Philippines, Manila, 29 November 2021 – Salary increases in the Philippines are likely to stay constant in 2022, with no change to median pay raises of 5% this year, compared to 5.5% in 2019. This is according to the annual Total Remuneration Survey (TRS) 2021 by Mercer that polled 435 organizations across 10 major industries in the Philippines between April and June this year.
Although the country’s Gross Domestic Product (GDP) is expected to rebound by 6.3% this year and show moderate growth of 5.4% in 2022, the overall outlook remains murky amid rising inflation and stringent pandemic restrictions that forced firms to downsize, restructure or shut down. Compared to other markets in the region, the Philippines’ projected median salary increment is lower than the Asia Pacific (APAC) average of 5.4%. Reflecting a divergence in pay progression between emerging and developed economies, projected salary increments across APAC range from 9% in Pakistan to 2.3% in Japan.
Floriza Molon, Mercer’s Career Business Leader for Philippines, said, “While pay raises have stayed constant in light of the pandemic, employers need to keep a close eye on inflation and how that affects the real salary increase for their employees, especially those on the lower end of the income spectrum. This has intensified the need for organizations to review compensation plans regularly and make any adjustments necessary to ensure their employees are paid competitively.”
Overall wage increases across all industries
Across all the industries surveyed in the Philippines, the High Tech industry is expected to see the largest improvement in median salary increment from 5% to 5.8% in 2022, followed by Retail & Wholesale (up 0.7% to 6%) and Consumer Goods (0.2% increase to 5.2%). The Energy, Life Sciences, Retail & Wholesale and Shared Services sectors reported the highest salary increase of 6% in 2022, while sectors with the lowest increments (5%) are Chemical, Manufacturing and Non-Financial Services.
Commenting on the industry salary trends, Ms Molon said, “Talent in the High Tech space is in demand and it is no surprise that companies in the sector continue to boost salaries to hold on to their people. The salary increments for industries that are dependent on consumer spending like Retail & Wholesale and Consumer Goods, show that consumer spending is on the uptrend as the Filipino economy continues its path toward recovery.”
Employers exercise greater prudence in recruitment
Of all the survey’s respondents, two in five employers in the Philippines specified they will not change their headcount while 29% of organizations have not decided whether to increase or decrease their headcount in 2022. With growing cost pressures, many companies have cut spending by skipping overtime wages, introducing shorter work weeks and laying off employees. Involuntary attrition for the first half of 2021 also rose to 4.8%, compared to 4% in 2020 and 3.5% in 2019.
Ms Molon added, “We see companies exercising greater prudence around recruitment in the short term, with their immediate priority being keeping their businesses afloat. This has had material impact on the economy as jobs may not be created fast enough to satisfy the demand. More Filipinos are not earning enough even if they hang on to their jobs, and are therefore on the hunt for more work. Until the pandemic situation stabilizes and granular lockdowns are lifted, jobs and livelihoods in the country will continue to be affected.”
Embracing the new shape of work
Apart from compensation and benefits, companies in the Philippines are reviewing return-to-worksite plans and re-evaluating what the future of work will be. According to Mercer’s recent labor market survey, 55% of employers intend to implement a hybrid work model with employees expected in the office between one and four days a week. More employers are also providing well-being and mental health support to help employees cope with challenges posed by the pandemic.
Teng Alday, Mercer’s CEO for the Philippines said, “The future of work is going to be hybrid and post-pandemic work practices will also require offices to be set up differently to cater to local regulations and different work structures. This is an opportunity for companies to introduce programs and tools to help employees adapt to flexible working arrangements, and build up new capabilities and skills. Investing in the workforce across compensation, benefits and skills to support the new shape of work, will be critical for businesses in their road to recovery.”
 IMF, World Economic Outlook
 2021 Mercer E3 Salary Movement Snapshot Survey
The Total Remuneration Survey, Mercer’s flagship annual compensation and benefits benchmarking study, identifies current pay practices and benefits policies, as well as budget, hiring and turnover trends for the year ahead. In addition, Mercer also conducts regular pulse surveys throughout the year to keep up with the impact of the rapidly changing business environment and compensation and workforce trends.
For more data and insights from Mercer’s Philippines Total Remuneration Survey 2021, please see here.
Mercer believes in building brighter futures by redefining the world of work, reshaping retirement and investment outcomes, and unlocking real health and well-being. Mercer’s approximately 25,000 employees are based in 43 countries and the firm operates in 130 countries. Mercer is a business of Marsh McLennan (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people, with 81,000 colleagues and annual revenue of over US$19 billion. Through its market-leading businesses including Marsh, Guy Carpenter and Oliver Wyman, Marsh McLennan helps clients navigate an increasingly dynamic and complex environment. For more information, visit mercer.com. Follow Mercer on LinkedIn and Twitter.