11 December 2018

Philippines, Manila

  • An average of 50% of companies across different industries are looking to add headcount in 2019, with shared services and outsourcing showing the most positive hiring outlook
  • ‘Lack of career opportunities’ and ‘low pay competitiveness’ the top reasons for employees leaving their jobs

Mercer recently unveiled the results of its annual ‘Compensation Planning for 2019’ study which identifies key remuneration trends and makes hiring and pay increase predictions for the coming year across Asia, Middle East and Africa. Figures and forecasts are based on the Total Remuneration Surveys – Mercer’s flagship annual compensation and benefits benchmarking study, with participation from over 416 companies in the Philippines.

Against a backdrop of continued strong economic and real wage growth (salary increase minus inflation rate) in emerging markets, the Philippines finds itself at the middle of the spectrum with a salary increase forecast of 6%. The highest salary increases in 2019 are forecasted for Bangladesh (10%), India (9.2%) and Vietnam (9.8%). At the other end of the spectrum, Australia is at 2.6%, New Zealand at 2.5%, and Japan has the lowest expected salary growth rate at 2%.  

“The overall hiring outlook for the country is positive, with an average of 50% of companies across different industries looking to grow their talent pool to seize diversification and growth opportunities in the face of ongoing digital disruption,” said Floriza Molon, Career Business Leader for the Philippines, Mercer. “Mercer continues to dedicate resources into understanding these trends, so our clients can plan more effectively and their employees can be appropriately engaged and rewarded,” she added.

In the Philippines, the shared services and outsourcing industry show the most positive hiring outlook in 2019, with 70% of companies in these sector looking to expand and 24% looking to maintain current headcount.

In spite of positive industry prospects, Mercer’s study reveals that talent retention in particular is a struggle for many companies in the Philippines. On an average, employees across all industries only stay in their current organization for five years. The shared services and outsourcing industry have the shortest employee tenure with employees staying an average of only three years in their jobs. These findings represent a challenge in terms of replacement costs in the form of higher salaries for new joiners, recruitment costs and productivity loss, which adversely impacts the overall cost of operations and resulting margins.

Employees cite a lack of career path and opportunity to grow, low pay competitiveness, and unpleasant relationships with supervisors as their top reasons for leaving their current organization. However, employees have also noted that beyond competitive compensation, they also highly value focus on health and well-being, career empowerment, and a sense of purpose in the workplace.

At the same time, Mercer’s study findings show that the changing nature of work due to digital disruption is driving demand for new skills, as companies in the Philippines begin to offer a significant premium for employees in data analysis and specialist sales roles. This also underscores the need for employees to upskill or reskill to stay relevant. With the emergence of shared services operations in other parts of the world, both organizations and professionals in the Philippines need to add value in the way services are delivered so as not to lose the country’s competitive advantage in this sector.

“As the world’s engine of growth, Asia, especially in markets with young populations like the Philippines, continues to see sustained demand for skilled talent, with digital skills continuing to draw a premium,” Ms. Molon noted. “To attract and retain employees, companies are going beyond offering generous incentives and retention bonuses, and taking a more holistic view of their total rewards philosophy. They are increasingly focusing on the experiential components of rewards programs to deliver meaningful career experiences and flexible arrangements, as well as programs to help manage the physical, financial and emotional well-being of their employees.”

For more data and insights from the 2018 Total Remuneration Survey please see here.

About Mercer
Mercer delivers advice and technology-driven solutions that help organizations meet the health, wealth and career needs of a changing workforce. Mercer’s more than 23,000 employees are based in 44 countries and the firm operates in over 130 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), the leading global professional services firm in the areas of risk, strategy and people. With nearly 65,000 colleagues and annual revenue over $14 billion, Marsh & McLennan helps clients navigate an increasingly dynamic and complex environment. Marsh & McLennan Companies is also the parent company of Marsh, which advises individual and commercial clients of all sizes on insurance broking and innovative risk management solutions; Guy Carpenter, which develops advanced risk, reinsurance and capital strategies that help clients grow profitably and pursue emerging opportunities; and Oliver Wyman, which serves as a critical strategic, economic and brand advisor to private sector and governmental clients. For more information, visit www.mercer.com. Follow Mercer on Twitter @Mercer.