Glossary:Compensation of employees

In national accounts; compensation of employees (D.1) is defined as as the total remuneration, in cash or in kind, payable by an employer to an employee in return for work done by the latter during an accounting period. (ESA 2010, paragraph 4.02)

Compensation of employees consists of wages and salaries in cash or in kind (D.11) and employer's actual and imputed social contributions (D.121 and D.122).

In balance of payments statistics, compensation of employees refers to gross wages, salaries and other benefits earned by individuals in economies other than those in which they are resident, for work performed and paid for by residents of those economies. Compensation of employees includes salaries paid to seasonal and other short-term workers (less than one year), to the employees of embassies and of other territorial enclaves that are not considered part of the national economy and to cross-border workers (Balance of Payments Manual, 5th edition, 1993, p.70). The European Institutions (like the embassies) are considered as enclaves not belonging to the national economies where they are located, while their employees are considered to be resident in the country where they live. The salaries that the European Institutions pay to their employees are therefore recorded among the flows of compensation of employees.

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