The salary is an important component of human resources’ management; ultimately, it is the main reason why people work. The reactions of employees to salary change depend in a considerable extent on how the reasons for salary policy change are communicated to employees.
The salary is a more motivating factor in making a decision to choose the job than leave it. This is because work characteristics are not known before the employee starts a job, and when the employee has a long time working, other factors play a motivating role in his decision to leave the job. Salaries play a modest role in motivating performance in systems where people receive the same salary, regardless of individual performance, or group they belong to. Salaries received by employees, employment benefits, and working conditions are affected by government. There are minimum salary laws, the pension regulations, safety, immigration controls etc. All these provisions and rules have one thing in common: they raise the cost of employers to hire employee.