Wages or Salary is the most important and contentious element in the employment relationship

Wages or Salary is the most important and contentious element in the employment relationship, and is of equal interest to the employer, employer and government. To the employer it is important because it represents a substantial part of the organization cost and is increasingly important to his employee’s performance and affects the organization ability to recruit and retain skilled employees. On the other hand for employees’ wages and salary affects their standard of living. And the government is also affected by the income earned by the employees in the country as it affects the aspects of macro-economic stability such as employment, inflation, purchasing power and socio – economic development in general. International firms are moving towards narrowing salary gap between the host country manager and expatriate to promote teamwork through team pay. To promote flexibility by changing hierarchical and rigid pay structures. International assignees, often work shoulder-to-shoulder with similarly quali?ed local employees (Welch 2003; Beaver stock 2004). However, the pay levels of these two groups tend to be fairly different. The purpose of this strategy was used to void the expatriate and Host Country National perceptions of pay unfairness.

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