Salary Increment 2022: Amount Added To Salaries Calculated And Explained

Public sector workers in Ghana will begin to receive the 7 percent salary increment in January 2022 as agreed upon by the labour unions, Fair Wages and Salaries Commission (FWSC), and the Government of Ghana.

Workers are in a state of dilemma as to how the said percentage will be calculated and how relevant it will be to them. Well, I have gathered some must-know facts about the 4 and 7 percent salary increment for 2021 and 2022 respectively.

The current 4% salary increase was based on 2020 base pay. So, the impending 7% salary increase will be based on the 2021 base pay.

The salary increase is never based on the net or gross salary of the employee.

Note this:

Base pay (under earnings) = your raw pay on the single spine salary structure

Allowance = earning a certain percentage of your base pay or otherwise determined

Gross Salary= an accumulation of all earnings.

Total deductions= accumulation of all deductions.

Net Salary= Gross salary minus Total Deductions.

Disposable income= Gross salary minus Statutory deductions

Assuming Mr. Black’s current base pay on the single spine is 2,000.

Let us see how the impending 7% will increase 2,000

7% of 2,000

0.07 × 2,000=140

The 7% will increase the 2,000 by 140.

Add the 140 to the old base pay to get the new base pay.

2,000 + 140=2,140

This year, his base pay will increase from 2,000 to 2,140.

Salary Increment 2022: Amount to be Added to Salaries Calculated & Explained -Second Explanation. Salary increases are cumulative. That is, they pile up progressively. If you receive a certain percentage of salary increase in a particular year, the following year’s increase is coming to add to what already exists.Assuming we had a pay rise of 10% in 2020 and in 2021 we are having a 4% pay rise. The 4% increase is based on the previous 10% increase last year.

The increases raise the base pay progressively. Now let’s look at the 4% and 7% increases in question. Currently, we are having a 4% increase in last year’s base pay. So next year, we are going to have a 7% increase on this year’s base pay.

Example

Now let’s project your January gross salary using the 7% increase.

If your current base pay is 2352.64

Your base pay after the 7% increase will be

7% of 2352.64

0.07 ×2352.64= 164.68

Your new base pay will be 2352.64+164.68= 2,517.33

Your new base pay will be 2,517.33

Let’s get your Retention Premium

15% of 2,517.33

0.15×2,517.33=377.60

Your Gross will be 2,517.33+377.60 = 2894.93

Your new Gross will be Gh¢2,894.93

So, if there is a salary increase of say 12% in 2023, the calculation will be based on your 2022 base pay which is 2,517.33

In that case, your new base pay will become 12% of 2022 base pay

=>12% of 2,517.33

0.12 × 2517.33 =302.08

2517.33 + 302.08 = 2,819.41

So, the 2023 12% increase will bring the base pay up to 2,819.41.

You will realize that the increases are cumulative as I mentioned earlier.

2021 base pay (4% increase) = 2352.64

2022 base pay (7% increase) = 2517.33

2023 base pay (12% increase) = 2819.41

From the above, you could see that the base pay rises with the percentage increases.

Workers are therefore urged to note that there is nothing like subtracting the percentage of the previous base pay increase from the impending one. That calculation is incorrect.

Note: Retention Premium is calculated using 15% of the base pay. So, to get your gross salary, you simply calculate 15% of whatever your base pay is and add the result to the base pay.

For Example: Your Gross salary for 2023 will be 15% × 2819.41 =422.91

2819.41 + 422.91 = 3,242.32.

Your new Gross for 2023 (using 12%) will become: 3,242.32.