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Is Your Boss Actually Giving You a Pay Raise or Just Shortchanging You?

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Jeff Cuellar

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Working in Singapore is similar to being part of a native tribe when it comes to workplace taboos. One wrong move such as “spoiling the market” on working hours, taking too many smoke breaks, or getting on the pantry Auntie’s bad side – and you’ll risk becoming the office pariah.

However, those examples don’t compare to the biggest taboo of all – asking your boss for a pay raise. In fact, you probably don’t broach the subject because you’re afraid you’ll receive an Oliver Twist-like response to saying “Please, sir, I want some more.”

But when boss your surprises you by saying he’s raising your salary, it’s hard not to suspend your disbelief and cheer at your good fortune – it’s like coming face-to-face with a Sumatran Tiger that happens to be vegan, it goes against nature!

Ever hear the saying “if it’s too good to be true, it probably is”? Keep that thought in mind as you ponder whether you’re really getting a raise, or just a cost-of-living adjustment meant to keep you at the same pay level.

 

Are You Really Getting a Raise?

I didn’t mean to ruin your “I’m king of the world!” moment after getting a pay raise. I just want you to be clear about whether you’re really getting a pay increase or not. Because when it comes to pay raises, getting a small bump in your monthly pay might not amount to as much as you think – because of inflation.

If you’re not familiar with inflation, you should worry deeply about not just your current pay raise, but every past pay raise you’ve received at your company. Because there’s a chance that even with a salary hike every 1 or 2 years, you’ve either received ONLY enough to maintain your current cost-of-living, or worse – you’ve been underpaid!

That’s why it’s important for you to compare your pay raise against the rise in inflation to see if your boss is really giving you a raise or not.

 

Compare Your Rise in Pay to the Rise in Inflation

As Ryan Ong’s article Why Average Singaporeans ARE Hurt By Inflation, states, the core inflation rate is simply “the price change in necessities: The things you must buy to survive.” This includes the cost of food, public transport, and food – but it doesn’t include the rise in the cost of housing and private transport.

Let’s look at a simple example to see how inflation affects annual pay raises:

Year

Annual Salary

Pay Raise

Inflation Rate

“Real” Pay Increase (factoring inflation)

2010 $33,600 ($2,800 X 12)

N/A (Started Job)

2.8%

N/A

2011 $36,000 ($3,000 X 12)

7.1%

5.2%

1.9% increase

2012 $37,200 ($3,100 X 12)

3.3%

4.6%

-1.3% decrease

2013 $37,920 ($3,160 X 12)

1.9%

2.4%

-0.5% decrease

As this example illustrates, that “raise” your boss might give you every year might not be much of a pay increase when you factor inflation.

So what can you do to ensure you’re getting a fair raise and not just enough to keep your head above water? Knowledge is the key.

 

Knowledge is Your Best Weapon

Calculating your salary progression over the last few years and factoring in inflation like the table above is a great way to gain the knowledge to bargain for fair compensation. Just find the inflation rate statistics on Singstat, create your own table. As for what raise you should be asking for this 2014, the Singapore Business Review gave a big hint that inflation will be between 2% – 3% this year.

Your results might make you cry if it turns out inflation completely destroyed your pay increases over the last few years, but you can put an end to that this year. If your performance has been great and you can back up your demands for a raise that’s at least 5% higher than what you’re getting now, there’s a good chance you’ll beat inflation.

And if your boss refuses to budge on the issue, you can get a wage increase by switching to a better job. You can read about several strategies to do that here. Also, don’t forget to find out your “market value”. You might be worth more than the salary your boss is paying you. You can read more about that here and here.

 

Final Note: Don’t feel too bad about leaving your job for a better one, because according to Singapore Business Review, about 40% of workers in Singapore have switched jobs over the last two years because of *gasp* bad bosses! So if you have one who won’t pay up, find one that will!

 

Is your recent pay raise fair, or is it just a cost-of-living adjustment? Share your experience on Facebook! And to find even more useful information on everything personal finance, visit MoneySmart today!

Image Credits:
misterbuckwheattree

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Jeff Cuellar

I'm known by many titles: copywriter, published author, literary connoisseur, ex- U.S. Army intelligence analyst, and Champion of Capua.