Sticker shock for expats

A survey released yesterday by Mercer Human Resources Consulting ranks Seoul as the fifth most expensive city in the world for expatriate living.  Seoul is up two spots from last year, and it now ranks fifth behind Tokyo, Osaka, London, and Moscow.  Asuncion, Paraguay remains the cheapest city in the world for expats.  Each year, Mercer publishes this ranking in order to give companies an indication of how much to pay their expatriate employees.  While most local residents manage to live in Seoul on a limited budget, expatriates who want to maintain a comfortable lifestyle in Seoul have to adjust to sticker shock.  It may not be as expensive as Tokyo or London, but then again, one would not expect Seoul to be more expensive than New York City or Paris.

It is still a bit of a mystery to me how Koreans can afford to live in Seoul.  When the average Korean earns about $12,500 (U.S.) annually, one wonders how Koreans can afford to live in Seoul at all (one in every four Korean lives in Greater Seoul).  Granted, Koreans can buy cheaper goods at local markets, rather than shopping at upscale department stores.  Plus, they often live at home with their parents until they can afford to rent their own place, and when they do rent or buy, they typically buy in areas far from downtown such as in Incheon City.  Although the cost of living in Korea is much cheaper for Americans who are stationed at local U.S. military bases because the military subsidizes goods purchased on base, prices on the local economy are significantly higher.  For example, prices at the three Costco warehouses in Seoul are far higher than in the U.S.  I think I would find it hard to make ends meet if I lived in Seoul making $12,500 a year.

The fact that 1 U.S. dollar equals approximately 1,000 won also hides the true cost of an item.  For example, when one pays 16,000 won for a lunch with one 10,000 won bill, a 5,000 won bill, and a 1,000 won bill, one does not automatically calculate the true cost of the meal they just purchased.  In the U.S., I commonly made my own lunch or paid a few dollars for lunch at a cafeteria.  Now, I routinely spend $6-$16 per day having lunch with colleagues.  Food and housing costs seem to make up the highest percentage of a typical Korean’s budget.  Apartments can cost well over $1,000,000 (U.S.) in some areas of town, especially in Jongno-gu (central district), Yongsan-gu (just south of downtown), and Gangnam-gu (the area south of the river).  Dining and entertainment is usually a large portion of one’s budget, because meeting with friends and coworkers for food and drink is a very common activity in Seoul. 

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