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Question about Percentages
The employees and employers on a construction site are negotiating salary issues. During the first round of meeting, the employees request to increase the salaries by 20% next year and then by 10% by the following year. The employers give a counter-proposal. They propose to increase the salaries by 10% next year and then by 20% the following year. If you were representing the employees, would you accept the counter-proposal? Why?
1 個解答
- 知足常樂Lv 78 年前最愛解答
The answer is NO, although after two years the salary level is the same under both proposal.
The key issue here is the salaries to be received the coming year.
I give an example instead of mathematical notations to enhance readability for general public.
Suppose the current salary is $1000 (and even make an unrealistic assumption that salary will only be received once a year).
Then, under the employee's proposal:
Salary Next Year = $1000*(1+20%) = $1200
Salary Next Next Year = $1200*(1+10%) = $1320
Under the employer's proposal:
Salary Next Year = $1000*(1+10%) = $1100
Salary Next Next Year = $1100*(1+20%) = $1320
Ignoring any time value of money (suppose you are not talking about Economics, Finance), the employee's proposal would yield higher salary in the next year.
By notation, 1.1x+1.1*1.2x < 1.2x+1.2*1.1x for any positive x.
And of course, PLUS the effect that salaries are paying monthly (or weekly), and also the uncertainty of job sustainability, and also as mentioned above, the time value of money (i.e., interest effect), the employer's proposal is NOT as attractive as the employee's proposal.
