Salary increases in the Philippines are expected to remain moderate through next year as employers balance rising inflation, cost pressures, and the need to retain critical talent, according to global advisory, broking and solutions company Willis Towers Watson plc (WTW).

In its latest Asia-Pacific Salary Budget Planning Report published this month, WTW said employers in the Philippines are projecting a 5.1-percent salary increase in 2027, slightly higher than the actual five-percent increase recorded in 2026 but still below the 5.3-percent increase posted in 2025.

The projected increase places the Philippines among Southeast Asia’s higher-paying markets, although it trails Vietnam’s projected seven-percent increase and Indonesia’s six percent in 2027. It is ahead of Malaysia’s 4.7 percent, Thailand’s 4.6 percent, and Singapore’s four percent. The Asia-Pacific average is 4.9 percent.

“In the Philippines, employers are taking a more deliberate approach to compensation planning as they manage rising business costs while staying competitive for critical talent,” said Chantal Querubin, rewards data intelligence practice leader, Philippines at WTW, in a statement on Monday, July 20.

The report found that more than half of employers said their actual 2026 salary increase budgets were in line with their original plans, while 18.8 percent reported lower budgets, and 8.9 percent reported higher budgets than initially projected, indicating that compensation planning remained largely stable despite economic uncertainty.

WTW noted that organizations are increasingly looking beyond across-the-board salary increases and are investing in broader reward strategies to strengthen employee retention while managing costs.

Among companies that responded to workforce-related questions, 71.9 percent said they intend to maintain their current headcount over the next 12 months, while 17.5 percent expect to increase hiring, and 10.5 percent anticipate workforce reductions.

Rather than pursuing aggressive hiring, employers are strengthening their employee value proposition by improving the employee experience, cited by 43.9 percent of respondents, expanding training and development opportunities (39.5 percent of respondents), and enhancing health and wellness benefits (37.5 percent).

WTW also found that employee pay does not necessarily rise with tenure.

Based on the 2025 WTW Total Compensation Survey report on General Industry, employees with one to two years of service in some job categories receive median annual base salaries comparable to—or in some cases higher than—those with six to eight years of service. More pronounced pay differences tend to emerge only among employees with nine or more years of tenure, particularly in sales roles.

“While further analysis is needed, this pattern tends to reflect the impact of market-driven hiring practices, targeted pay adjustments and increased competition for critical talent,” Querubin said.

WTW said employers are increasingly concentrating compensation budgets on critical roles and hard-to-fill positions instead of broadly increasing pay across the workforce.

“With compensation budgets remaining constrained, organizations have limited ability to differentiate broadly across the workforce. As a result, pay investments are increasingly being concentrated on critical roles and key talent segments, while compensation decisions for the wider employee population become more standardized,” said Patrick Marquina, senior director, work and rewards, Philippines at WTW.

WTW’s Salary Budget Planning Report survey was conducted from March to May 2026, and gathered 34,024 responses from companies across 156 countries. In the Philippines, 408 organizations participated.

The latest WTW projections come as the Department of Labor and Employment (DOLE) approved Wage Order No. NCR-27 last July 9, granting minimum-wage workers in Metro Manila an ₱85 daily wage increase effective July 25.

The new wage order raised the daily minimum wage for workers in the non-agricultural sector to ₱780, while workers in agriculture, service, and retail establishments employing 15 or fewer workers, and manufacturing firms with fewer than 10 regular employees now receive a minimum daily wage of ₱743.

Last week, the Bangko Sentral ng Pilipinas (BSP) expressed concern over the larger-than-expected 12-percent minimum wage increase in Metro Manila, while the Philippine Chamber of Commerce and Industry (PCCI) warned that the wage adjustment could add to inflationary pressures and weigh on overall economic growth.

The Metro Manila daily minimum wage for the non-agricultural sector was previously ₱695, while workers in agriculture, small service establishments, and small manufacturing firms received ₱658 under Wage Order NCR-26. - Danielle T. Bayani