Salary Increases for Employees

I don't know how common it is

but I have always increased my cleaning lady's salary annually each January. Last summer I gave her January 04's increase early, to combat falling peso problems, and then I increased it again in Jan 04.
The other thing I did was to set up a pension plan for her. This is NOT with the goverment social security scheme, nor with a private insurer nor a bank. Too many of those (the last 2) had gone down for my liking. It is with a Finance House which I know well. I provided the lump sum, they add the interest - when it matures in 20 years it'll be worth over a million pesos. I also included a condition that she can only touch the interest if she has a prolonged period of sickness & can't work. Otherwise it all compounds up to give her a worry free old age.
Paying in peso equivalent of dollars may work for you, but in my case it would have confused the worker concerned. It took a very long time to explain the pension plan! The latter also means that if I ever leave here (other thanin my coffin!) my cleaning lady is still covered.

Lambada said:

but I have always increased my cleaning lady's salary annually each January. Last summer I gave her January 04's increase early, to combat falling peso problems, and then I increased it again in Jan 04.
The other thing I did was to set up a pension plan for her. This is NOT with the goverment social security scheme, nor with a private insurer nor a bank. Too many of those (the last 2) had gone down for my liking. It is with a Finance House which I know well. I provided the lump sum, they add the interest - when it matures in 20 years it'll be worth over a million pesos. I also included a condition that she can only touch the interest if she has a prolonged period of sickness & can't work. Otherwise it all compounds up to give her a worry free old age.
Paying in peso equivalent of dollars may work for you, but in my case it would have confused the worker concerned. It took a very long time to explain the pension plan! The latter also means that if I ever leave here (other thanin my coffin!) my cleaning lady is still covered.

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How much did you have to give the finance house to start this off?

I chose to deposit RD$20,000

I could have made it more or less, the Finance House is eminently flexible. And of course I did it at a time I was getting 54 to the dollar, so it didn't make too big a hole! I just pray the million will still buy her something in 20 years time!

over a 20% return per annum.
is that possible?

antspants said:

over a 20% return per annum.
is that possible?

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In pesos, yes. The question is, will they be about in 20 years or even 2 years? Also, what was the peso at early last year?

Saying this, it's good to see someone being pro-active and looking out for their employees interest.

Antspants,ddid you know that.................

Inflation in the DR for the months of January and Febuary of this year was 22%?Central bank is paying 50% on 1 year cds! So what!If inflation is greater than your interest rate,YOU LOSE!!!!Lets see,one million pesos in twenty years= a cup of coffee!CC

yep i was aware of inflation out of control.

how could any firm offer that kind of return on what should be quality investments to fund a pension in any currency?

"Quality Investments",I doubt it!

They offer you 20%,loan out your money at 30 %,that money at 40%,and the "House of Cards" grows ever yet larger!I don't see this as a time to invest in the DR,at any interest rate!CC

ahhh. i get it now.
a house of cards built by ponzi & co

Hardly a ponzi scheme.

You do know that Central Bank is currently paying 50% per year on CD's????

When the currency is inorganic and devalues at by 100% in a year what do you have?

what is an inorganic currency gringo?

Inorganic means it isn't backed by anything. It has no hard value. That is the problem with the peso right now. The exchange market is volatile because of that. This is also the reason why the anyone paying for imports has to use USD (hard or organic currency).

Ken said:

With respect to employees at the level of maintenance and grounds, how common is it to:
...
2. Establish salaries in dollars, even though paid in pesos, so that the salary paid in pesos fluctuates monthly with the exchange rate, so that the employee doesn't experience a decrease in purchasing power during the salary year?

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I've recently heard of a co-operative that started paying their suppliers (small farmers) in dollars (paid in dollars) to try and give the suppliers a better deal. I heard the small farmers are very happy. I think this type of practice may be more common than what we think. I'm certainly not an expert on currencies and macro financial economics, but I do think there is a grassroots dollarization taking place in the market - not formal, but grassroots.

Chris said:

I've recently heard of a co-operative that started paying their suppliers (small farmers) in dollars (paid in dollars) to try and give the suppliers a better deal. I heard the small farmers are very happy. I think this type of practice may be more common than what we think. I'm certainly not an expert on currencies and macro financial economics, but I do think there is a grassroots dollarization taking place in the market - not formal, but grassroots.

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I know of a few people who work at Casa de Campo. They said they get paid in dollars.

Isn't it strange how whenever we hear of a "Positive' & 'Good Heart" taking steps to do some good in this country, the usual "Negativos" have to put their oar in & "KNOCK" what is being done???

I will acknowledge that the 'Investment' or in this case 'Retirement Plan' might well have been better invested in US $'s at an 8% return IN THE SHORT TERM, but 20%p.a. compounding monthly over the next 20 YEARS, will produce quite a tidy sum as a retirement for the cleaner in question. CERTAINLY it will produce more of an income than the Governments Pension Plan!!! YES, inflation is high at the moment, but this will NOT continue at 20% p.a. over the next 20 years, so the compounding interest plus capitasl will certainly be worth a damn site more than the RD $20,000 capital originally invested!!! Congratulations Lambada - as Rob says, it is nice to see someone doing something POSITIVE for their employees!

Can't afford to do the same for MY employee just yet, (& he hasn't been with me long enough to justify it just yet - 3 months only working in the garden) but I WILL do same in 12 months time & prior to that I will organise my investments to set up a 'FUND' for deserving causes whereby only the interest can be paid out on a monthly basis. This will therefor generate a long term payout to those determined as "justifiable for assistance" impertuity (Sp?). If enough of us do this form of retirement plan, we WILL start to make a difference & get the Dominicans to PLAN for the future!!! - Grahame.

Thank you, Bushbaby

Actually, for the negativos, as you put it, the period of 20 years was not pulled out of thin air. A study of the history of the Dominican economy indicates to me that it is cyclical in nature. I would LIKE the upswing to be sooner, of course, and I THINK it will be, but I'm fairly certain 20 years is a safe bet. Of course, if your employee is already 55 that isn't much use!