After implementing salary cuts last year, employers in the Philippines are projecting slight pay hikes this year to average 5.6 percent, signaling economic optimism for 2021, according to a salary budget planning survey report.
The latest report by Willis Towers Watson (WTW)’s, which survey’s salary budget planning among companies covering over 130 countries worldwide, showed that employees in Asia Pacific are expected to experience pay hike of 5.5 percent on the average this year.
The Philippines modest salary hike increase projection is also aligned with the rest of the Asia Pacific countries. According to the report, the pandemic forced companies to revise down their pay rise budgets, leading to an average increase of 5.5 percent in 2020 (compared to 6.0% 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.
Projections this year show 82.4 percent of companies in the Philippines increasing salaries with fewer implementing salary freezes, signaling employers optimism for this year, the report added.
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%) 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 (vs 61% in 2020).
Different industries have experienced differing fortunes during the pandemic, and that is reflected in anticipated pay rises for 2021. The most optimistic industries 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.
“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, Head of Talent and Rewards, Philippines, at WTW.
“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,” added Patrick.
Among ASEAN countries, the Vietnam has the highest projected pay hike this year followed by Indonesia and Myanmar.
The Salary Budget Planning Report is compiled by Willis Towers Watson’s Data Services Practice. The survey was conducted online in October/November 2020, receiving over 18,000 sets of responses covering over 130 countries worldwide. In the Philippines, a total of 233 companies participated across different industries.
Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth.