MANILA - Many Philippine companies are expected to raise their employees’ salaries next year, as well as hire more staff, according to a survey by a global human resources consultancy firm.
Salaries will increase by around 5.5 percent in 2023, which is higher than the 5.3 percent median rate this year, according to Mercer’s annual Total Remuneration Survey (TRS) 2022.
“Salary increases are gradually increasing now that business activities in the Philippines are picking up post-pandemic,” said Floriza Molon, Mercer’s career business leader for the Philippines.
Mercer said the TRS surveyed 447 organizations across 11 industries in the Philippines between April and June this year.
The company noted that 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.
Molon said that because of the high inflation this year “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,” Molon said.
In its latest inflation outlook, the Bangko Sentral ng Pilipinas said inflation would likely average 4.3 percent in 2023. But the BSP also raised its inflation forecast to 5.8 percent this year.
WHICH INDUSTRIES HAVE HIGHEST SALARY HIKES?
Mercer noted that the Philippine’s median salary increment is also above the Asia Pacific average of 4.8 percent.
Across the industries surveyed, shared services is projected to offer the highest salary increment at 6 percent with High Tech (5.8 percent), Life Sciences (5.8 percent) and Logistics (5.8 percent).
“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,” Molon said.
Many companies are also looking to hire more staff. Mercer said 36 percent of the organizations surveyed plan to increase their headcount in 2023, while 38 percent intend to maintain headcount.
Unemployment rate across the Philippines is also trending down from the high of 7.8 percent observed in 2021, at the height of the pandemic. For 2023, the rate is forecasted to dip to 5.4 percent.
Companies in select industries however will also have to work harder to keep their skilled staff as well as attract new talents.
A tighter labor market and buoyant job market have resulted in higher voluntary turnover this year.
Mercer noted that the Shared Services industry saw the highest voluntary turnover of 15.8 percent, followed by Non-financial Services at 15.1 percent and High Tech at 13.2 percent.
“Shared Services, High Tech, and Services (Non-Financial) industries have seen the highest voluntary attrition rates due to increased employment opportunities. At the same time, in terms of involuntary attrition, we have also seen movements from companies in the High Tech and Shared Services sectors, as well as Consumer Goods, letting go of their people to optimize and manage operational costs. Some companies are also closing certain business units with professional (non-sales) and plant operations staff most affected,” Molon said.
Godelieve van Dooren, Mercer’s CEO for South East Asia Growth Markets said the Philippines was not spared from the “Great Resignation” seen in many markets this past year.
“Employees are increasingly influencing the way businesses are hiring, whether by offering higher salaries and/or providing more holistic benefits packages. Hence, organizations need to quickly adapt to this new normal and revise their hiring and retention strategies to be competitive,” van Dooren said.
To keep their talents, companies need to prioritize employees’ well-being, and create a nurturing yet purposeful work environment that meets both business and personal needs.
“Offering flexible work arrangements, support for mental and physical wellness, asell as relevant training and development programs are some ways employers can cultivate, retain and engage their workforce,” van Dooren said.