PPP compares what money buys locally, not market exchange rates.
Sources: OECD Taxing Wages 2025, comparative indicators (single worker, no children; average wage as defined by the OECD for each country) and OECD, Non-tax compulsory payments as an additional burden on labour income in 2025 (Tables 5 and 6) for mandatory pension and insurance payments that are not classed as taxes, such as Australian superannuation. Model estimates: voluntary benefits, local caps and sector-specific schemes are not included.
What PPP means
Purchasing power parity (PPP) adjusts for the price of a common basket of goods in each country. A salary converted at PPP shows what it buys locally in US-dollar terms, which is fairer for comparing living standards than market exchange rates. HireCost uses OECD PPP conversion factors.
When to use market rates instead
Use market exchange rates for budgets and invoices, because that is what you actually pay. Use PPP to judge whether a salary is competitive or fair for the local cost of living.
Frequently asked questions
Is PPP the same as the exchange rate?
No.
Why is the PPP figure higher than the exchange-rate figure?
In countries where prices are lower than in the US, the same money buys more locally.
Does PPP include rent?
The PPP basket includes housing, but city rents vary widely within a country.