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Friday, 8 June 2007

Annual Wage Rise

Late June (just before the new financial year starts) is when my company does it's annual salary budget. Unless you're getting a promotion, have done an exceptional job, or were recently employed and just coming off your probationary period the salary review tends to be a somewhat disappointing experience. The default rise is a "cost of living" adjustment, which is allegedly based on the previous 12 months CPI increase. Given that inflation for the past year has been around 3%, and the fact the the NSW minimum wage was just increased by 5.3% (from $504 to $531 a week), this year's standard rise should be around 3%-4%. Last year I got the default rise (3.5%), and I expect about the same this year, as I'm in the same role and already had a large rise two years ago. Anyhow, although a big rise would be a nice surprise it wouldn't have a material impact on my net worth. After all, a 5% salary increase this year is equivalent to my net worth increasing by just 0.35% - even less after tax! However, it would increase the value of my accrued annual and long service leave (around 16 weeks altogether) and compounds with any future rises - ten years of 3% increases leaves you in a much poorer position than ten years of 4% rises. Ah well, I'll find out the good (or bad) news in a couple weeks time... It's a bit like waiting to open a Christmas present.

Enough Wealth

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