Tweets on 2010-07-28 — Inflation and Salary Hikes

by Vinaya HS on July 28, 2010

in Finance

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Can inflation be a reason when justifying a request for a salary hike at work?

I’d say YES. What do you say?

Thanks S, for the discussion leading to this post.




Thanks for reading this article. I'd love to hear your opinion. Please use the comments section below to share your thoughts. I frequently write new articles that also cover several other aspects of personal finance including credit cards, financial goals, health insurance, income tax, life insurance, mutual funds, retirement planning, and much more. You can Subscribe through Email and receive new articles directly in your Inbox or you can Subscribe through the RSS Feed and receive new articles in your feed reader.

{ 4 comments… read them below or add one }

Shilpa July 28, 2010 at 10:05 AM

The primary purpose of a salary increase is to meet the price rise.

In government companies, every role (designation) has a pay band with increments for every year (until the maximum in the pay band is reached). This increment is anywhere between 3-8% (usually 6%).

In private companies, we tie the salary increases with merit which is good. But if the percentage of salary increase is lower than the inflation, then to maintain the same lifestyle, your expenditure will start feeding on your savings.

My two cents.

Vinaya H S July 28, 2010 at 11:05 AM

Good point.

But when we talk about salary increases it’s always the before-tax percentages. Factoring in tax implications and inflation, most often we won’t have anything left to talk about.

What do you think?

Shilpa July 28, 2010 at 11:14 AM

I agree with you.

It is particularly true when you get a salary increase and you move to a higher tax bracket. Thats like feasting your eyes on the menu, not the food :)
But if your salary increase doesn’t move you up the tax bracket, well, its not so bad. Of course it depends on the percentage of salary increase.

Anoop August 19, 2010 at 11:09 AM

I agree, but two things to note here is How many employers would be ready to give you a salary hike? even if they give you a hike what percentage? 10%, 15% or 30%.. Another thing to remember is as you rise your salary bracket, your tax also goes up..

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