YONGSAN GARRISON, South Korea — For the first time ever, servicemembers in South Korea will get a cost of living adjustment — perhaps as soon as in their July 1 paychecks.
Those stationed on the peninsula do not receive extra COLA cash as do their counterparts in places such as Germany — even though South Korea has been ranked equally or more expensive.
“I’m absolutely ecstatic for the soldiers, sailors, airmen and Marines,” said Col. Charles M. Kuyk, commander of the 175th Finance Command. “This is what happens when the United States Forces Korea team comes together.”
The COLA was effective Monday, Roy Sammarco, head of the economics and statistics branch of the Per Diem Committee, wrote Stars and Stripes.
The new data is being fed to payroll computers, Kuyk said, adding that the goal is to begin the payments July 1. If that happens, servicemembers should see two weeks’ COLA in that check.
“It’s a very positive thing,” said Maj. Philip A. Woodworth, a surgeon at the 121st Hospital. “It’s something the soldiers need and it is long overdue.”
Under the new rates, COLAs can range from around $109 per month for an E1 living on post to $513 monthly for a lieutenant colonel living off post. Rates vary according to rank and whether a servicemember lives on or off base.
Servicemembers can check how much they will get at www.dtic.mil/perdiem/ocform.html.
COLA background
A COLA is paid when the average cost of living in an area outside the United States exceeds the average cost in the United States. The COLA is based on spendable income and the amount of that income servicemembers spend in the local economy.
That amount is determined by a survey that takes into account how much soldiers use their post exchange and commissary. The COLA also is adjusted for changes in the dollar-won exchange rate.
In April, the 175th Finance Command conducted a new living pattern survey in South Korea. Such surveys determine where people buy products off post. About 11,000 servicemembers — almost 98 percent of those eligible — participated, Kuyk said.
Then retail prices for goods bought are surveyed and compared to prices of the same items in the United States. Indexes are generated comparing South Korean and U.S. prices for 120 items.
The indexes are weighted individually and summarized to determine a location’s COLA index.
For example, if an overseas location has an index of 120, it’s 20 percent more expensive than the average U.S. location.
How South Korea rates
Seoul and Uijongbu garnered the highest indexes at 118 each; Kunsan, Taegu, Waegwon and Taejon had the lowest at 108. COLA indexes in Japan range from 144 to 180, according to figures published by the Per Diem Web site.
Other countries with indexes comparable to South Korea are: Afghanistan, 118; Macedonia, 116; Nicaragua, 116 and Yugoslavia, 108.
Capt. William Green said he found Nicaraguan prices extremely inexpensive when he lived there in 1988-89 and wondered why South Korea ranks comparably.
But some areas lack well-stocked bases and availability of some products may be low, forcing off-base purchases which may cost more, Sammarco wrote.
“As for comparing costs in one country to another, that is really apples and oranges and never a good idea. There are over 120 goods and services in the market basket [survey], and their prices vary form country to country,” he said.
Changes in exchange rates are applied to that portion of the COLA index reflecting local currency purchases, and those exchange rates reviewed at least twice per month, according to the Per Diem Web site.
But Woodworth argued the living pattern survey is backward, as it asked for shopping habits absent any COLA at all. “It’s asking people how they shop on a limited budget and not how they would shop if they had an appropriate budget or what the true costs are,” he said.
Kuyk countered, “The problem is that you have to establish the entitlement. There is a bit of a vicious cycle there.”
He said servicemembers in Japan have been able to keep their COLA, and the command aims to continue to improve the entitlement.
South Korea is next eligible for another living pattern survey in 2004, which then would reflect servicemembers’ adjusted spending habits, Kuyk said.
USFK commander Gen. Leon J. LaPorte aggressively lobbied the Military Advisory Panel for the COLA. That group makes the final decision on COLAs.
“A guy wearing four stars can make a difference,” Kuyk said.
How COLA helps you
About 320,000 servicemembers get COLAs at 600 overseas stations. The average payment is about $300 monthly at a cost of $1 billion annually to the government, according to the Per Diem Committee’s Web site.
Green calculated he will get about $529 extra per month with the COLA, an amount he said probably won’t make him spend more off post.
Green, who lives off post with his wife and two children, said he already spends from $250 to $300 per month on phone bills, groceries and little necessities such as light bulbs.
Woodworth said he eats out two to three times a week with his wife, at costs usually far exceeding what he’d spend in the United States for similar meal. A $4 American salad, for example, may cost $15 or more off-post in Seoul.
“I think it will expand my purchasing power,” said Woodworth, who calculated his COLA at more than $500 monthly.
Staff Sgt. Ernest Clark recently stayed at Lotte Hotel in downtown Seoul, one of the city’s pricier hotels. He and a friend spent about $96 on dinner.
A COLA “would be great,” said Clark, with the 14th Signal Detachment. “It would help out with the funds. It’s expensive here.”
Staff Sgt. Joseph Beck and four friends dined at an Outback Steakhouse in Seoul, dropping about $180 collectively. For him, the extra COLA means more sightseeing and savings.
“A lot of the guys I know who are on a budget and are married,” said Beck, who is stationed at Camp Hovey in Tongduchon. “It’s going to come in handy.”
