Hey, guys! You all agree that talking about salary increases is always an exciting topic, right? Who wouldn’t want their salary to go up every year? Legally, there are no specific rules on how much a salary should increase in a company. Article 92, Paragraph 2 of the 2003 Labor Law states that companies can periodically review the wages given to employees. These reviews should also consider the company’s ability and productivity. Although it’s not mandatory and there are no set percentages for the increase, companies must ensure that salaries are not lower than the minimum wage. Article 23, Paragraph 3 of the 2021 Government Regulation on Wages emphasizes that companies are prohibited from paying wages below the minimum wage set by the government. So, what factors do companies consider when increasing employee salaries? MUTUAL+ will discuss it in this article!
1. Minimum wage increase
You must have heard about the increase in the minimum wage regulated by the government, right? Well, this is really important to understand because it significantly affects your daily life. So, the minimum wage is the minimum amount of money that companies must pay their employees. According to the website kelashr.com, the minimum wage also serves as the lowest wage limit for employees in the lowest positions with less than one year of service. The government often sets an increase in the minimum wage each year. The goal is to ensure that workers receive fair wages that align with the cost of living in their region. Each region has its own policies, so the minimum wage increase can vary from place to place. This is important for you as a worker because it directly impacts the salary you receive.
2. Company capacity
A company's capacity to increase employee salaries depends on various factors, ranging from financial conditions to the company's own internal policies. For example, companies that are growing and have stable finances are usually more likely to offer larger salary increases. However, it's not just that; company policies, business strategies, and the company's commitment to employees also play a role. So, a company's capacity to provide salary increases to its employees is influenced by how well the company manages and runs its overall business.
3. Responsibility upgrade
The company must create a salary structure that serves as a reference for determining fair salaries for all employees. This salary scale includes the range of salaries from the lowest to the highest based on level and position. The determination of this salary scale is influenced by several factors such as level, position, length of service, education, and the skills possessed by the employees. The goal is to ensure there is not a significant salary gap between different positions. An upgrade in responsibilities and roles is one of the main factors that influence salary increases. If you receive a promotion, it means more responsibilities and a higher role, allowing you to demonstrate that you are ready for new challenges and can make a greater contribution to the company. Additionally, you can also receive a salary increase according to the company's salary scale.
4. Employee performance
The next factor that can be a reason for an employee's salary increase is your performance as an employee. Employee performance and productivity are aspects that can be measured and evaluated by the company to determine whether the employee is working well or not. The evaluation tool that companies often use is KPI (Key Performance Indicators). According to the website libera.id, salary increases based on performance can be determined from the evaluation results of KPIs that reflect employee target achievements. For example:
Employees with 100% KPI achievement receive a periodic salary increase of 5%-10%;
Employees with KPI target achievement of 101-120% receive a salary increase of 10%-15%;
Employees with KPI target achievement above 120% receive a salary increase of 15%-20%.
So, those are some factors that can influence employee salary increase. From minimum wage increase, company capacity, responsibility upgrade, to employee performance, all play an important role. Therefore, if you want a salary increase based on your skills, make sure you continuously strive to improve yourself and your contribution at work. Remember, a higher salary doesn't come just like that. You have to show that you are worthy and valuable to the company. I hope this article is useful for you. Keep up the spirit and don't be afraid to seize the opportunities that come your way!
Sources:
Wajibkah Melakukan Kenaikan Gaji Karyawan Tiap Tahun? Ini Aturannya! (libera.id)
4 Faktor yang Mempengaruhi Kenaikan Gaji Karyawan - Kelas HR
7 Faktor yang Memengaruhi Kenaikan Upah Karyawan | Glints for Employers
8 Faktor-Faktor yang Memengaruhi Tingkat Upah - StaffAny
https://kemenperin.go.id/kompetensi/UU_13_2003.pdf
PP No. 36 Tahun 2021 mengenai Pengupahan - Gajimu.com/Garmen