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What is the Impact?
Help your assignees understand the impact of exchange rate changes and inflation. Remind them that:
- Assignees are expected to contribute from salary; COLA makes up only a portion of total host goods and services expenditures
- Changes in exchange rates and relative (host compared with home) inflation impact total host goods and services expenditures (home salary contribution plus COLA), but only COLA flexes up or down to ensure the assignee has sufficient funds to support the host goods and services expenditure. This means a 10% exchange rate change does NOT equal a 10% change in COLA. Percentage changes in COLA will be greater than the percentage changes in inflation and/or exchange rate. However, COLA changes can be easily reconciled by comparing the change in the total host goods and services expenditure
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