Cost of Living Allowances / COLA
How is the COLA determined?
There are two key components in establishing the COLA: the employee’s spendable income and the Cost of Living Index.
The spendable income is the amount of the employee’s salary spent on G&S; this is the amount protected while on assignment.
The location’s Cost of Living Index (or COLA index) indicates the relative cost difference between the host and home. An index of 100 indicates that the host location is equally expensive as the home location. A location under 100 tells us that the host is less expensive, and an index over 100 tells us that the host is more expensive.
To calculate the COLA, the COLA index is multiplied by the employee’s spendable income. The result is the amount that the employee needs to maintain their purchasing power.