Economic environment (currency exchange regulations, banking services)
Socio-cultural environment (censorship, limitations on personal freedom)
Medical and health considerations (medical supplies and services, infectious diseases, sewage, waste disposal, air pollution, etc.)
Schools and education (standard and availability of international schools)
Public services and transportation (electricity, water, public transportation, traffic congestion, etc.)
Recreation (restaurants, theatres, movie theatres, sports and leisure, etc.)
Consumer goods (availability of food/daily consumption items, cars, etc.)
Housing (rental housing, household appliances, furniture, maintenance services)
Natural environment (climate, record of natural disasters)

The scores attributed to each factor allow for city-to-city comparisons. The result is a quality-of-living index that compares relative differences between any two locations that we evaluate. For the indices to be used effectively, Mercer has created a grid that allows users to link the resulting index to a quality-of-living allowance amount by recommending a percentage value in relation to the index.

For 2012, Mercer also prepared an Infrastructure Index, based on Electricity, Water Availability, Telephone, Mail, Public Transportation, Traffic Congestion & Airport Effectiveness. The results for this index are in many places quite different, with Auckland dropping from 3rd for liveability to 43rd for infrastructure provision. This most likely highlights that transport, particularly public transport I suspect, is the main barrier to becoming number one. The table below runs a comparison between the lists for those cities which appeared in both lists – those which scored better in the infrastructure are shown in green and those that scored better in the liveability are shown in red:It’s interesting that Auckland and Wellington are the two cities which outperform their infrastructure score in the final liveability ranking so much. What’s also interesting is that the cities with the top two infrastructure scores which haven’t corresponded to ending up in the top 50 liveable cities are Dallas and Atlanta: notoriously car dependent cities.

What is very interesting is that Auckland’s poor infrastructure score, relative to liveability, is perhaps reflected in Auckland generally scoring quite lowly in terms of economic performance compared to a number of these other cities. This is outlined in the Economy chapter of the Auckland Plan quite starkly:

Measured internationally, Auckland’s performance is relatively poor: it is ranked 69th out of 85 metro regions in the Organisation for Economic Co-operation and Development (OECD) in terms of GDP per capita. New Zealand’s economic performance has declined relative to other OECD countries in terms of GDP per capita to its position at 21st, but has stabilised at around 80% of the OECD median.

Pulling a few strands together, I think there’s likely to be an argument that Auckland’s historic under-investment in infrastructure – particularly the kind of transport infrastructure that encourages productivity through boosting employment densities - has held back our economic growth. This is reflected not only in our relatively poor economic performance, but also in our relatively low infrastructure scores in the Mercer survey. Because our transport investment in the past has been so focused on encouraging employment dispersal we have missed out on the agglomeration benefits that would have otherwise been enjoyed and therefore missed the economic growth that we should have had.

Fortunately there seems to be a growing recognition of this faulty thinking and a growing realisation that smart transport investment is about encouraging and facilitating land-use patterns which support economic growth – particularly through agglomeration. Let’s hope the government finally starts to understand this point and sees how critical a project such as the City Rail Link is in boosting Auckland’s economic productivity by allowing much greater employment densities in the city centre and in major centres on the rail network across Auckland. I can’t say I have too much hope though, sadly.