Average Salary Increase In Phl To Remain Unchanged At 5% In 2022 – Survey
An executive of an investment firm said employers need to “keep a close eye” on inflation and how it affects the salaries of their employees, especially those on the lower end of the income spectrum.
Although the country’s gross domestic product (GDP) is expected to rebound by 6.3% this year and show moderate growth of 5.4% in 2022, the salary increases in the Philippines are likely to remain unchanged next year.
Based on the annual Total Remuneration Survey (TRS) 2021 conducted by American asset management firm Mercer, median or average pay hikes of 5% this year is expected to continue in 2022, compared to 5.5% in 2019.
It said the overall outlook remains “murky” amid rising inflation and stringent pandemic restrictions that forced companies to downsize, restructure or shut down.
The survey is an annual compensation and benefits benchmarking study that identifies current pay practices and benefits policies, as well as budget, hiring and turnover trends for the year ahead.
Mercer polled 435 organizations across 10 major industries in the Philippines between April and June this year.
With no change to median pay rises of 5% this year, the Philippines’ projected median salary increment, compared to other markets in the region, is lower than the Asia Pacific average of 5.4%.
“Reflecting a divergence in pay progression between emerging and developed economies, projected salary increments across APAC range from 9% in Pakistan to 2.3% in Japan,” the survey noted.
While pay raises have stayed constant in light of the pandemic, Floriza Molon, Mercer’s career business leader for Philippines, said employers need to “keep a close eye” on inflation and how it affects the real salary increase for their employees, especially those on the lower end of the income spectrum.
According to Molon, there is a need for employers to review compensation plans regularly and make any adjustments necessary to ensure their employees are paid competitively.
Overall wage increases across all industries
The survey showed that the high technology industry is expected to see the largest improvement in median salary increment from 5% to 5.8% in 2022, followed by retail and wholesale (up 0.7% to 6%) and consumer goods (0.2% increase to 5.2%).
Molon emphasized that talent in the high tech space is “in demand” and it is no surprise that companies in the sector continue to boost wages “to hold on to their people.”
The energy, life sciences, retail and wholesale and shared services sectors reported the highest salary increase of 6% in 2022, while sectors with the lowest increments (5%) are chemical, manufacturing and non-financial services.
As the economy continues its path toward recovery, the survey concluded that the wage increases for industries that are dependent on consumer spending like retail and wholesale and consumer goods show that consumer spending is on the uptrend.
Employers exercise greater prudence in recruitment
The survey also bared that two in five employers in the Philippines said they will not change their headcount while 29% of organizations have not decided whether to increase or decrease their headcount in 2022.
“With growing cost pressures, many companies have cut spending by skipping overtime wages, introducing shorter work weeks and laying off employees,” it stated.
“Involuntary attrition for the first half of 2021 also rose to 4.8%, compared to 4% in 2020 and 3.5% in 2019,” the survey stated.
Molon emphasized that this had a material impact on the economy as jobs may not be created fast enough to satisfy the demand.
“We see companies exercising greater prudence around recruitment in the short term, with their immediate priority being keeping their businesses afloat,” Molon said.
More Filipinos are not earning enough even if they hang on to their jobs, and are therefore on the hunt for more work, Molon added.
Until the pandemic situation stabilizes and granular lockdowns are lifted, according to Molon, jobs and livelihoods in the country will continue to be affected.
Embracing the new shape of work
Apart from compensation and benefits, the research showed that companies in the Philippines are reviewing return-to-worksite plans and re-evaluating what the future of work will be.
According to Mercer’s recent labor market survey, 55% of employers intend to implement a hybrid work model with employees expected in the office between one and four days a week.
To help employees cope with challenges posed by the pandemic, more employers are also providing well-being and mental health support, the survey revealed.
For Teng Alday, chief executive officer of Mercer Philippines, the future of work is going to be hybrid and post-pandemic practices will also require offices to be set up differently to cater to local regulations and different structures.
“This is an opportunity for companies to introduce programs and tools to help employees adapt to flexible working arrangements, and build up new capabilities and skills,” Alday emphasized.
“Investing in the workforce across compensation, benefits and skills to support the new shape of work, will be critical for businesses in their road to recovery,” he said.