As countries in Asia Pacific continue to navigate the COVID-19 pandemic, employers in the Philippines are projecting pay rises this year at an average of 5.6%, according to Willis Towers Watson (WTW)’s latest Salary Budget Planning Survey report.
Last year, companies were forced to revise down their pay rise budgets, leading to an average increase of 5.5% 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
“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.
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% of companies this year with 82.4% 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% 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.
“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.