The business idea behind the salary cap is to make budgeting more predictable. If the budget is $X and you need a staff of Y, your salary cap of $X/Y makes it easier to manage... in theory.
In reality, if $X/Y is low, then you can't find anyone who will work at that rate and you either have to cut back services or outsource (which is often in a different budget - see traveling nurses).
It is the opposite of what should be done, but if you're trying to fit things into a fixed budget then it is what must be done. The way to fix it is to get the budget to expand up to what is needed to supply services. That is a difficult sell in the public sector.
In reality, if $X/Y is low, then you can't find anyone who will work at that rate and you either have to cut back services or outsource (which is often in a different budget - see traveling nurses).
It is the opposite of what should be done, but if you're trying to fit things into a fixed budget then it is what must be done. The way to fix it is to get the budget to expand up to what is needed to supply services. That is a difficult sell in the public sector.