Employee is ok to reduce other components of his salary but wants to show a high basic. What is the impact on the company? - CiteHR

A new recruit is asking to show a higher basic salary. He is ok to reduce other components of his salary but show basic high. What is the impact on the company ? How is this advantageous to him.
From India, Hyderabad
In a wage structure comprising of different components according to the nature of job, type of industry, place of work, possible automatic devaluation of the real income due to continual inflationary trend in the economy etc., basic pay becomes a determinant of the allowances as well as actuarial contributions to various social security schemes which are termed as indirect financial commitments to the employer. That's how the concept of CTC emerged as an important factor in wage/salary negotiations. This is the generally prevailing scenario.

However, now a days, for obvious reasons like non-unionization of knowledge workers though large in numbers, increase in the employability of certain highly skilled employees due to competitive hiring methods like poaching, market-driven production schedules etc., wage/salary negotiation has become highly individualised and employee-specific. Hence the trend like the one mentioned in the post.

In such a situation, the demand of the new recruit has to be considered with reference to the additional indirect commitments arising out of a higher basic pay. If the expected employee contribution of value addition is more, of course, one can consider the demand positively as it would lead to a mutually both-gain situation.

From India, Salem

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