Best and Worst Places to Send Expatriate Employees

An expatriate assignment is not a vacation, and an employee posted abroad can’t expect luxury living, but there are places in the world where the economic situation is so bad, employers may want to think twice about sending people there.

The country that’s the most wretched by far is Venezuela, according to Bloomberg’s 2017 Misery Index.

Using inflation and unemployment rates as a gauge of economic conditions, the Misery Index gives Venezuela a score of nearly 500 based on its projected inflation rate of 491.9 percent in 2017, combined with an unemployment rate pegged at 7.8 percent.

According to Bloomberg, "economic woes have plagued Venezuela for years. Sluggish oil prices, the country's only significant export, have fueled a crisis that has left grocery store shelves empty, hospitals without basic medication and violent crime rampant as desperation leads to anger."

In attempting to keep up with runaway inflation, Venezuela’s government raised the nation’s minimum wage on Jan. 1, marking the fifth increase in a year, the 14th since President Nicolas Maduro took office in 2013 and the 35th since his predecessor and mentor, the late Hugo Chavez, took power in 1999. The new monthly minimum wage is 40,638 bolivars (about $60 taking into account the country’s currency controls and hyperinflation, $12 on the black market, which may be a more accurate gauge), a 3,000 percent increase since 1998.

To put that into a practical context, a cup of coffee in Caracas will cost you today about 1,400 times what it would have in August of last year, assuming you can find a shop selling coffee, which may not be easy, given Venezuela’s chronic shortage of food staples.

And how does 500 percent inflation affect wages? Say you posted an employee to Maracaibo at the beginning of this year with an annual salary of 675,000 bolivars (about $100,000). By the end of the year, you’d have to be paying 337,500,000 bolivars to preserve that employee’s buying power.

The state of the economy isn’t the only criterion for deciding where to post an employee or open an office, but all else being equal, you might want to consider stationing that South American representative in Ecuador (misery index: 8.6) or Peru (9.4) rather than Venezuela, even if she doesn’t drink coffee.

Looking on the Bright Side

Mercer looks at other factors when ranking expatriate destinations in its annual Quality of Living survey. Where’s the best place to send an expatriate? Vienna tops the list worldwide (its eighth consecutive year at No. 1), followed by Zurich, Auckland, Munich and Vancouver.

European cities account for eight of the top 10 rankings, principally because of their high standards of living. Brussels (27th place), Rome (57th) and Istanbul (133rd), however, have dropped in this year’s rankings because of (respectively) terrorism-related security issues, waste-removal problems and political turmoil.

San Francisco is the highest-rated U.S. city (in 29th place) followed by Boston (35th), Honolulu (36th) and New York (44th). Chicago (47th place) and Los Angeles (58th) fell in this year’s ratings due to high crime rates.

The three worst places to send employees, according to Mercer, are Port au Prince (No. 231), Baghdad (230) and Sana’a in Yemen (229).

"Economic instability, social unrest and growing political upheaval all add to the complex challenge multinational companies face when analyzing quality of living for their expatriate workforce," said Ilya Bonic, senior partner and president of Mercer’s Career business.

Bloomberg BNA’s International HR Decision Support Network  provides resources, including labor and employment law primers on more than 70 countries, to help you stay compliant and develop policies for your international operations. Start your free trial  today.