More Filipinos borrowed to augment their income and support their expenses in the past 12 months, according to online lending firm Digido.
A separate report of business consultancy Mercer, however, said salaries are expected to rise by a median rate of 5.5 percent next year.
Citing its commissioned survey, Digido which is a unit of Singapore-based Robocash Group, said more Filipinos took to borrowing as expenses grew as a result of the pandemic.
Digido said its survey, which focused on the change in the wealth of Filipinos over the past year, is based on a sample of the population with previous experience in online borrowing.
“(About) 55 percent of respondents reported increased spending in the last 12 months, whilst only 5 percent saw a decrease. Those considered under Generation X stand out against the rest, accounting for the majority of the increase in demand: 61 percent of respondents of this age group claimed an increase in expenses,” it said.
Forty-one percent of respondents said their income dropped in the past 12 months, including 29 percent who described it as “significant.”
“Only 27 percent of respondents reported an increase, including the 9 percent that said it was a significant increase. Another 21 percent claimed to have about the same level of income as before,” Digido said.
Digido said for those who suffered an income decline, the drop was attributed to a change in employment status, position and place of work.
“The predominant growth in expenses and the reduction in the income have led to growing demand for credit among the respondents. In the past year, 22 percent of them considered borrowing more frequently than before, 13 percent have used loans or plan to continue using loans in approximately the same amount, and 10 percent started applying for more loans,” Digido said.
About 12 percent of respondents claimed to avoid official loan sources entirely, while another 11 percent said they no longer considered taking on credit as frequently, and another 9 percent began to actually cut their number of loan applications.
“When asked directly how respondents assess their own financial situation, 26 percent answered ‘in dire need of money’, and another 24 percent answered ‘money is enough only for essentials’,” Digido said.
Salaried employees in the Philippines meanwhile can look forward to a median 5.5 percent increase in pay next year, up from 5.3 percent this year, said Mercer, citing its annual total remuneration survey (TRS) 2022.
The TRS surveyed 447 organizations across 11 industries in the Philippines between April and June this year.
“The last time employees received a median 5.5 percent salary increase was in 2019. This return to the pre-pandemic level reflects continued growth among the businesses surveyed amidst a more positive outlook as inflation rate is forecasted to decrease to 4.3 percent from this year’s high of 5.3 percent,” Mercer said.
Mercer said median salary increase in the Philippines is above the Asia-Pacific average of 4.8 percent.
Floriza Molon, career business leader for the Philippines at Mercer, said, salary increases are gradually increasing now that business activities in the Philippines are picking up post-pandemic.
“But inflation hit a high this year and there was little to no real salary increase for employees. The situation will improve for 2023, as the market outlook is forecasted to improve with lower inflation rates. Employees will be able to benefit from some real salary increase, which will be welcome news for many,” she said.
Across the industries surveyed, shared services workers are projected to experience the highest salary increase at 6 percent with high tech industries (5.8 percent), life sciences (5.8 percent) and logistics (5.8 percent) following closely behind.
Non-financial services (5 percent) and chemicals industries (4.6 percent), on the other hand, are forecasting the lowest salary increase.
Molon said salaries in the shared services and high tech industries are not showing signs of slowing down.
“As companies were forced to accelerate their digitalization plans during and post-pandemic, there continues to be high demand for tech-based products and services which are in turn generating employment opportunities,” she said.
“But some industries like services (non-financial) and chemicals remain cautious about their 2023 outlook as business demand is just starting to pick up,” she added.
More than one-third (36 percent) of the organizations surveyed plan to increase their headcount in 2023, while 38 percent intend to maintain headcount.
