International cost of living rankings are the result of comparing the cost of an expatriate’s personal budget, using the local prices for the same defined quantities of the same goods and services in each country throughout the world Our findings show that the compound impact of the multifaceted global economic trends that impact each country in one way or another, are contributing to rapid substantial changes in the relative cost of living of countries around the world

When an expatriate moves from one geographic location to another, the change in cost of living they experience is relative to the change in the purchasing power of their salary The basic principle is that a move to a higher cost of living city should be accompanied by a proportionately higher salary in order to maintain the same amount of purchasing power and vice versa

The challenges of ensuring expatriates are paid fair salaries across different countries, in the current economic climate, of the credit crisis together with rapid currency and inflation fluctuations are increasingly complex The current economic climate has made it necessary to constantly review expatriate salaries

A Cost of Living Allowance (COLA) is a salary supplement paid to employees to cover differences in the cost of living, particularly as a result of an international assignment The amount of COLA should enable an expatriate to be able to purchase the same basket of goods and services in the host location as they could in their home country

The objective of expatriate pay programs is to ensure that employee spending power and standard of living is maintained irrespective of global location How to achieve this has been an issue many organizations spend considerable time on

A global cost of living comparison conducted by Xpatulator indicates 3 of the top 5 most expensive cities are in Asia, while London is the most expensive global city for expatriates Tokyo, Seoul, and Hong Kong are ranked 2nd, 3rd, and 5th respectively in terms of overall cost of living