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Hi All
I wanted to understand how the minimum increment % for a place like Pune & Chennai for a year is calculated. somebody told me its economic growth + inflation rate in general. can someone help me understand this further.
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Hi Shaini,
If I am not wrong the economic growth & inflation are considered in to Minimum wages part where as the annual increment is basically on the paying capacity of the employer which depends on the bottom line ie., profits (Organizational performance)
Once the first criteria is ok then the increments will be based on the individual, department & unit performance. Being HR we need to fi the performance slabs like high performer (A+), Very Good performer (A), Good Performer (B), fair performer (C) & poor performer (Z). Then fix the percentage of amount you are going to pay for Ex: A+ = 30%, A = 20%, B = 15%, C= 8% & Z = Nil.
If you go further an employees who gets A+ rating for 2 years continuously then the second year he will get promoted to next higher grade etc., vis-a-vis 2 times Z is liable for demotion / termination.
Hope you are clear
Thank You Kameswararao
that makes sense that economic growth & inflation are considered in to Minimum wages - please confirm my understanding - so for example the min wage of 2017 is 15000 and considering economic growth as 7.2% and inflation as 4.4 % as of Jan 2018 so the minimum wage for 2018 may be calculated as 7.2+4.4 =11.6% increase to 15000
I came to know in Chennai they are planning 10% -12% as increment which is a general % considering the market. how is this % arrived at, is there are science behind determining this.
Hi Shaini,
Pl don't mix the minimum wage and increment part both are different. Minimum wage is being fixed by the Government and it is by State Government concerned considering the Cost of living index and all the organizations ( factories, shops & establishments) to comply with. As HR or the Organization you don't have any control over Minimum wages even if you go in to micro level then the minimum wage differs category wise ( Manager / salesman / clerk / security guard etc.,) Industry wise like Chemical & Pharma / Cinema / Electronic Industry / Motor transport / Hotels & restaurants etc) and even there is change based on the location like Metro / suburban etc.,
One more critical point to be noted is that the change in minimum wages ( + or - ) shall be on half yearly basis ie April to September & October to March)
As far as increment is concerned it is on annual basis and the same totally based on the performance of the organization / unit / department & individual. In finalizing the increment part the management will consider the economic growth, cost of living part, scenario in similar type of industries also in addition to the profits earned by the organization.
Hope you are clear.
Thanks and regards
The increment is given to compensate and balance the loss has suffered due to inflation. Compare the price index (what was the index during the last increment and what is present index rate), there would be definitly either increase or decrease trend. Mostly there is a increase trend compared to down trend.
The percent of increase to be add up in salary as increment. If the employer gives something more where busines growth is good.
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