A frequent area of discussion in Norway concerns the costs of living and how things compare to “back home”. There was a fantastic post on Us and Them recently about the cost of living in Norway. This article offers an excellent overview on this topic that had me nodding all the way through.
The author uses the Cost of Living Adjustment (COLA) index to delve into this topic, explaining that:
COLA is based on an index of 13 different ‘baskets’ of goods. By choosing similar products in each country and grouping them into categories, an ‘apples to apples’ comparison is possible.
She then uses the COLA index to take a closer look at expenses such as housing, clothing, health care, transportation, and other fund grabbers. Because COLA indices are measured with a USD base, currency and salary fluctuations and purchasing parity differences are not reflected in the relative affordability of these rankings.
So it is true that alcoholic beverages are very expensive! The restaurant ranking confirmed my suspicians that meals out are meant to be special occassions. That toothpaste and other personal care items are priced competitively with other countries was was not a surprise. That the author’s first car cost the same as her first apartment is a very illustrative example of the high cost of personal vehicles! I particularly enjoyed the tips on what to stock up from outside of Norway or at duty-free – sometimes hedging allows one to enjoy the best of both worlds!
This was so much fun to read. You can read the full article here.
Thanks for the shout out! The COLA rankings are very interesting, to say the least. At least they let us expats complain about the high costs in Norway in a more educated manner!
Just wanted to make a clarification about salary and currency changes. It’s not really necessary to take into account salary flux as the most significant purpose of the COLA is to determine how much a premium should be paid on an expat’s base salary in each location.
Regarding currency flux, this is a major complaint of many expats as the premium you are assigned when you accept a contract can leave the pockets feeling a bit empty if the USD nosedives against the currency of your host country. The best thing expats can do is familiarize themselves with the COLA’s and let their HR know they are in on the joke now. It will scare them, I promise!
Thanks for clarifying! I had a friend who kept an excel chart on the wall of his office to keep track of his salary when the US$ fell in value 2005-2008 and management would not adjust his salary based on the COLA. It got a little embarrassing when people started asking him about it and he said, “that is my salary”. They eventually adjusted things – knowledge is power!