Which term is used to describe adjustments in compensation for expatriates to meet local living costs?

The term used to describe adjustments in compensation for expatriates to meet local living costs is cost-of-living adjustments. This concept is essential in expatriate compensation packages because it ensures that employees sent to work in a foreign country can maintain their purchasing power despite differences in living expenses.

When employees relocate internationally, the cost of housing, groceries, transportation, and other essential daily expenses may vary significantly from their home country. Cost-of-living adjustments are specifically designed to address these disparities, allowing expatriates to live comfortably and equitably in their new environment without suffering a financial disadvantage compared to their peers.

In contrast, housing allowances specifically pertain to support for accommodation costs but do not encompass overall cost adjustments for varied living expenses. Similarly, relocation expenses are one-time costs associated with moving, such as shipping belongings and travel expenses during the move, rather than ongoing adjustments to salary based on living costs. Separation allowances typically relate to compensation given to employees who are separated from their jobs, and are not related to expatriate living conditions or cost adjustments.