Cost of living calculations make up the basis of nearly all salary projections for relocating employees, as they work to ensure that the reward in the host location is sufficient to maintain the assignee’s lifestyle. These calculations are not simple, however, and rely on the availability of quality data which can be effectively compared to find a reliable index. It’s no wonder then that various companies now offer these calculations as their primary service, or as part of their suite of tools. This week Global Mobility Insider looks at five of the best tools currently available for global mobility professionals to make cost of living calculations easy.
|5||Economic Research Institute|
AIRINC’s cost of living calculations cover over 400 cities across the globe, meaning that you’ll likely be able to find the right data for your assignee’s moves, wherever they are coming from or moving to in the world. In addition, AIRINC’s market basket covers the cost of more than 300 items, making it the most comprehensive currently available in the industry.
The data is commonly provided in tables, giving estimated values for different living situations, making it simple to compare different potential salary levels for your assignees. The downside to this, however, is that these numbers are a snapshot in time and need to be regularly updated for those who need up-to-date figures for large mobility programs and recalculations, potentially a costly expense.
Included as part of their salary calculator system, ReloTalent’s cost of living calculations are based upon their proprietary database of 346 cities across the globe. What makes their data interesting is that they leverage their existing network of service providers from the platform to qualify and add to the data, ensuring users always have access to the most up-to-date information available.
Unlike the other calculators listed here, ReloTalent’s cost of living calculations are offered as part of their global mobility management software platform, which integrates the calculations along with all the assignment and vendor management tools you would expect, for a single monthly price. This makes it a great option for businesses who need to perform many calculations, as there is no limit on the number of calculations or recalculations that can be made using the tool.
ECA’s cost of living calculator tools comes as a part of their data subscription service, which allows users to explore a variety of different data options to ensure they can apply the setting and situations that best fit the assignment at hand. At present, their salary calculation tool covers 482 locations around the world, ensuring quality coverage where you need it. Another great feature is that they provide detailed information about the data used, including prices, exchange rates, cost movements and weighting to help you better understand the calculations. In addition, ECA provides a complimentary summary which includes downloadable indices and index changes from across your whole subscription.
Mercer’s cost of living reports cover 370 locations using both factual and objective pricing information for more than 200 goods and services, with data collected by their own team of professional researchers in each city. Essentially, only specifically chosen vendors are surveyed to reflect only those places where expats can buy ‘international quality’ goods and services, so your calculations may be a little higher than other providers on this list, as the index might not reflect the ‘real’ local price.
It is worth noting that Mercer uses the multinational approach of cost of living calculations, which assumes expatriates spend the same amount of money in the host location, regardless of their home country or lifestyle, and then use their cost of living index to find the appropriate allowances figures. Some organisations, especially ones trying to lower relocation costs, may not find this method of calculation acceptable as the resulting allowances can be too high for entry-level employees and too low for executives.
The United States’ Economic Research Institute’s Relocation Assessor tool has an extremely comprehensive list of over 10,000 locations to compare and contrast cost of living data, although the vast majority of these fall within the United States itself. The Relocation Assessor also allows a comparison to be made across multiple cities, to better help you study the cost implications of moves when there’s multiple options for transfer on the table. For organisations placing transferees within the United States in particular, this is an excellent tool as changes in expenses can be predicted down to ZIP code level in many cases.