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Toronto is the Lowest Risk City in the World for Employers, Says Aon Consulting

2010-09-27 18:42 1637

-- People Risk Index helps organizations assess risks when hiring, employing and moving staff

CHICAGO, Sept. 27 /PRNewswire-Asia/ -- A first-of-its kind global study found Toronto to be the city with the lowest risk in the world to recruit, employ and relocate employees, according to Aon Consulting, the global benefits and human capital consulting business of Aon Corporation (NYSE: AON).

Aon Consulting's People Risk Index measured the risks that organizations face with recruitment, employment and relocation in 90 cities worldwide[i] by analyzing demographics, education, employment practices and government regulations (See page 6 for global rankings; See page 3 for Greater China highlights). According to the Index, the five lowest risk cities for employers are Toronto, New York, Singapore, London and Montreal. On the opposite end of the ratings, locations such as Dhaka, Bangladesh; Phnom Penh, Cambodia; Lagos, Nigeria; Karachi, Pakistan; and Tehran, Iran, represent the least desirable of the 90 cities for employers. (See Table 2, page 5 for 10 lowest and highest risk cities). "The new risk ratings come at an opportune time as assessing employment risk takes on heightened importance as of late, from controversy over Arizona's strict new anti-illegal immigration law to recent strikes in China," said Rick Payne, chief research officer of Aon Consulting's Global Research Center, based in Singapore. "As companies face these and other employment risks as well as take a close look at new investment opportunities in emerging markets, the ratings can help companies systematically and consistently assess the relative risks they face when hiring, employing and moving staff."

Sibling Rivalry in the Five Lowest Risk Cities

Montreal and Toronto are among the five lowest risk cities primarily due to Canada's low level of corruption; strict enforcement of equal opportunity laws; health and retirement benefits; and high quality and broad availability of training facilities. The main difference between the two is due to Toronto's larger population as well as quality and broader availability of training resources, according to Aon.

The results also found New York and London's favorable ratings to be attributable to world-class educational institutions and training facilities, and a large pool of qualified and experienced talent.

Singapore is the only city outside Europe and North America among the 10 lowest risk cities. Contributing to this rating is Singapore's strict laws on discrimination and occupational health and safety, flexibility on personnel costs, lack of corruption and willingness to work with the private sector on human resources related issues.

"A significant factor influencing the People Risk Index is government support," Payne said. "Cities with low risk typically have a government that is transparent, non-confrontational, and deal with employment issues fairly. Employers in these cities are less likely to be surprised by changes in government policies on employment, health care, and retirement. Therefore, they have fewer issues finding and retaining educated and experienced talent. These employers also have more flexibility to restructure their operations without fear of incurring significant unanticipated costs." Still, analysis of these low risk cities shows room for improvement. For example, Toronto is not No. 1 in any category, even though it ranked No. 1 overall. In fact, it is 14 in demographics and 12 in employment practices. New York, on the other hand, ranked No. 1 in education and 2 in talent development. And Singapore is No. 1 in government support but is ranked 41 in education. (See Table 2, page 5 for rankings by areas of risk)

"As the report indicates, even the lowest risk cities are not perfect," Payne said. "For instance, the talent pool in Toronto and Montreal is small compared to New York or Los Angeles, which increases the risk of recruiting for certain types of jobs such as highly specialized financial jobs and design/visual arts jobs. Additionally, in Singapore the inflow of foreign talent helps to increase its talent pool despite its small population, low birth rate and aging workforce."

Trends from the Highest Risk Cities

A common contributing factor of the five cities with the highest risk is an urbanization rate faster than its city can manage. Dhaka, for example, has an estimated 12 million people living in a city originally designed for a population of 1 million. Ratings for education factors such as low literacy, limited spending on education, and low enrollment in secondary and tertiary education also are significant reasons for the high scores among the 10 highest risk cities, according to the People Risk Index. "The education system of an overcrowding city faces great challenges to cope with the fast growing urban population," Payne said. "In general, the lack of basic human capital infrastructure such as education systems and training resources, coupled with poor government support and a culture of bias and favoritism, contribute to the high people risk that we observe in these cities."

To obtain a copy of the 2010 People Risk Index Ratings, please visit http://www.aon.com/peoplerisk .

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China People Risk Index Highlights

While there is a substantial gap in the overall people risk rating between China's tier-one cities[ii] and Hong Kong or Taipei, the tier-one cities are on par with Kuala Lumpur and Bangkok due to their good talent development resources, a relatively safe living environment and high adult literacy rates. The standard of talent development facilities in Beijing and Shanghai is fast catching up to high-income Asian cities, and many international executive search firms have offices in these cities.

Table 1: 2010 Greater China People Risk Rating
Global Rank City Rating (25 - 250)
16 Hong Kong 85
20 Taipei 88
52 Beijing 129
53 Shanghai 130
60 Shenzhen 141
64 Guangzhou 142
69 Tianjin 148
72 Wuhan 151
75 Dalian 153
77 Chengdu 154
79 Xi'an 161

The major differentiations between the mainland cities and Hong Kong or Taipei are in the areas of government transparency and efficiency, which in turn impact, directly and indirectly, the employment practices in the particular locations.

