 In this topic we are going to talk about the key components of international compensation program. As I just told you in the previous topics that international compensation is not just a basic payment of money to people as in the domestic context. So there are several different components of international compensation program. So let's take a look what they are. So first component of the international compensation package is the base salary. In the domestic environment, the base salary, it denotes the amount of cash compensation serving as a benchmark of other compensation elements such as bonuses and benefits. So it is something which is a cash component which denotes other elements which are bonuses and benefits, how they are going to be calculated. In the domestic component that is it, that is the base salary is what it is about. But in the international context, it is the primary component of a package of allowances, many of which are directly related to the base salary. For example, there could be a foreign inducement allowance or a hardship allowance or cost of living allowance as well as the basis for in-service benefits and pension contributions. So the base salary of an expatriate, it is a primary element of a bundle of allowances and benefits which are being paid to the expatriates. And some of them may be in the form of cash, some of them may be in the form of facilities, some of them may be in the form of pension and for example, healthcare benefits. So it is only the primary element of these bundle of packages. It is not something which is the major component of the compensation package, only primary element of a bundle of packages. So that is what base salary is in the international context. The base salary may be paid in the home country or in the local country currency or in both. It is possible, for example, if a multinational is operating in America and Pakistan and they are sending expatriates, international employees to work in Pakistan, they are paying them in dollars as well as in rupees. It is possible that either they pay them in dollars or in rupees or in both. So it is possible to be paid in both. And therefore base salary is the foundation block for international compensation, whether the compensation is of an employee who is a parent country national or a third country national. So international compensation is obviously of a parent country national or a third country national because it is going on international assignments. The compensation of host country nationals, that would not be international, that would be something which is a domestic issue. So host country nationals, for example, who are working in subsidiary, for example, a multinational who is operating in Pakistan, they are working in subsidiary Pakistan. So the Pakistani employees here, for them compensation packages, they are not going to be addressed by the international scenario. They are going to be addressed in the local scenario because they are local and they are employed in the local context. But if in Pakistan, from America or Britain or Australia, international assignees are appointed, you will compensate them in the context of international compensation. So compensation packages, they are designed for parent country nationals and secondly, third country nationals who are working in local host country from a third country. Alright, so the second component of this international compensation package is the foreign service, inducement and hardship premium. So if parent country nationals, they are being sent to an international assignment which is less attractive for them and going on a foreign assignment is something which is actually less attractive because you need to leave your comfort zone, you need to leave your home country. So it is something which requires a more attractive package. So parent country nationals, they are paid foreign inducement allowance, inducement means that they are made to act in that particular way. So inducement allowance is that that is an allowance which makes them take the foreign assignment and they can also be paid hardship allowance if the area is a hardship area and then the hardship allowance is to compensate for going into a hardship area. For example, going and working in Afghanistan is something which is considered to be a hardship area even for Pakistani nationals. So they are usually paid a premium to go and work in Afghanistan. So in this context, the definition of hardship, the amount of hardship and eligibility for the premium should all be calculated according to the hardship situation. Usually these payments are paid more to the parent country nationals rather than to the third country nationals. Then the third component of the pay of the international package is allowances. These allowances include Kola, which is the word used for cost of living allowance. Cost of living is allowance is to balance the cost of living between two countries. If the cost of living is very, very high as compared to the parent country, then cost of living allowance is paid accordingly. And for that cost of living index is calculated internationally to decide how much cost of living allowance can be paid to them. Then housing allowance, home leave, this is something which is paid to expatriates that they can come back to their country for some time. They can take a break. They can bring their children. So transportation, air tickets and leaves are given to expatriates so that they can come to the home country back and reconnect with their own people. Then educational allowances for their children. Relocation allowances, which includes the cost of transportation of taking your house and furniture and your required living items with you. So relocation allowance includes all those costs of logistics. And sometimes spouse assistance allowance is also paid that if you have to take your spouse along and your spouse cannot work in the foreign location and has been working in the parent country, then the compensation is given to the employee so that they can make up for the income, the total family income which is being compromised because the spouse is going along with the employee. And finally, the fourth aspect of the international package is the benefits. And these are health care benefits, pension plans, social security, life insurance, child allowances and profit sharing stock options plans. The pension plans are very difficult to deal with in country to country as national practices may vary. And similarly health care allowances and medical coverage benefits. They are also very difficult to administer because it varies from different culture to culture in country to country. For example, in Europe and the UK, people who are working in UK and European countries, they are medically covered by the government. But this is something which is not in Pakistan or it is not something which is available in America or in other countries which have lesser social security packages for them. So you need to take care of that that if somebody from the UK is going to work in Pakistan, they need to be given a medical coverage because that is something which is not going to be taken care by the government. So these are the different challenges and the different components of international compensation packages which are included in the international compensation program of expatriates who are parent country nationals as well as third country nationals.