The End-of-Year Salary Fact Check

November 28, 2023

Is your salary still up to date?

The end of the year is a wonderful moment to realize what you should keep, what you should modify or change massively and what you should leave or do completely differently.

And before you prescribe yourself the hundredth senseless diet, you are better off with a checkup of your current salary. At a time when the strong increase in prices in the real estate sector, for international commodities and, according to WIFO, for the CO2 pricing and the reversal of the VAT reduction in the sectors heavily affected by the COVID 19 crisis (catering, accommodation, and events) is responsible for a high inflation rate, it is important to think about your finances. After all, no one wants to see their standard of living deteriorate.

But where do you start? And what questions do you need to ask yourself?

The turn of the year is often the time for good resolutions - among other things, you can take a look at your expenses, but also your salary, and see if it's time for a change. Image: shutterstock, Vitalii Stock

Is My Salary Still Appropriate?

This is a highly subjective question, because anyone who has had to pay off an expensive loan in recent years, or who - like so many others during lockdown - suffered from a temporary reduction in working hours, or who has started a family or taken up an expensive hobby, will naturally feel that their salary is less attractive than before. Just one thing should be made clear: the salary we earn is not usually adjusted to our individual circumstances but is defined by the market value of our job level and the responsibility we bear in the company.

And that's exactly where the checkup should start.

Has my market value changed?

Salaries on the market often develop more dynamically than in your own company, so it's important to bring your knowledge up to date.

The much-cited online research at karriere.at, stepstone.de, kununu.com, glassdoor.com and the online portals of the major newspapers is indispensable.

And please don't just search for the exact title of your own job, but also check out similar profiles in comparable industries within your own region.

It is equally helpful to ask mentors and colleagues for their recommendations which salary to ask for a corresponding position on the market.

If there is a large discrepancy despite comparable factors such as region, industry, function, competence profile and responsibility, you should seek a discussion with your superiors to clarify the facts and to strive for at least a gradual adjustment of your salary.

What do I really earn? Let’s have a look at the total annual compensation

At first glance, this question seems confusing; after all, all you must do is look at your paycheck. Far from it! Nevertheless, a common approach for many employees: they note the net amount of their base salary - and that's it.

Company Benefits

BUT: Who calculates all the perks that are available in the company and thinks about how much you would have to earn gross to be able to afford these things net? Starting with free coffee, to canteen or vouchers for lunch, annual pass for public transport, health care, to sports facilities or subscription for a fitness center, leisure events, support for a kindergarten or summer kids camps, training measures that serve to better qualify on the labor market, discounts for purchases in the own company and many more. Very often, these things are consumed and taken for granted- but when comparing your salary on the market, you should take the social benefits into account. And if you check all the benefits listed on the Austrian Chamber of Commerce's website, you'll also get a great flavor of what you could ask your employer during your next salary negotiation round - maybe as an add-on to your current salary or as an alternative to the next base salary increase.

Perks, benefits and other allowances from employers are often not taken into account, but they also have their value. Image: shutterstock, stoatphoto

Bonuses

There are many different types of bonuses. All kind of bonus payments are based on one principle: The bonus is an additional and generally variable salary component that is paid out on a discretionary basis, i.e., there is no legal entitlement to the annual payment of a fixed amount. Some companies, for example, pay a team bonus to all employees when company targets are exceeded These targets are usually linked to key business figures such as sales or profit. The amount of the bonus can be the same for everyone, vary according to the level of responsibility or follow completely subjective criteria, i.e., the employer can decide that Ms. Smith gets a bonus and Mr. Miller does not. Other companies already agree by contract on a so-called performance-based compensation component: the employee will be able to participate in a bonus program: the bonus amount - defined as a certain percentage of the basic salary, may be paid as soon as the criteria, which are redefined annually, have been achieved. Others may receive a project bonus that is limited to the duration of the project and is also tied to certain quality criteria.

The interesting thing about this type of compensation is that employees often do not consider this payment as part of their salary and completely disregard it when making comparisons with other people on the market. Or that - although the Latin origin of the word refers to something good - they are just frustrated because the bonus turned out to be lower than the year before or than that of a colleague. But beware: especially in sales or with executives, the variable salary component may well be 25% or higher. And what exactly can you do in this regard for the new year? Make sure that you have understood the goals for achieving the bonus, and that you discuss with your supervisor what you can else do to achieve or exceed the goals, because the bonus is usually paid out after the business figures have been published or the balance sheet has been completed - i.e., in April/May of the following year.

And according to the latest tax reform, Austrian employees can participate tax-free in the company's profits with up to EUR 3,000 per year. This also creates opportunities for future salary negotiations.

In this regard, all the best for the New Year - earn your worth, you are worth it!

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