Well it covers the inflation of last year. That was 10.9% officially.
As for this year -well that leaves 1.1% to play with. Inflation over 2008 is conservatively estimated to be 15% however we all know with the increases in the first few months that the 15% is a gross underestimate. Since that estimate oil has climbed quickly and will almost certainly hit $150 before year end. Maybe sooner.
The oil prices will be transmitted into everything as all goods are dependant on oil for transportation. Especially in Dubai that doesn't grow much or produce a lot locally. There is a lag as shipping contracts precede the goods arriving on our shelves.
In a years time we will be worse off than today in real terms (what goods our money can buy)
Simple exercise: See what your new salary buys in terms of barrels of oil, ounces of gold, tonnes of rice or wheat. (A simple basket of basic goods - throw in cotton, corn, silver, steel and copper for a broader comparison.) Check what it buys a year from today and it will most definitey be less.
If inflation gets much higher here, there is a possibility of a second salary review this year. Take a place with rampant inflation in the 50-100% range: Salaries there are generally reviewed monthly to retain staff. EK might laugh at this concept but if these levels of inflation are reached they would have to, as attrition would force their hand.
If someone posts their salary over the past 8 years since 2000, I will convert it into equivalent commodities and thereby illustrate the point.
This is unlikely to be unique to Emirates however. The same exercise with a BA or SQ salary is likely to show the same result - declining value. Bonuses and flying pay should be factored in all cases. Housing, education etc should not as we are not deciding who pays the best, simply how the cash in pocket is trending.
EK are not obliged to keep salaries to a basic level of value. They will be driven by the market which illustrates one point. Aviation is a declining profession. It is largely being turned into a wage earning job and credit to EK for not being more agressive on this stance. We could have had 3% on basic and 100% on flying pay. That would be a greater increase but of far less value. If a mid term review becomes necessary they will probably increase the flying pay. Easier to manage. This would also apply to cabin crew if required.
Tough times ahead. Spend that bonus wisely. Its not an unconnected windfall. It forms part of the salary - a point EK explained to the cabin crew with their review.