How Do You Set Fair Salaries Across Different Indian Cities with Varying Living Costs?

Hi,

We are trying to recruit people for 9 different major cities in India for a similar profile. As the cost of living in these cities is different, I am finding it difficult to come up with a clear salary structure. Is there a base on which I should work, or can I just pay them a percentage of salary higher than what they were earning in those cities?

Hi Atul,

What you are looking for is a daunting task in India because you may classify these cities into Grade A, B, C, D depending on economic size and cost of living as per government notifications. You have to also determine the salary structure consisting of Base Salary, Allowances, Benefits, Perks to design a total compensation package. Then you may divide these cities into grades in percentages, for example:
- Grade A cities = 100% of salary grade code
- Grade B cities = 80% of salary grade code
- Grade C cities = 70% of salary grade code
- Grade D cities = 60% of salary grade code
You may suitably alter the distribution of the above percentages working on practical assumptions to adjust the percentage.
Basic (As per salary grade structure depending on hierarchy)
Fixed Allowances:
- DA = 25% of Basic
- HRA = 30% of Basic
- CCA/Transportation = 10% of Basic
- Medical = 5% of Basic
- School = 2% of Basic

Operational Allowances:
- Shift Allowance
etc.

I hope the above suggestions will work.

Regards,
Sawant