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
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