The Cost of Living Is Through the Roof—Can You Use It to Leverage a Raise?
With hire hikes, rising rates of interest and inflation, it’s a well known undeniable fact that the price of nearly every part is skyrocketing proper now. At the identical time, nevertheless, wages are staying stagnant—and Canadians are more and more discovering it troublesome to make ends meet.
Ottawa-based assume tank, Canadian Centre for Policy Alternatives, not too long ago revealed a new research that calculated how a lot employees would want to make in a 40-hour workweek with the intention to spend not more than 30 per cent of their earnings on housing (what they name “rental wage”). Unsurprisingly, rental wages are a lot larger than the hourly minimal wage in each province. In B.C., for instance, it’s good to be making no less than $27.54 an hour to afford a one-bedroom. (The minimal hourly wage within the province is $15.65.) In Ontario, it’s good to make $25.96 an hour for a one-bedroom (the place the minimal hourly wage is $15.50). And the unaffordability is high of thoughts for everybody: Financial planning and training physique FP Canada’s 2023 monetary stress index finds that cash is the main supply of stress for Canadians, for the sixth 12 months in a row.
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But can the rising value of residing be used as a bargaining chip to barter a increase, or different job perks? According to workplaces consultants, it may not be the best argument. However, mentioning inflation to your supervisor is perhaps a great way to barter for non-salary perks, like versatile hours or distant work.
Can you ask for a increase primarily based on value of residing?
As employees are being requested to return to the workplace (typically in city cores), asking for a increase to assist sustain with the price of residing in an costly metropolis like Toronto or Vancouver appears completely affordable. However, consultants say that workers shouldn’t use elements outdoors of their work efficiency, like inflation, when negotiating wages.
“Ultimately, any wage increase would have to be commensurate with the productivity of that worker,” says Rafael Gomez, the director of the Centre for Industrial Relations and Human Resources on the University of Toronto. Gomez says that workers citing the price of residing as a manner in to get a increase may not see a lot success, particularly since firms are additionally dealing with inflation and is perhaps cautious of offering wage will increase that have an effect on their backside line—regardless of all-time excessive earnings for CEOs and an more and more massive pay hole between them and the typical employee.
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However, there is perhaps some non-salary advantages you’ll be able to negotiate as a substitute of a wage increase, which could assist with the price of residing. These advantages embrace issues like daycare stipends, meal plans for workplace employees, distant or hybrid work preparations and versatile hours. “Those things have always been on the table,” says Gomez, particularly for small and medium-sized enterprises (SMEs) the place there’s much less capital, however a bit extra flexibility.
How to barter a increase
While it may not be the best bargaining chip, it’s simple that inflation has an affect on employee morale—and retention. Robert Half’s 2023 wage information discovered that 58 per cent of Canadian employees search for a brand new job due to inadequate salaries, and 45 per cent of senior managers retain workers by rising compensation. (Interestingly, 45 per cent of senior managers additionally permit distant work with the intention to hold their workers). And, asking for a increase is usually a constructive: Even should you’re rejected, asking could be a reminder to your supervisor of your laborious work and would possibly open up future alternatives throughout the firm.
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So how would possibly you negotiate with the price of residing in thoughts, whether or not that’s a wage bump or for elevated flexibility or distant work? Mike Shekhtman, a senior regional director at HR options agency Robert Half, says that for a increase, the perfect tactic is to arrange an inventory of concise speaking factors in regards to the worth you deliver to the group earlier than going right into a dialog along with your boss. Bring up contributions from the previous 12 months, methods you’ve taken on extra accountability, or extra coaching or training you’ve obtained since your final increase.
There are a pair methods to determine how a lot to ask for. If you’re asking for a increase to maintain up with inflation, search for the Consumer Price Index (CPI) from the final 12 months to search out the inflation price (in Canada, it’s at present 6.8 per cent) after which calculate how a lot your wage ought to be upped by primarily based on that price. (For instance, you’d wish to ask for no less than a 6.8 per cent enhance this 12 months to maintain up with inflation). Another manner to determine your ask is to do some wage analysis on-line, or discuss to your coworkers. Try to determine how a lot your friends—individuals in the identical metropolis and business and who’ve the identical title and expertise as you—are making.
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When it involves different advantages that will ease the burden of the price of residing, Shekhtman says that there’s nothing flawed with asking your supervisor for advantages like meal plans, low cost commuter passes and backed journey so long as you may make the case for it. This would possibly imply, for instance, declaring how a lot you’re spending on fuel should you’re driving into the workplace in comparison with pre-pandemic prices.
Gomez provides that firms are making “more room” for these non-wage advantages and are extra keen to offer them as a result of they want employees on this very tight market. He says that firms taking a look at their backside strains will certainly do the psychological calculus and will resolve that permitting employees to have versatile hours is cheaper than giving them raises. But, like Shekhtman says, be certain that to floor your negotiations with a superb case and be ready to provide you with another plan (whether or not that’s rebalancing your personal funds or discovering a brand new, higher-paying or extra versatile job) ought to your supervisor reject your proposals.
Ultimately, there’s a better consciousness now of the excessive value of residing and the potential of non-traditional work agreements as a result of pandemic. This implies that workers really feel extra empowered to ask for raises and elevated advantages—and employers are extra open to those requests. “When pandemic restrictions were lifted, workers were left thinking about their jobs and how to make their jobs work better for them. They started asking for all these other benefits,” says Gomez. “Employers who aren’t sensitive to that will fall behind.”
