Salary Purchasing Power Parity (SPPP)
What is Purchasing Power Parity (PPP)?
Purchasing Power Parity (PPP) is an economic theory that compares different countries' currencies to the cost of living difference. According to this concept, purchasing power parity is when a the same basket of goods is priced the same in both countries / cities, taking into account the exchange rates.
What is the Salary Purchasing Power Parity (SPPP) Report Calculator?
The SPPP report calculates how much you need to earn in another location to compensate for cost of living, hardship, and exchange rate differences, in order to have the same relative spending / purchasing power and as a result have a similar standard of living as you have in your current location. This is recommended for a detailed comparison of two locations. For example, if you have you been offered a job overseas or in another country or state and you want to do a comparison to your existing salary taking into account the cost of living differences. Use your current salary to compare whether the offer is higher or lower than what you earn now, in terms of purchasing power.
How do you run a Salary Purchasing Power Parity (SPPP) Report?
- 1) Login using your username and password.
- 2) Check that you have subscribed to 2 or more locations.
- 3) Select Report Calculators from the menu.
- 4) Choose the Salary Purchasing Power Parity Report Calculator.
- The calculator will prompt you for the following inputs:
- 5) Reference Information: Give your report a reference and the name of the individual for whom you are running the report. This will help you identify your reports for future reference.
- 6) Locations: Select the location that is being relocated FROM and the location that is being relocated TO.
- 7) Cost Allocations: Select the basket costs that will be paid for by the employee from his own salary (column on right) and what will be provided for by the employer or state, for the employee (column on left). Basket costs that are provided are not included in the cost of living calculation. The default is that all basket costs will be paid for by the employee from their own salary unless otherwise specified. Note that there is no point in selecting that all costs are provided for the employee by the employer, as then theoretically the employee would not need to earn a salary.
- 8) Currency Details: Select the appropriate currency. You can choose any currency, it does not have to be the currency of the selected locations. Enter the current salary amount in the current location. This is used as the basis of the Xpatulator calculation. You can choose the salary you wish to use as the basis for the calculation. For example depending on your salary structure you may choose to use Basic Salary, Base Salary, Guaranteed Cash, Total Cash, Total Remuneration or any other structure. We recommend using net salary (i.e. after tax) as the basis for the calculation. This will provide you with the equivalent net salary in the "moving to location". Use the Hypothetical Tax Calculator to calculate net salary.
- 9) You can choose if you want to allow negative cost of living differences to be applied to your calculation by checking the box. If you choose to allow negative cost of living differences, the calculator will decrease the salary when the cost of living is lower in the TO location. Unless you choose to allow negative cost of living differences, the calculator will only apply positive (higher) cost of living differences.
- 10) You can choose if you want to allow negative hardship differences to be applied to your calculation by checking the box. If you choose to allow negative hardship differences, the calculator will decrease the salary when the hardship is lower in the TO location. Unless you choose to allow negative hardship differences, the calculator will only apply positive (higher) hardship differences.
- 11) Run Report: When you are sure that all your selection criteria are correct, click on run report. Reports can be re-run for the period that you have purchased your subscription for.
- 12) Your report will be created immediately and will look like this Demo SPPP Report
To get started:
Register, then login using your email address and password, and subscribe to your locations online. Please note that credit card verification time is usually a few minutes, but can take a few hours. Once your locations have loaded you can run the premium content calculators and receive your reports online within minutes.
If you have not registered yet: Register Now.