How To Calculate 2023 Salary Increment
The government and the Trade Union Congress (TUC) of Ghana, which comprise various labour unions in the country, have been negotiating since November 2022 to determine the salary increment for the year 2023. The next thing after negotiations have concluded is how to calculate 2023 salary increment that public sector workers will enjoy.
The calculation of the increment is purely finding how much will be added to the gross salary minus obligatory deductions (pension and taxes) subtracted from the amount that is added to the gross salary. The calculation, though simple and easy, is very personal in the sense that everyone’s existing gross salary is different. A gross salary is basic salary plus retention premium plus any other allowance (if any). Our team will, therefore, use an assumed old gross salary of two thousand Ghana cedis (Ghc2,000). Readers should, therefore, find their gross salary and substitute it in place of our Ghc2,000. But remember not to include the Cost of Living Allowance (COLA) in your existing gross salary
Calculations Formula
2023 salary increment = negotiated salary – all deductions
Negotiated salary
A. Negotiated salary = Negotiated percentage x existing gross salary
Negotiated salary = 30% x Ghc2,000
Negotiated salary = 0.3 X Ghc2,000
Negotiated salary = Ghc600
First deduction (SSNIT)
B. The first deduction is social security deductions (SSNIT), which is 5.5%, it will remain 94.5% (i.e 100% – 5.5%) of the negotiated salary for the worker after SSNIT
Remaining negotiated amount/ salary after SSNIT = 94.5% of negotiated salary
Remaining negotiated amount/ salary after SSNIT = 94.5% x Ghc600
Remaining negotiated amount/ salary after SSNIT = 0.945 x Ghc600
Remaining amount/ salary after SSNIT= Ghc567
Second deduction (17.5% tax)
C. The final deduction by the government from negotiated salary is tax, which is 17.5%, since any extra addition of income falls in the 17.5% tax bracket.
The tax is, however, applied after the SSNIT deductions. Meaning only Ghc567 will be taxed 17.5%, which is
Tax after SSNIT deductions = 17.5% of Ghc567
Tax after SSNIT = 0.175 x Ghc567
Tax after SSNIT = Ghc99.225
See also: 30% Salary Increment Terms | 1.7%? COLA
Net salary increment
Therefore, salary increment = Ghc567 – 99.225
Salary Increment = Ghc467.775
Therefore, anyone whose current gross salary is Ghc2,000 will have Ghc467.775 added to his salary.
Variations
However, any change in union contributions will further reduce the salary increment calculated.
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