This is an anonymous post from an Elpha member.

International Cost of Living Adjustments

Is there any standard source for cost-of-living adjustments between different countries? For example, I'm trying to figure out how to adjust a salary whether the employee is in the United States, Canada, Mexico, Brazil, India, Pakistan, Dubai, Poland, or Germany. And really any other country that pops up in the future as well.

I don't want to choose something arbitrary. When I Google salary converter, I get links like this (salaryconverter.nigelb.me) or this (paritydeals.com/ppp-calculator).

If you are an employee at a company that offers different salaries in different cities/countries, what are these rates and how are the sources communicated to you? Or if you work in HR, how do you ensure you are setting these rates fairly?

Jeanelle210·Aug 28

I was actually just exploring this yesterday because I need to figure out paying someone moving from San Francisco to Bilbao Spain and pay the equivalent, local rate, not meaning currency conversion, but the rate that accounts for all the different variables that determine salaries for that area.I found two online options that do this: Neil Kakkar & Numbeo. Highly recommend you start using AI for these kinds of searches as it can very quickly get you to options to consider! That’s what I did.

April149·Aug 28

Thank you! Yes, ChatGPT did recommend Numbeo. My main issue with it is that the website looks unprofessional. I wish there was something like this that was validated by a well-known institution, like the global equivalent of the U.S. Bureau of Labor Statistics.

Fredda127·Aug 28

I've seen some people mention Gitlab's compensation structure for different locations, so maybe you can check that out?https://handbook.gitlab.com/handbook/total-rewards/compensation/compensation-calculator/#calculating-location-factors

April149·Aug 28

Thanks! It looks like you need to be a GitLab "team member" in order to use the calculator, but I can see that they are using sources like Comptryx (by Mercer) and Radford (by Aon). Although those sources are not free, they seem much more legitimate than what ChatGPT is showing me.

judithsoldyess·Aug 28

I realize you probably already did this, but I was looking for more than Glassdoor and Chat GPT suggests these (I have not validated this info as a human, however). I asked it to add URLs to facilitate your research. Sections 2 and 3 seem most helpful?When adjusting salaries across different countries, many organizations rely on standardized economic metrics to ensure fairness and accuracy. Here are some of the most common sources and methods used for cost-of-living adjustments:### 1. **Purchasing Power Parity (PPP)** - **Overview**: PPP is a common method used to compare economic productivity and standards of living between countries. It measures what a basket of goods costs in different countries, thus giving a basis for adjusting salaries to match the cost of living. - **Tool Example**: The World Bank and the International Monetary Fund (IMF) provide PPP data, which can be used to inform salary adjustments. - **Resource**: The OECD's [Purchasing Power Parities (PPP) database](https://data.oecd.org/conversion/purchasing-power-parities-ppp.htm) is a reliable source.### 2. **Cost-of-Living Indexes** - **Overview**: These indexes compare the cost of living in different countries or cities. They typically consider housing, transportation, food, and other living expenses. - **Example Tools**: - **Numbeo**: Provides a cost-of-living calculator that includes various cities worldwide ([Numbeo Cost of Living Calculator](https://www.numbeo.com/cost-of-living/)). - **Expatistan**: Another popular platform that provides cost-of-living comparisons between cities ([Expatistan Cost of Living](https://www.expatistan.com/cost-of-living)). ### 3. **Salary Surveys by Compensation Consulting Firms** - **Overview**: Consulting firms such as Mercer, Willis Towers Watson, and Aon conduct regular salary surveys that take into account the cost of living in various countries. These surveys are often used by multinational companies to set equitable salaries. - **Example Firm**: - **Mercer**: They provide a comprehensive suite of services around global compensation planning ([Mercer Cost of Living Reports](https://mobilityexchange.mercer.com/Insights/cost-of-living-rankings)).### 4. **Government and International Organization Data** - **World Bank**: Provides comprehensive data on GDP per capita, income distribution, and other economic indicators that can be used to inform salary adjustments ([World Bank Data](https://data.worldbank.org/)). - **International Labour Organization (ILO)**: Offers data and reports on global wages and labor standards ([ILO Global Wage Report](https://www.ilo.org/global/research/global-reports/global-wage-report/lang--en/index.htm)).### 5. **Internal Company Policies** - Many companies develop internal methodologies for adjusting salaries, often based on a combination of the sources mentioned above. They may also use data from third-party compensation platforms like **PayScale** or **Glassdoor**.### 6. **Exchange Rate Adjustments** - **Overview**: While not a direct measure of cost of living, exchange rates are sometimes used in conjunction with PPP to adjust salaries. - **Resource**: XE ([XE Currency Converter](https://www.xe.com/currencyconverter/)) is commonly used for up-to-date exchange rate information.### Communication to Employees: - Companies typically communicate these rates through internal HR portals or during the offer negotiation process. HR departments ensure transparency by explaining the methodology used to determine salaries in different regions.### Summary:For a reliable and non-arbitrary approach to setting salaries across different countries, companies should use a combination of PPP, cost-of-living indexes, salary surveys from reputable firms, and government data. These tools and resources ensure that salaries are fair and reflect the true cost of living in different regions.### URLs for Reference: - [OECD Purchasing Power Parities (PPP)](https://data.oecd.org/conversion/purchasing-power-parities-ppp.htm) - [Numbeo Cost of Living Calculator](https://www.numbeo.com/cost-of-living/) - [Expatistan Cost of Living](https://www.expatistan.com/cost-of-living) - [Mercer Cost of Living Reports](https://mobilityexchange.mercer.com/Insights/cost-of-living-rankings) - [World Bank Data](https://data.worldbank.org/) - [ILO Global Wage Report](https://www.ilo.org/global/research/global-reports/global-wage-report/lang--en/index.htm) - [XE Currency Converter](https://www.xe.com/currencyconverter/)

katiesedg·Sep 12

What did you land on? My company also rejected Neil Kakkar even though it seems to capture the relevant info to provide a true local rate. Have you ever tried SalaryExpert?

April149·Sep 12

Ironically nothing because I think the candidate was doing something illegal. He wouldn't sign up for the platform we use to pay people internationally and claimed that it did not allow people from his country, and he said he could accept payment via Western Union instead. This was definitely a lie because the platform offered to speak with him and help onboard him.But I'll keep this post bookmarked because I'm sure the situation will arise again in the future with a more legitimate candidate.I just browsed SalaryExpert but it looks like I need to put in my phone number in order to get my "free result." Is it worth it / how much does it cost on an ongoing basis?