At the end of a every financial year, everyone who work for salary is is going to face a emotional session with their superior. To some people, it is something worth anticipating because they believed that they have performed their best in the last financial year; while some people are anxious and agitated, heart palpitating walking along the corridor into the superior's room. The appraisal is the most important assessment to decide whether an employee deserves an increment.
In human resource management, appraisal is a measure to ensure that the performing employees are rewarded fairly and encourage the not-so-performing employees to work harder. The performing employees are given a higher percentage of increment, which could be 2-3% higher than those who are not performing as well as them. According to Aon Hewitt's new salary survey, Malaysians anticipate 5.8% increment for 2016, increased 0.2% from 2015 figure. Increment gives the employees a hope that as long as they continue to work hard, they will be paid more and more, and one day they will become rich. Now, we are going to show you why this is a mere illusion (or at least, less reality than you have imagined)
In earlier article, we have discussed the concept of inflation. Let us assume that in 2016, all companies in the country gives a 5.8% increment to all the employees. Is that a happy ending? Does that mean that all the citizens are richer by 5.8% this year? If you know what inflation is, then NO.
In January 2016, inflation rate in Malaysia is 3.5%. Presume that this figure is precise, your increment is actually 2.2% only instead of 5.8%. Why not 2.3%? Well, the calculation goes this way:
Assume that Salary = $3,000,
Increment = 5.8%
New Salary =$3,174
Inflation rate = 3.5%
New Salary purchasing power compared to year before = $3,174 ÷ 1.035 = $3,067
Actual increment = [($3,067 ÷ $ 3,000) - 1 ] x 100% = 2.2%
However, the official inflation numbers is just an indicator, by the finance ministry and federal bank to formulate the best fiscal policy for the country's economy. The actual inflation experienced by the citizen can be very much different from official figure, from region to region and according to individual's lifestyle.
Today, a fresh graduate in the country are offered salary around $2,500. A 750 square feet apartment in Georgetown, Penang area is now worth around $300,000. Fried Koay Teow today in Penang is calling for RM 4.5 to RM 5 per plate. 15 years ago you could buy the same apartment below $100,000, and a plate of Fried Koay Teow was only $1.80.
Yes, to those who are born in 1990s, all of you dreamed to make thousands monthly as a kid, and many of you managed to achieve it today. Today, to help you get out of the illusion, we would have to wake you up from your fantasy, your wonderland.
The $2,500 salary that you are making today is not the same $2,500 back in your old days. Assume the value of money has depreciated 3 times against the cost of food and cost of accommodation, the $2,500 you make today is just $ 833 in the old days. Those days, that's the salary for a labor worker without SPM certificate. So, are you getting richer after all these years of economic development? Are we moving forward and improving? If so, why would a degree holder receive the pay of a labor worker who did not even have the proper education 15 - 20 years ago?
We are not discouraging you to work hard. In fact, we believe that by working hard one person can change his fate. But, you must work hard the smart way. Be an informed employee, learn to plan your finance. Learn to allocate funds, learn to invest. If you fail to plan today, you plan to fail tomorrow.
More articles like that are coming up and we will move progressively to more in depth knowledge in future. Like us on FB and follow us for more financial tips!
No comments:
Post a Comment