How Much Is The Fair Salary Increase

fair salary increase

As far as I know, there is no law or regulation here in the Philippines that require a company or an employer to increase the employee salary every year. The most relevant law that I can think of is the wage increase section of the labor code that applies to all the workers and employees in the private sector. But unfortunately, it is clearly defined that all workers and employees receiving a basic wage of more than Php100.00 per day (1989) are exempted. In other words, it is only applicable to minimum wage earners.

So how about the others? The answer is depending on your employer. Each company has the right to impose or formulate salary increase scheme whether annually, quarterly or any time frame they want.

Now, the question is how much is the fair increase? There are a lot of factors that influences the salary percentage increase. The most significant factor is the performance of the company. Even if you’re the rock star of your department, if the company’s performance for the previous year is really bad, you probably won’t get a big adjustment. The second most important factor is of course, your performance. If the company’s profit jumped gazillion times but you suck in what you do or you did something really bad, chances are not in you favor.

Another obvious factor that affects your salary increase is your boss or the person who will evaluate your performance. Even if you did a great job, if your boss doesn’t like you (probably a mutual feeling), you’ll end up in the lower spectrum of the bell curve. Remember that the higher your boss in the corporate ladder, the lesser the chance his recommendations to be overridden.

The word “fair” is relative and subjective so it is really hard to say that the salary increase is fair, and you can be sure that if the approving officer is a relative then you are sure of a fair increase. A very good measure for this would be the rate of inflation. Inflation is the decrease in purchasing power or value of your money. It means that your 100 pesos can buy more stuff last year as compare to the stuff you can buy today. Therefore, if your salary increase is less than the inflation rate, I’m sorry to say but technically, you do not have a salary increase. But if your salary increase is more than the inflation rate, congratulations!

The Philippine inflation rate as of July 2018 is 5.7%.
To get your real salary increase, here’s the simple equation:

Real Salary Increase Rate = Salary Increase Rate – Inflation rate

It is important to understand that the salary increase is given to the employees as a reward. If you think you don’t deserve an increase, then don’t expect one.

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