Salary increments for 2023 are set to hit pre-COVID-19 levels in the Philippines as businesses put the pandemic behind them: Mercer survey
- Overall median salary increment projected to rise to 5.5% in the Philippines next year, similar to the rate seen in 2019
- Voluntary attrition rate continues to increase this year due to a more buoyant labor market
Manila, The Philippines, 23 November 2022 – Employees in the Philippines can look forward to a median 5.5% increase in their salaries next year, up from 5.3% this year, according to Mercer’s annual Total Remuneration Survey (TRS) 2022. The TRS surveyed 447 organizations across 11 industries in the Philippines between April and June this year.
The last time employees received a median 5.5% salary increase was in 2019. This return to the pre-pandemic level reflects continued growth among the businesses surveyed amidst a more positive outlook as inflation rate is forecasted to decrease to 4.3% from this year’s high of 5.3%.
The Philippine’s median salary increment is also above the Asia Pacific average of 4.8%. Across Asia, the overall average salary increases reflect a divergence in pay progression between emerging and developed economies, with estimates as high as 9.1% in India to 2.2% in Japan, the lowest in the region.
Floriza Molon, Mercer’s Career Business Leader for the Philippines, said, “Salary increases are gradually increasing now that business activities in the Philippines are picking up post-pandemic. But inflation hit a high this year and there was little to no real salary increase for employees. The situation will improve for 2023, as the market outlook is forecasted to improve with lower inflation rates. Employees will be able to benefit from some real salary increase, which will be welcome news for many.”
Increased salary increments across most industries
Across the industries surveyed, Shared Services is projected to offer the highest salary increment at 6% with High Tech (5.8%), Life Sciences (5.8%) and Logistics (5.8%) following closely behind. Services (Non-Financial) (5.0%) and Chemicals industries (4.6%), on the other hand, are forecasting the lowest salary increments.
On industry salary trends, Ms Molon said, “The Shared Services and High Tech industries are not showing signs of slowing down. As companies were forced to accelerate their digitalization plans during and post-pandemic, there continues to be high demand for tech-based products and services which are in turn generating employment opportunities. But some industries like Services (Non-Financial) and Chemicals remain cautious about their 2023 outlook as business demand is just starting to pick up.”
Higher turnover and more job opportunities available
More than one-third (36%) of the organizations surveyed plan to increase their headcount in 2023, while 38% intend to maintain headcount. Unemployment rate across the Philippines is also trending down from the high of 7.8% observed in 2021, at the height of the pandemic. For 2023, the rate is forecasted to dip to 5.4%.
A tighter labor market and buoyant job market have resulted in higher voluntary turnover this year. As of mid-2022, the average half year voluntary attrition rate was already at 6.7%, as compared to the full year rate of 11% in 2021. In contrast, voluntary attrition in 2020 was 7.9% when employees’ priority was on job security during the pandemic.
The Shared Services industry saw the highest voluntary turnover of 15.8%, followed by Non-financial Services at 15.1% and High Tech at 13.2%. High Tech also saw the highest involuntary attrition rate of 5.4%, followed by Consumer Goods (4.7%) and Shared Services (4.4%).
Ms Molon added, “Shared Services, High Tech, and Services (Non-Financial) industries have seen the highest voluntary attrition rates due to increased employment opportunities. At the same time, in terms of involuntary attrition, we have also seen movements from companies in the High Tech and Shared Services sectors, as well as Consumer Goods, letting go of their people to optimize and manage operational costs. Some companies are also closing certain business units with professional (non-sales) and plant operations staff most affected.”
Godelieve van Dooren, Mercer’s CEO for South East Asia Growth Markets said, “The Philippines has not been spared from the Great Resignation witnessed in many markets this past year. Employees are increasingly influencing the way businesses are hiring, whether by offering higher salaries and/or providing more holistic benefits packages. Hence, organizations need to quickly adapt to this new normal and revise their hiring and retention strategies to be competitive.
Employers should prioritize employees’ well-being, and create a nurturing yet purposeful work environment that meets both business and personal needs. Offering flexible work arrangements, support for mental and physical wellness, as well as relevant training and development programs are some ways employers can cultivate, retain and engage their workforce.”
About Mercer’s Total Remuneration 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 2022, please see here.