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 Thread: Yearly increment View Single Post
13-07-2011, 10:34 PM
 Unregistered Guest Posts: n/a

normally annual increment is 2-6%,

for my example below i will assume annual increment (AI) be 5%

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different company pay AI differently, some pay AI in term of % as you have mention, while some pay AI by giving fix quantum increment throughout the board.

(my example will exclude promotional increment)
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AI base on %

MR A
basic = \$3000
AI = 5%
After 10 years with the same company = \$3000 x (1.05)^10 = \$4886

MR B
basic = \$4000
AI = 5%
After 10 years with the same company = \$4000 x (1.05)^10 = \$6515

when AI is payout in %, the higher the basic salary will be better, as it will generate higher AI on a higher base.

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AI base on fix quantum increment

MR A
basic = \$3000
AI = fix \$150 every year
After 10 years with the same company = \$3000 + 10(150) = \$4500

MR B
basic = \$4000
AI = fix \$150 every year
After 10 years with the same company = \$4000 x 10(150) = \$5500

when AI is payout in fix quantum, every one get the same increment.

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In the long term, annual increment in % will be better, as the base salary getting higher, the annual increment will be larger!!1