The Obsession With Last Drawn Salary.


“Please provide your last drawn salary and latest payslip for verification.” In certain states in the US, and nearer home in Australia, such a request would be unlawful. Yes, that’s right. It’s against the law to ask for any kind of pay history in these places, but unfortunately in Asia, the practice is far too prevalent.

So why exactly does a company ask for your last drawn salary before offering?

Every company I’ve worked for has guidelines on how much increase one should give. More often than not, that increase is considered in percentage terms. If your current salary is $2,000 and I offer you $2,800, the manager thinks, “Surely I shouldn’t be paying 40% more?” But that same manager is happy to pay $3,000 to another candidate whose current salary is $2,500 to do exactly the same job – it’s only 20% increase after all. At the end of the day though, the manager is spending $200 more! How does this make sense?

Well, the short answer is it doesn’t. Companies assume whatever the current salary is is what the market values the candidate at, and therefore should not “overpay” by giving a lot more. It’s irrational. This disregards the reasons for why the salary is such – it could be a case of the previous company not doing well and implementing salary freezes, or even that the candidate may be a victim of discrimination.

This is also despite the same companies spending money on salary surveys to find out the market value of the jobs they’re hiring for. Instead of relying on the data they have purchased and giving a fair offer in line with the market, they instead become obsessed with the increase over last drawn salary.

More and more countries are outlawing pay history questions in a bid to stem discrimination, particularly gender bias. If a woman is paid poorly due to her gender, and the next company bases their offer on her last drawn salary, it creates a never-ending vicious cycle of depressed pay. By simply banning companies from asking that one question, the overall offer process may become more objective and reflective of market supply and demand forces. It’s about time for Asia to come on board with that.

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