Final answer:
The international premium in compensation is a significant pay increase given to employees for overseas work, reflecting additional costs and strategic importance of their roles.
Step-by-step explanation:
The international premium in compensation refers to a significant pay raise given to employees when they work overseas. This premium is designed to compensate for the challenges and inconveniences associated with international assignments, such as cost of living adjustments, relocation expenses, cultural differences, and sometimes even security concerns in certain regions.
Companies provide this premium to ensure they can attract and retain talent in global markets. This is particularly important as multinational corporations often provide higher wages and benefits in developing countries compared to what local businesses can afford. Also, international trade's impact on raising productivity implies that overseas assignments might be strategic roles contributing to their higher pay scales. While local labor markets and international wage laws do influence pay structures, these are not directly related to the international premium.
The compensation structure, including international premiums, typically accounts for various factors. It comprises a large portion of wages and salaries, with additional components such as health insurance, vacation pay, and other perks. The overall compensation package is influenced by several determinants including experience, education, skill, talent, labor union membership, and market conditions amidst global trade adjustments.