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I read that 4% is considered a good yearly salary increase. However, the inflation in my country is close to 10%. The average salaries in my area are also increasing according to the reports from the labor market: around 15%/ year.

What is the highest salary increase that seems reasonable to request in this setting?

I'm not writing about my performance etc. although of course this also plays a role.

The question is NOT about how I can approach my boss. It's about what to ask for given a specific context explained here.

user2789
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  • @Seth I think this question is different because cost of living raises are based mainly around inflation, and no so much around the merits and results of the employees. – zmike Feb 07 '22 at 16:00
  • @user2789 are you part of a professional association or a union? This would probably affect the answers: unions and professional associations usually have cost-of-living raises written in the collective agreements. – zmike Feb 07 '22 at 16:02
  • @zmike, unfortunately they are not very popular in my country. So: no. – user2789 Feb 07 '22 at 16:11
  • @zmike, it still comes down to asking your boss for a raise because you want more money. The reasons you may want a raise don't really matter, the process is the same. – Seth R Feb 07 '22 at 16:38
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    What does the linked question have to do with mine apart from the fact that both are about salaries? My question is NOT about how I can approach my boss :D – user2789 Feb 07 '22 at 17:51
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    "It's about what to ask for given a specific context explained here." That means this would be a salary check/advice question which is off-topic here. We routinely link the question from above because in the end that's what 90% of these questions boil down to. As others mentioned there is simply not usually a link between inflation or CoL and salary. Answers here can cover that in more detail perhaps, but you're not going to get straight number here. – Lilienthal Feb 07 '22 at 19:23
  • Reasonable is entirely subjective. What kind of salary increase do you require to continue working for this employer and what will you do if you do not get it? No one here can answer that for you. – Seth R Feb 07 '22 at 19:58

2 Answers2

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A raise less than inflation is a pay cut, and you should act appropriately.

In layman's terms: Let's say you could buy a widget for $1. You make $100 (per time period), and you can buy 100 widgets with your money. Then the price of the widget goes to $1.50. Now you can only buy 66 widgets. In terms of widgets per time, you are now making 33% less money; essentially you have taken a pay cut of 33% in terms of a payout in widgets. This is how inflation works. In order to have the same widget-based salary, you would need a 50% pay raise to $150 (per time) so you can still buy 100 widgets (per time).

Therefore, you should consider a pay raise less than inflation to be a pay cut; "inflation" is the average amount of price increase of a widget (product), across all widgets (products) that you can buy. In order to maintain your widget-per-time salary (this term is more commonly known as "purchasing power"), you need a raise to match the increase in widget price.

So, you should not feel reticent at all to ask for a 10% pay raise, if 10% is the inflation rate in your locale. In fact, if your boss refuses your 10% pay raise, you should consider that the same as if they are cutting your salary, and act the same as if they called you into a meeting and announced they were slashing your salary by 10%. Whatever that means to you is up to you, but that's how you should respond.

Ertai87
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  • This answer only holds if the higher inflation does not also bring with it higher unemployment. When it does, then a "pay cut" may be justified. As per OP, this is currently not the case in their situation. – paulj Feb 08 '22 at 12:24
  • That's why I left the final paragraph open-ended. If OP's reaction to a 10% pay cut is "well, at least I have a job", that's an acceptable reactiion. – Ertai87 Feb 08 '22 at 15:58
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A 'reasonable' increase depends almost entirely on whether your value to the company has increased.
Does your extra year (or whatever) of experience increase your productivity? Are you able to solve harder problems more efficiently?
If you're doing the same job today in the same way as you were last year, then you shouldn't expect much more than an inflationary increase (same work for the same pay). So if inflation in your area is 10% then it would seem that a 10% increase would be 'reasonable' for you to continue to be paid effectively the same amount for the same work.
If your company is unable to afford to give you a reasonable inflation-based increase then you should probably start looking for a new job, because either your company is poorly managed, or your company's entire industry is in decline.
If your company is unwilling to give you at least an inflation-based increase then either your performance has been substantially sub-standard (and you should probably make an effort to improve), or the work you do is not valued by those making the decisions (and you should start looking for a new job).

brhans
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