The reality is that companies can decide how/how much to pay. It is up to the employees/contractors to decide whether or not they are ok with that.
What I don’t like is when someone says our pay system is “fair” while differentiating pay by geography. You can say that it’s “company policy” and that would be ok.
“Fair” is paying people for the value they bring to the organisation - and that has got nothing to do with geography.