SEOUL — The cost of living allowance here jumped another 4 cents Wednesday, meaning a portion of every servicemember’s next paycheck will include an extra 32 cents for every dollar earned.
The COLA change — the third increase this fall — is the latest adjustment from the Pentagon to combat the rising value of the won, said Sidney Keyes, staff accountant for 175th Finance Command in Seoul.
The dollar has been setting record lows this fall against most major currencies, including the won. On Thursday, $1 bought 1,047 won at commercial rates. The military’s exchange rate, always slightly lower than commercial rates, put $1 equal to 1,021 won.
The financial news has prompted Korean officials to slow the soaring won with the hopes of stabilizing export prices and preventing a speculative crash.
At the Pentagon, a committee sets COLA rates to combat those economic fluctuations.
“They’re not doing it so you can take another two trips to Thailand next year,” Keyes said Wednesday. “It’s not just a gimme pot of money. It’s designed so you can have the same standard of living as you would in the U.S.”
The allowance gives servicemembers the same buying power they would have if stationed in the United States. The percentage is based on economic changes, such as the weakening dollar, and on the spending habits of troops in a foreign country, Keyes said.
COLA payments are different for each servicemember. Wednesday’s change would mean an E-6 in Seoul with two dependents and 10 years of experience would see an extra $92.34 in each paycheck, Keyes said.
Keyes said he doubted the COLA rate would increase again for Korean-based troops in the next few weeks. Financial analysts expect the dollar-won exchange rate to stabilize, he said.
Early next year, the Pentagon is to do another survey to judge how and where servicemembers spend their money in Korea. That survey — due out in March — likely will bring the next change, he said.
