Filipino workforce estimated to receive 5.6% salary increase this 2021

Philippine businesses and industries continue to recover from the 2020 impact of the COVID-19. With the number of unemployed Filipinos going down to about 4 million as of January 2021, from the 7.3 million in April 2020, it is safe to assume that the workforce has been grinding hard to recover from the economic downturn of the health crisis.

According to the latest Salary Budget Planning Survey report released by Willis Towers Watson (WTW), employers in the Philippines are projecting 2021 pay rises at an average of 5.6 percent, the lowest pay rise in more than a decade. The actual salary increase in 2019 and 2020 are relatively higher with 6.0 percent and 5.7 percent respectively. WTW believes the lowered increase rate has been triggered by the impact of the pandemic as resources and budgets needed to be shifted.

In Asia Pacific, companies in 13 out of the 20 markets have also decreased their 2021 average salary increase forecasts with Cambodia and India reported to have the largest pay decrease. Fortunately, Bangladesh and Myanmar have indicated a rate increase to the benefit of their respective workforce.

“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.

While remaining cautious this 2021, companies expecting to freeze pay will reportedly decrease sharply. Last year saw 28 percent of private sector companies in the Philippines freeze pay increases due to curtailing costs. WTW projects this to fall to 13 percent with 82.4% of companies expecting to conduct a salary review.

Industries that are optimistic in securing a pay rise for their employees include 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. Similarly, demand for talent in these industries are also expected to increase as employers 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.

The Salary Budget Planning Survey was conducted online in October/November 2020, receiving over 18,000 sets of responses covering over 130 countries worldwide. In the Philippines, a total of 233 companies participated across different industries. The report summarized WTW’s findings on salary movement and reviews practices to aid companies in compensation planning for 2020 and beyond.

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