London is perhaps the most costly of all cities in the UK. Due to various economic changes and the number of people in the working class, everyone wants to live a well-organized life. The cost of living in the capital is very high in comparison to all other states in the country. The people who stay nearby London have to pay extra for everything whether it is food, property or transport. Due to this reason, the employers tend to pay an extra calculated incentive to the employees who stay in and around Central London. As the primary motive is to retain employees, such allowances prove to be an attractive force to keep the employees with the company. The ideal compensation is close to £3,000 and £4,000 a year, with the finance companies paying the highest incentives among all the employers. However, the allowances seize to rise and have remained mostly constant for many years, as per a study conducted by IDS (2002c). Companies mostly look for potential employees who will be an excellent resource for their organization. They always want to have the best and search for candidates who are hard to get due to their enormous potential. Therefore, they find it beneficial to use the pay package as a tool to attract such employees. The pay rates now and what was a decade ago is very much different with employers offering tons of incentives to their employees. They have started adopting an entirely different payscale, especially for London-based employees.

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