Some employers use a low first offer on Salary as a standard negotiation tactic.
This is called “positional negotiating”.
This type of negotiation is akin to a Bali street market barter. 
In all cases I have seen it insults the candidate and ends in a mess for the employer.

Instead of solving the problem and reaching a mutually acceptable solution, the negotiation takes on the form of a battle.
Here there is a winner and a loser.

8 months ago an experienced recruiter, lets call him Ewan because that’s his name, screened over 570 candidates for one mid-level role for his client.
Under the instruction of the employer, every candidate, bar one that was offered the role was low balled with the first salary offer. The offer was usually 40% below market rates.
The one that accepted the offer resigned within 4 weeks after getting a better offer.
Ewan was left with an obligation to find a replacement.

Every time the salary negotiation began the employer refused to budge on low balling.

The people that typically applied to this employer were overseas candidates or low skilled candidates.
This is because the salary was advertised.
The low skilled candidates were culled before being interviewed.

When asked why a low rate was offered to New Australians, the employer quoted risks due to:
• The getting used to the cultural issues may impinge on the performance of the candidate.
• How things are done in Australia may not be the same as overseas.
• Experience overseas is harder to qualify during the screening process.

These “risks” coupled with the past GFC make this employer believe that low-balling was the only way.

With the wonders of modern technology and proven recruitment methodologies, all risks spoken of could be minimized.
Unfortunately the employer had had some bad experiences in the past.
These, coupled with candidates not “sticking”, made her even more reluctant to offer a market salary.
Besides making it almost impossible to help her it also made her current staff ripe picking for being poached.

In the end the recruiter after educating the client as much as possible, threw his hands in the air and moved on to employers he could help.

The client was left with a recruitment bill, no other recruiters wanting to help and a severly overworked team.
To this day she still cant fill her role.

Typically overseas candidates do not know their worth when they first arrive to Australia.
It takes a few interviews, chats with peers and looking at job adverts before they start to understand. It does not take long!

You may be one of the earlier employers they apply for.
You may be tempted to take advantage of that.
Very soon, if you don’t increase the rate to market rates, you will lose that candidate.
In the cities of Australia there is an acute shortage of housing.
Most new Australians are forced to share in many times over crowded homes with friends or family.
They are desperate to move out.
Rent is expensive and getting a new place without a reasonable income is almost impossible.
Travel distance is also a concern as most are reliant on public transport.

Now that the market has picked up, we are finding more and more good candidates approaching us.
Why? Because they were in filler jobs, taken to solve a problem. 
The employers that low balled them or did not keep current with salaries now on offer are starting to loose staff.

Low balling taints your name as an employer in the market place.
Good staff will not be attracted to you even if in the future you address this. Once painted one way it is hard to change.

You will be thought of as the stingy employer that does not reward staff fairly.
Even if you do offer a good salary in the future there will be the underlying sentiment in the market that you wont be fair when it comes to salary reviews.

Good Recruiters that know the industry will avoid you.

The job seeker will just drift off to another employer, feeling relieved that they did not make a mistake in their eyes.
Your current employees will be overworked. They will start believing that they also may be getting underpaid.
They will be regularly poached by recruiters and other employers.
You will left as a training ground for your competitors.

So what is the solution?

First you need to find out what the market rates are. A good recruiter can advise you of this.

A short term bargain may appear if a jobseeker is in crisis. However, you must have a visible reward structure in place when they start. “Reach this KPI and your salary will be…”

Always connect up salary to their production level. Any other mechanism leaves you open to politics.