Seven Top Tips When Asking For A Raise Due To Inflation

Seven Top Tips When Asking For A Raise Due To Inflation
Jobstreet content teamupdated on 20 September, 2022
Share

Every salaried employee or entrepreneur gets worried when asking for a raise due to inflation.

What does inflation mean? The word has been defined by economists as an economic event where there is too much supply of money in the economy. This affects how people perceive the value of a currency based on its availability. Additionally, this also means that the purchasing power of your Peso has been devalued because there is too much of it going around.

To better understand this, imagine your ₱1 is able to buy 1 Megabyte of data, in an economic inflation event, that ₱1 you have can only purchase half a Megabyte of data because its value has lessened due to economic inflation. For any professional, this can be seen as bad as their take home pay has been devalued, the price of commodities has increased, and there are fewer ways to sustain their current standard of living.

Why should I be worried?

When economic inflation occurs, industries will make attempts to ensure that they are still able to competitively produce while maintaining profit. They take measures such as doing budget cuts, finding cheaper raw materials, or lowering operating expenses. Some, if not all, are considered and may even raise their prices to ensure profitability.

Operating expenses involve paying for utilities, office space, and most of the time, labor. As a necessity, labor is important and it usually has a set price.

If economic inflation affects the operating costs of doing business, this causes prices to inflate to ensure that the same profit  value is maintained.

If inflation raises the prices of products, the value of your paycheck or a business' profits may not be able to sustain the same standard of living for employees or the value of a venture for entrepreneurs.

The existence of a product or service is a result of labor. Your labor has value and is measured according to your paycheck.

If the value of your labor (better described as your paycheck) devalues because of economic inflation, you are paying more for basic living necessities with a devalued salary for the labor you worked on to produce.

Read: JobStreet’s Salary Negotiations Myths DEBUNKED

How do I ask for a raise at work because of inflation?

Yes. You can ask for a raise but you must ask for it with tact and skill. To guide you on how to execute asking for a raise masterfully, you can consider the following tips to get the raise you need based on inflation.

Consider the following guide when planning to ask for a raise due to inflation:

1. Understand the market rate of your role.

Depending on how long you have been at your job, the average salary may have changed. It's best to check if there is a gap on your paycheck when you first started and what companies are currently offering. There are times when your job title may have changed so be sure to check related terms that may be associated with your role.

Read: Know Your Career Worth! How to Compute Salary in the Philippines.

2. Check the current inflation rate versus your cost of living.

Determining your cost of living may seem daunting at first. The easiest way to do this is list your necessary expenses (i.e. food and beverage, rent, electricity, laundry, internet, mobile bill, etc). Then, add your non-essential expenses (i.e. steaming service subscriptions, games, dine outs, travel, etc.).

Once you have this all written down, add them up and you have your cost of living. You may also realize that in an inflation, you may want to cut down on expenses and save part of your paycheck for an emergency fund.

With this knowledge, you can now do some research on the inflation rate. One of the best sources for information on what the latest inflation rate is checking the Philippine Statistics Authority (PSA). As of 2021, the inflation rate is 3.93%. In August 2022, the PSA reported a monthly inflation rate of 6.3%.

Summarizing this information, you could come to a realization on gauging if you can still afford to live on the same salary with prices rising due to inflation. This will help build your case.

3. Highlight your performance and career achievements during your tenure.

When building a case to justify asking for a raise during inflation, you should be able to prove to your employer how much of a positive contribution you have brought to your role. Typically, you should show the achievements in your career that have made a good impact on the business. It could be reaching a sales target, lowering the cost of operation for a business, raising workforce morale, or increased brand identity, etc.

Citing these examples as proof points, especially when it benefits a business with something measurable in numbers, solidifies your case and gives good reason for your superiors to decide in favor of giving you a raise.

4. If necessary, write your achievements down and provide measurable examples

Depending on how an organization is structured, your direct line supervisor may influence a decision but they will need to bring your case to a decision maker up the chain. Documenting your case is not just a great way to help build your case, it also helps the higher ups in your organization to move the decision along with a summary of what you've achieved and why your raise should be justified.

5. Don't be afraid of the word No.

Inflation not only impacts employees but they also affect business. In certain situations, management may decline your request. That's the worst thing that can happen. If they have a counter argument to your proposal, try to understand it from a business point of view. Hearing the word No isn't the end.

6. Be ready to compromise.

Just like any business relationship, compromises have to be made. Salary raises don't have to be all about money, this could be in other non-monetary forms. In fact, some businesses offer stock equity as a benefit. This means that you can partly be considered as a shareholder and profit from the stocks when they are already vested at a future time during your stay as an employee.

Other options you can consider are more vacation time, employee subsidies, a chance  to work at a worthy project that can raise your profile, and other incentives that can enable a work-life balance between your personal and professional time.

7. If it doesn't work on the first try, try again at a later date.

Timing is everything! If you ask for a raise when your employer knowingly is not financially capable, it may be harder to ask it again in the future. Read the situation and use your better judgment on when is the right time to ask for a raise again.

It's very important that you have a good case built on your performance as an employee. As mentioned previously, getting them written down will help you avoid missing an important detail that could provide a good reason to raise your salary.

Ideally, the best time to ask for a raise during an inflation is after successfully completing a project or during a performance evaluation. If you're well-armed with knowledge of the market rate of your role outside the company, can cite work achievements that benefit the business, and provide measurable indisputable metrics of how successful your past performances are, you're on the right track to ask for a raise during an inflation.

If you feel that you need a raise during an inflation but you think the timing isn't right, you may want to speak privately with your supervisor. Part of the role of a manager is to ensure that their subordinates are set up for success. And being able to talk honestly with your manager shows maturity and self-awareness of what you need to be successful.

Again, the worst thing that they can say is no. If that's the case, ask again at a later time.

These tips should be able to give you an idea how to approach your manager in asking for a raise during an inflation. However, do consider that you will have to be confident in justifying a change in your compensation with measurable facts. Great employees are great contributors to the business.

If you can make a great case supported by solid facts, you're advancing your career opportunities and proving that you can perform well in any situation. Adding these successes would always look great on your resume.

#LetsGetToWork by creating or updating your profile. For more tips and guides on career success, visit our Career Advice page and learn more about advancing your professional journey.

Salary advice

Browse top search terms

Did you know many candidates preparing a resume also research their industry by exploring top search terms?
Did you find this helpful?
😦
😐
🙂

Subscribe to Career Advice

Get expert career advice delivered to your inbox.
You can cancel emails at any time. By clicking ‘subscribe’ you agree to Jobstreet’s Privacy Statement.