Monday 21 July 2008

Salary review time

Last week the annual salary reviews were distributed at my workplace - since I'm already at the top of the salary range for my position I just received the standard across-the-board "inflation" adjustment, which was 4% this year. The chart below shows how well the "inflation" rises have tracked the headline CPI rate over the past few years - the figures for 99/00, 01/02 and 03/4 can be ignored as I changed roles and received pay increments in those years. Overall, it appears that my company has been pretty good at increasing salary in line with inflation. Of course, the AWE (average weekly earnings) rate tends to increase by more than inflation, so the company policy of making the basic pay rise track the inflation rate isn't particularly generous. However, although I want my salary to keep pace with our living expenses and provide enough income to fund my savings plan, the annual "pay rise" is rather insignificant compared to other influences on our wealth and standard of living. Compared to the effect of RBA rate rises on the monthly payments for our home loan and margin loans, and the impact of real estate and stock market valuations on my net worth, it matters very little whether my pay rise is 2%, 4% or even 10%!

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