Do you pay someone based on their last drawn?

We are in the 3rd year of the COVID-19 pandemic, and after living in the current work arrangements for some time, people have started to make a few realisations. One of which leads to what type of work they want, possibly fuel the trend of The Great Resignation.

When discussing this recent trend with friends, we found a potential gap in how employers might be considering their offers — the last drawn pay of the candidate. While this is a common practice, it might not work for either the candidate or the organisation.

Scenario One

John was retrenched during COVID-19 and settled for a job that offered much lower pay. However, he saw a job offer recently, which fits ideally based on his experience before COVID-19. He decided to apply for the position.

During the salary negotiation, he was being offered an amount based on his last drawn pay, which is the job that he took up during COVID-19. While John tried his best to explain the situation, the prospective employer was unwilling to give a fair offer as his last drawn pay was much lower. From the employer’s perspective, they are already paying much higher than his final drawn pay.

Scenario Two

William used to be the Sale Director of an MNC responsible for the SEA Region before being asked to leave in 2021. He decided to take a break and did not engage in any job search until recently. He decided to look for a lower-paying job as he is nearing retirement and like to spend more time on his hobby.

While he qualified for most of the positions, he did not hear back from those companies after submitting his application. So he decided to approach one of them to find out if there was anything that he could do better. He found out that the main reason for not being considered is his last drawn. The majority of the employer feels that he will be asking figure that’s based on his previous drawn.

What might be a good scenario?

If I am looking for a job, I will look for one that’s offering me higher pay than what I am getting now. This is based on my current situation that I need to trade my time for more money to support my parents and my family. However, this might not be the case for everyone. I know friends who are not in short of cash and like to get employed to stay engaged instead of doing nothing. They do not mind a lower-paying job compared to what they used to get previously.

Employers might want to start considering paying someone based on the role and responsibilities that they are hiring instead of looking at their last drawn. If someone is getting SGD3,000 previously, but the current position could justify SGD7,000, look at offering near to this amount. Similarly, if the current role justifies only SGD2,500, offer this amount to someone previously drawing SGD15,000.

Summary

This is my thought of an ideal scenario where many are hired based on merit and future contributions instead of one’s past. But, of course, as a small company, I cannot afford to hire someone who has two years of experience and ask for SGD7,000.

Yet on the other spectrum, we should also be asking ourselves if these high pays can be sustainable in the long term.