MANILA, Philippines — Companies in the Philippines would likely temper salary increases next year, as firms try to recover from the pandemic’s onslaught while convincing top talents to stay.
Local employers are projected to bump up employees’ salaries by 5.3% on average next year, American asset management firm Mercer said in a report. If realized, this would be slower compared to the 5.5% pay hike that employees are expected to receive this year on average.
Mercer’s report came from results of a survey of firms conducted in June and July this year. Some of these employers belong to chemical, consumer goods, life sciences and "high tech” industries.
The projected decline in salary increases was observed in most countries in the Asia Pacific region, the report showed, except for the developed economies of Japan, Korea and New Zealand.
At home, there are growing calls for wage hikes as multi-year high inflation prompted Filipinos to tighten their belts. To tame the rapid price increases, the Bangko Sentral ng Pilipinas fired off a series of rate hikes, which could potentially add strain to household finances by making borrowing costs high.
There is also pressure on some firms to make their compensation packages more competitive to attract more top talents and retain existing ones. This, while also trying to recover from a pandemic that pushed many companies on the edge of financial collapse.
In the Philippines, Mercer found that while lay-offs have started to ease as businesses recover, resignations rose by an average of 10.2% last year, from the 2020 average quit growth rate of 7.9%.
Mercer said 15% of Philippine companies who responded to the survey expect the employee turnover rate to increase this year, while 70% see no change in the rate.
Mercer said employers need to give special consideration to their workforce most impacted by inflation, as well as give focus on compensation efforts on the supply and demand for talent or risk losing their best people.
It noted that “employees would forgo a pay increase for flexibility”, highlighting the need to offer flexible work arrangements to employees amid the pandemic.
“With real salary increases still negative for many markets, this has accelerated the need for employers to reassess their compensation strategies to retain talent in a tight labor market,” said Kulapalee Tobing, Mercer’s regional industry and solutions leader for Asia Pacific.