Working From Anywhere?
With the prospect of “working from anywhere” increasingly becoming a reality, a key question to answer for many people will be: “If I can do my job from anywhere in the world, where is the best place for me to live?”
“Best place” can be defined in many ways. For some, the best place is where they can have the highest purchasing power. For others, quality of life may be more important. In this post, we’ll be focusing on the economic factors that affect how far the money in your wallet can go on a global basis.
The rankings and discussion below focus on the financial background data used in AIRINC's 2020 Global 150 and only focuses on a select grouping of global cities. To see the Global 150 Index, click here now.
“If I can do my job from anywhere in the world, where is the best place for me to live?”
Start with Salary
The salary you get paid for your job can vary significantly across countries. To illustrate this, we picked 20 cities around the globe, and ranked them according to the local pay levels:
If you happen to be looking for the highest pay for a given job, Switzerland is probably the place to go; Indonesia, on the other hand, would rank lowest. In fact, pay scales in Switzerland are on average around five times higher than in Jakarta for the same job. So, from a gross salary perspective, a reasonable person would pick any of the top 5 or 6 cities to maximize their economic standard of living.
If you happen to be looking for the highest pay for a given job, Switzerland is probably the place to go
Income Taxes and Living Costs Start to Paint a Picture
While a high salary is attractive, the reality that we all know is that personal income taxes and living costs will significantly impact your purchasing power. The following table shows how each of our 20 cities stacks up in terms of personal income taxes and living costs:
Dubai and Hong Kong have the two most favorable personal income tax regimes of the 20 locations; Vienna and Melbourne score as the two locations with the highest personal income taxes. On this basis, you might conclude that Dubai or Hong Kong is the place to be simply because of low income taxes charged to individuals.
While income tax rates determine how much disposable income you have, another key factor to consider is living costs. For example, even though Hong Kong ranks as the second lowest income tax regime out of the 20 on our list, it is a very expensive place to live, ranking second highest out of 20 for living costs (living costs include housing, utilities, groceries, and other goods and services). Zurich, our location with the highest salaries, has a relatively low tax regime but is the third most expensive location on the list.
Ranking Purchasing Power
While the three types of measurement we’ve looked at above (salary, income taxes, and living costs) are helpful, how do we put together a ranking that combines all of these factors?
For example, looking at Singapore:
- Salaries are relatively high in Singapore (ranked third highest on our list)
- Income taxes are quite low, ranked 16th out the 20 cities
- But living costs are ranked the fourth highest
Do the high living costs in Singapore offset the relatively high pay scales for jobs there? How do Singapore’s relatively low taxes affect the overall economic living standard available? Combining these factors into a single index allows us to compare the locations across each of these factors:
Do the high living costs in Singapore offset the relatively high pay scales for jobs there?
- While living costs in Zurich are very high (3rd out of 20 on our list), high salaries and low taxes ensure that Zurich delivers the highest financial living standard, 1st out of our 20 locations.
- Singapore’s high salaries and low taxes, however, are offset by very high living costs so the overall financial living standard comes in at 5th out of 20.
- Despite moderate salaries in Tokyo, income taxes and the highest living costs mean that Tokyo has one of the lowest living standards on our list of 20 cities.
- London comes in 16th out 20, in terms of living standards for similar reasons: moderate pay relative to other cities in our list, high income taxes, moderately high living costs.
Despite moderate salaries in Tokyo, income taxes and the highest living costs mean that Tokyo has one of the lowest living standards on our list of 20 cities.
When it comes to understanding which locations have the highest and lowest financial living standards, you need to consider all three factors combined: local salary levels, local income taxes, and living costs.
Over time, however, these rankings will change for a number of reasons including:
- Exchange rates
- Changes in income tax rates
- Changes in pay
AIRINC researches and regularly updates income tax, living costs, and quality of living data from around the globe. If you have any questions, please let us know. In the meantime, if you are interested in quality of life rankings, check out the recently released 2020 Global 150 list by clicking the button below:
Listen | Partner | Deliver. For over 60 years, AIRINC has helped clients with the right data, cutting-edge technology, and thought-leading advice needed to effectively deploy talent worldwide. Our industry expertise, solutions, and service enable us to effectively partner with clients to navigate the complexity of today’s global mobility programs. As the market continues to evolve, AIRINC seeks innovative ways to help clients address new workforce globalization challenges, including mobility program assessment metrics and cross-border talent mobility strategy. Our approach is designed with your success in mind. With an understanding of your goals and objectives, we ensure you achieve them. Headquartered in Cambridge, MA, USA, AIRINC has full-service offices in Brussels, London, and Hong Kong. Learn more by clicking here.