Lower basic pay and higher hourly reduces an operators all important fixed costs. It also incentivises people to work on a day off, which reduces the number of employees required on the payroll as absences can be covered. Pilots can fly close to maximum hours if they want to by putting their hands up for extra work, better to have 100 pilots doing 900 hours a year than 110 doing 820 hours a year. It's similar to the tip system used in the USA where a waitress earns a very low basic wage but makes it up with an expected 15% premium on each customers bill.
In many instances flying pay can make up half of a pilots income which is fine when you're bouncing off the limits but not so good at the moment. However the current downturn is so severe and unprecedented that very few airlines will be able to sustain high fixed wages for much longer, and in the absence of a rapid recovery pay cuts may be needed in the short term to ensure that as many people are kept on a possible and the company survives.