Employers offer Cost of Living Allowance (COLA) as a form of additional compensation to their employees to help offset the higher cost of living in a particular area. Offering a COLA can be an effective strategy for attracting and keeping talented employees in the UAE, GCC, and KSA, where the cost of living can be relatively high.
Depending on the policies of the employer, a COLA can be given in a variety of ways, such as a fixed amount or a percentage of the employee's base salary. When determining the COLA amount, employers may also consider the employee's job level, family size, and housing costs.
Offering a COLA can have a few advantages for the two employers and employees. For employers, it can help in drawing in and holding capable talent by giving a competitive pay bundle. It can also assist in lowering employee turnover rates and increasing employee contentment. For employees, a COLA can help in working on their way of life, lessening monetary pressure, and making it more straightforward to manage the cost of the significant expense of living in the UAE, GCC, and KSA.