Salaries in the Philippines are expected to rise by an average of 5.6 percent this year, their lowest increase in over a decade, a survey of companies done in late 2020 by management consultant Willis Towers Watsons.
Results of the Salary Budget Planning Survey indicate “employers optimism” for this year, Willis Towers Watson said.
The survey showed 82.4 percent of companies in the Philippines eye increasing salaries, though a few looking still at implementing salary freezes.
The company said this is a stark contrast from employers’ sentiments in 2020 when companies were forced to revise down their pay rise budgets, leading to an average increase of just 5.5 percent
in 2020 compared to 6 percent of actual salary increase in 2019.
“This is the lowest average salary increase for Philippines in more than a decade. In Asia Pacific, companies in 13 out of the 20 markets have also decreased their 2021 average salary increase forecasts,” it said.
The survey was conducted online between October and November, receiving over 18,000 sets of responses covering over 130 countries worldwide. In the Philippines, a total of 233 companies participated across different industries.
“After a difficult year for employers and employees – battling lockdowns, employee safety issues, working from home and declining revenues – many employers are finding ways to handle the crisis better, manage their businesses and help their employees with a more focused work and reward strategy,” said Patrick Marquina, Willis Towers Watson Philippines head of talent and rewards.
Willis Towers Watson said the number of companies expecting to freeze pay is expected to “decrease sharply” this year, in a further sign of cautious optimism for 2021.
“Last year saw over a quarter, 28 percent, of private sector companies in the Philippines freeze pay increases as they were curtailing costs. This is expected to fall to 13 percent of companies this year with 82.4 percent of companies expecting to conduct a salary review as against 61 percent in 2020,” said Marquina.
The management consultant said the most optimistic industries this year are pharmaceutical and health sciences, high tech, electronics manufacturing and business support services, including business process outsourcing with a 2021 salary budget increase forecast of 5 percent or more.
“These industries will continue to see an increase in demand for talent as employers in these sectors prepare for growth and development opportunities in 2021,” said Marquina.
“While there is certainly more optimism this year in both employers and employees alike, the recovery for many hard-impacted businesses would not be smooth sailing. Companies will continue to experience smaller salary budgets this year. Therefore, it is important for employers to differentiate their allocation of pay rises, so that they can provide meaningful salary increases for their best and most valuable talent, and prioritize spending on jobs that are likely to contribute the most to the success or survival of their businesses”, he added.
The report summarizes the findings of Willis Towers Watson’s annual survey on salary movement and reviews practices as a means of helping companies with their compensation planning for 2020 and beyond.