5 Factors that Determine Pay Rates and 4 Ways to Ask for a Pay Rise

No one wants to stay in one position for a long time without a salary increase. Perhaps, every employee periodically thinks about the possible approaches to asking about a promotion. But they are often afraid and shy, tending to underestimate themselves.

If asked what wages they would like, any worker would naturally express a desire to receive more. Apart from choosing the correct strategy of asking employers for a pay raise, one needs to know some of the salary secrets. The remuneration should correspond to the efforts and time devoted by the employee.

Factors that Determine Pay Rates

Meanwhile, the amount of payment is not only a product of an employer’s imagination. This article is aimed at considering factors that affect the raise of salary, which is crucial for most people. Of course, the first thing you must do is use a top-notch resume edit service to ensure an applicant tracking system considers your candidature. Then, the most important factor of investing in your career is to follow the changes in the labor market.

Top 5 Factors that Determine Pay Rates and Salary Increment

In a market economy, the level, functions, and principles of forming wages are influenced by various factors. They together determine the level of payment for the employees.

1. Supply and Demand

The general level of salary primarily depends on the supply and demand for workers of certain specialties, qualification, work experience, and key skills. An increase in the demand for labor raises wages, and an increase in supply reduces this level. At the same time, it is important to understand that supply and demand in these markets are formed under the influence of markets for consumer goods and services.

Therefore, to land a job, one must scan the market and apply for those positions that are in high demand. If there are difficulties, it is recommended to get professional help such as LinkedIn resume writing services to craft a winning resume. When you occupy a decent position, there is no doubt you are subject to growth in the company. Professional growth equals a salary raise, so use every opportunity to invest in your career.

2. Work in Demanding Areas

Enterprises that engage in more demanding areas also offer higher salaries at all levels. Higher wages are the result of both: a more generous salary system and financial bonuses. The following are areas with high demand in the long term: 

● information technology;

● energy;

● telecommunications;

● banking.

3. Form of Remuneration

The use of advanced technology entails new forms of wages and incomes for workers in developed countries. Today, traditional wage systems are increasingly abandoned. Those are the types in which labor is paid at a fixed rate. Some modern wage options are based on the assessment of each worker’s capacity, personal contribution, initiative, and responsibility for the entrusted work.

4. Cost of Living

The level of salary often depends on the current prices and changes related to them. Many workers expect a raise that would correspond to the annual increase in the living cost. It depends on how much cheaper or more expensive things are now as compared to the prices a year ago. In such a case, one may examine the Consumer Price Index to make some predictions about the possible pay raise.

5. Inflation

Changes in payment rates often depend on external factors, such as inflation. In a market economy, under conditions of demand inflation, there is a greater chance of increasing profits. Manufacturing enterprises are expanding production capacity, thereby increasing the number of jobs. As a consequence, there is an increase in the demand for labor and thus in nominal wages. Increases in wages do not cause inflation but rather contribute to it. 

The following are the basic causes of inflation: 

● an increase in prices for raw materials, transportation costs, or due to the exchange rate;

● an increase in wages under pressure from trade union organizations or at the request of employees of the enterprise. 

Another aspect of the effect of inflation on wages is that when inflation occurs, prices increase faster than nominal wages.

4 Tips on How to Ask for a Pay Rise

Here comes the most interesting part. How to combine all your professional skills with those personal to benefit from the conversation with a boss? 

1. Make Sure Your Request Is Appropriate

It means that the company’s financial position allows you to make such a request. Is the company doing well? If there are customers, it has no problems with money, and the tax authorities do not audit it, it is probably a good sign. On the other hand, if you ask for a raise at the time of cost optimization, you are unlikely to get a positive answer.

2. Prepare Strong Argumentation

Be ready to demonstrate real results, indicators, and figures. The phrase “I work here for a long time” does not do well. Indeed, sometimes experience is not the determining factor.

Focus upon the arguments that will show that you are a truly valuable employee. Demonstrate the number of closed projects, profitable deals, or attracted customers. It will be a large plus if your accomplishments have made a significant contribution to the company’s budget or its development. Speak confidently about your results.

3. Calculate the Worth of Your Work

Discuss how much more money you want to receive with a hiring manager or a recruiter. First, estimate yourself: think about your degree, work experience, direct responsibilities, participation in company projects, proactivity, and additional ideas for business development. Try to speak about a specific amount or percentage and avoid general phrases such as “I’d like to get a little more.” 

Ask your boss to give you some additional tasks if you are willing to take on more responsibility. Discuss where you can be helpful and then ask for a pay raise. If your experiences, skills, and results are profound, why not talk about climbing up the career ladder? Sometimes, what you really need is to get employed in a higher position.

4. Explore the Labor Market

It is recommended to keep up with the latest trends in the labor market. Take the most out of available career resources. Look how much people at your level earn with similar responsibilities in other companies. You may find that your salary does not meet the standards. This will be the sign for you to change something or address a career advice expert.

Conclusion:

Increasing income is a natural desire for both job seekers and people who have long been occupying their positions. Understanding the mechanisms of the economy and the basic rules of the labor market is indispensable for every employee. Moreover, distinct proposals, arguments backed up by numbers, and your results are the best helpers in negotiating wage increases!

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TechGlobeX: 5 Factors that Determine Pay Rates and 4 Ways to Ask for a Pay Rise
5 Factors that Determine Pay Rates and 4 Ways to Ask for a Pay Rise
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