Philippine companies are increasing salaries to respond to a competitive talent market, according to global professional services firm Mercer.
In its Total Remuneration Survey conducted this year, Mercer said the average employee salary in the country is set to increase by 5.5 percent in 2025, slightly above the 5.2 percent actual increase in 2024.
The survey analyzed remuneration trends and policies across 2,258 roles in over 482 companies in the Philippines.
"The average salary increase of 5.5 percent in 2025 underscores the competitive landscape for talent and highlights the ongoing commitment by organizations in Philippines to invest in their workforces," Floriza I. Molon, Mercer Philippines business leader, said in a statement.
"It is crucial for HR leaders to adopt a holistic approach to total compensation. This includes salary adjustments, short- and long-term incentives, as well as addressing the evolving well-being needs of employees,” she added.
By effectively adapting to changing expectations, Molon said organizations can attract and retain top talent in an increasingly competitive landscape.
The survey found that the top factors influencing salary increases in 2025 are individual performance, salary range, the organization's competitiveness in the job market, and inflation.
In addition to merit increases, companies are also allocating one percent of their total payroll budget for promotions and three percent for market adjustments.
The study also highlighted that 97 percent of companies are planning to adjust their remuneration strategies next year.
Today, nearly 90 percent of the organizations surveyed have short-term incentive plans such as bonuses, while the percentage of companies offering long-term incentives such as stock options grew from 19 percent in 2023 to 22 percent in 2024.
Mercer Philippines also observed a notable increase in the adoption of flexible benefits in the country, with the percentage of companies offering these benefits rising from 10 percent in 2018 to 19 percent in 2024.
The energy job family remains the highest-paying positions in the Philippines, offering 45 percent more in annual base salaries compared to other job families.
The energy industry also recorded the lowest voluntary attrition rate for 2023 at only eight percent, whereas the Shared Services and Outsourcing (SSO) industry experienced the highest rate at 17 percent.
The elevated attrition in the SSO industry may be attributed to a more assertive younger demographic in the workforce and the abundance of opportunities for career advancement.
Aligned with the highest attrition rate, the Shared Services and Outsourcing (SSO) industry also has the shortest average tenure, with employees staying for only three years, whereas the average tenure in the consumer goods industry is significantly longer at nine years.