"Employment practices in China are becoming an increasingly important source of risk for foreign businesses operating in China," according to Klaus Liu, Managing Director, Greater China.

"High employee turnover rates, underdeveloped health care programs and the uncertainty in labor relations and government policies are currently the biggest employment risk areas in the mainland Chinese cities," added Mr. Liu.

Another important source of risk for China is the underdeveloped education system, which impacts the supply and capability of potential applicants. In comparison, the education systems in Hong Kong and Taipei are much more capable in producing sufficient numbers of qualified graduates.

Tier-one v Tier-two cities

The tier-two cities have higher risk than the tier-one cities due to a lower level of economic development, which implies a lower level of resources these cities can afford to invest into building their human capital. Most tier-two cities also face greater challenge of brain drain to the coastal cities. On the other hand, the tier-one cities enjoy the advantage of a larger labor supply by having a larger urban population.

The key difference between the tier-one and tier-two cities is in the area of talent development. The study shows a great divide between the two groups of cities in terms of the availability and quality of talent development and recruitment resources. While the tier-one cities have ample training resources of satisfactory quality, talent development remains a challenge for companies operating in the tier-two cities.

Table 2: 10 Lowest Risk & 10 Highest Risk Cities
Lowest Risk Cities

 

Highest Risk Cities
Rank City Rating (25-250) Rank City Rating (25-250)
1 Toronto 70 90 Dhaka 190
2 New York 73 89 Phnom Penh 189
3 Singapore 74 88 Lagos 182
3 London 74 87 Karachi 180
5 Montreal 77 86 Tehran 178
6 Zurich 78 85 Nairobi 177
6 Stockholm 78 84 Hanoi 175
8 Copenhagen 79 83 Colombo 171
8 Amsterdam 79 82 Cairo 169
10 Los Angeles 80 80 Lima 164

 

 

 

 

80 St. Petersburg 164

Table 3: People Risk Rankings by Area of Risk

 

City

 

Toronto New York Singapore London Montreal
Overall Ranking 1 2 3 4 5
Ranking by Area of Risk
Demographic 14 2 2 19 23
Government Support 2 12 1 10 2
Education 4 1 41 16 7
Talent Development 2 2 11 2 16
Employment Practices 12 23 23 6 12
About Aon Consulting's People Risk Index

The results are based on in-depth research conducted over a six-month period by the Aon Consulting Global Research Center. Data from more than 100 statistical sources provide the quantitative basis for the ratings, which were augmented by the assessment of Aon Consulting's local and regional human resources experts from around the world.

The 90 cities were selected based on population size, rate of population growth, level of business investment and geographic spread among the cities covered.

Aon Consulting People Risk Index assigned ratings relative to risk for 25 qualitative and quantitative factors across five broad areas: Demographics; Education; Government Support; Talent Development; and Employment Practices. Each of the 25 factors has a scale from 1 (minimal risk) to 10 (extreme risk). Thus, the overall ratings are from 25 to 250, where 25 is minimal or no risk and 250 is extreme risk.

About Aon Consulting

Aon Consulting is among the top global human capital consulting firms, with more than 6,300 professionals in 229 offices worldwide. The firm works with organizations to improve business performance and shape the workplace of the future through employee benefits, talent management and rewards strategies and solutions. Aon Consulting was named the best employee benefit consulting firm by the readers of Business Insurance magazine in 2006, 2007, 2008 and 2009. For more information on Aon Consulting, please visit http://www.aon.com/human-capital-consulting.

About Aon

Aon Corporation (NYSE: AON) is the leading global provider of risk management services, insurance and reinsurance brokerage, and human capital consulting. Through its more than 36,000 colleagues worldwide, Aon delivers distinctive client value via innovative and effective risk management and workforce productivity solutions. Aon's industry-leading global resources and technical expertise are delivered locally through more than 500 offices in more than 120 countries. Named the world's best broker by Euromoney magazine's 2008, 2009 and 2010 Insurance Survey, Aon also ranked highest on Business Insurance's listing of the world's largest insurance brokers based on commercial retail, wholesale, reinsurance and personal lines brokerage revenues in 2008 and 2009. A.M. Best deemed Aon the number one insurance broker based on brokerage revenues in 2007, 2008 and 2009, and Aon was voted best insurance intermediary, best reinsurance intermediary and best employee benefits consulting firm in 2007, 2008 and 2009 by the readers of Business Insurance. Visit http://www.aon.com for more information on Aon and http://www.aon.com/unitedin2010 to learn about Aon's global partnership and shirt sponsorship with Manchester United.

Aon Consulting 2010 People Risk Index(TM) -- This full listing is for journalists only. (C) 2010 Aon Consulting.

1. The 90 cities were selected based on population size, rate of population growth, level of business investment and geographic spread among the cities covered.

2. Tier-one cities: Beijing, Guangzhou, Shanghai and Shenzhen; Tier-two cities: Chengdu, Dalian, Tianjin, Wuhan and Xi'an)

Source: Aon Consulting
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