PH firms seen to hike salaries by 6.2% this year

Salary increases are expected to be higher in the Philippines this year, amid growing demand for professionals and elevated inflation, according to global professional services firm Mercer.

In its Total Remuneration Survey conducted last year, Mercer said Philippine-based organizations projected a median salary hike of 6.2% in 2024, slightly higher than the actual 6% salary increase last year. 

It is also above the projected average median salary increase of 5.2% in Asia for 2024.

“The projected hike in median salary increment can be attributed to factors such as the rising demand for skilled professionals, the need to attract and retain top talent in a fiercely competitive job market, and persistent inflationary pressures,” Mercer said in a statement.

The expected median salary increase in the Philippines is the fourth highest in the region, just behind India (9.3%), Vietnam (7%), and Indonesia (6.5%).

The country surpassed the projected median salary increments in Mainland China (5.2%), Malaysia (5.1%), Thailand (4.7%), South Korea (4.4%), and Singapore (4.2%).

Meanwhile, Hong Kong SAR (2.6%), Taiwan (3.8%) and Japan (3.9%) reported the lowest projected median salary increments in the region.

Floriza I. Molon, business leader at Mercer Philippines, said that most industries are seen to ramp up hiring as businesses expand this year.

“The Philippines is poised for economic growth despite some global headwinds. Some industries will continue to hire as businesses, particularly in shared services and outsourcing industry, retail and consumer sectors expand,” Ms. Molon said.

Mercer said salary increases will likely be consistent in most industries this year, as firms seek to retain talent.

The energy sector is seen to raise salaries by 7% this year, the highest among industries in the Philippines, data from Mercer showed. This is the same as the 7% hike implemented in 2023.

The high-technology industry is expected to hike salaries by 6.8%, a tad higher than the actual 6.5% increase last year.

Firms in retail and wholesale will increase wages by 6.7%, slightly higher than last year’s 6.5%.

Consumer goods firms will hike wages by 6.5%, faster than the 6% implemented last year.

“Besides compensation, companies would need to reassess their total rewards programs focusing on the employee benefits and work experience,” Ms. Molon said.

Citing Mercer Global Talent Trends 2023 report, Ms. Molon said that employees prefer to stay with organizations that offer job security, work flexibility and high pay.

“Employees are also expecting benefits and career opportunities within their organizations. The ability to provide these creates a more holistic and strategic management on talent in the workplace,” she added.

China Banking Corp. Chief Economist Domini S. Velasquez said businesses will likely provide higher salary increases as inflation remains elevated.

The Bangko Sentral ng Pilipinas (BSP) expected inflation to have averaged 6% in 2023. It sees inflation averaging 3.7% in 2024.

“The rise in inflation could prompt businesses to provide higher compensation to offset the increased cost of living for Filipinos,” Ms. Velasquez said in a Viber message.

“Moreover, the approved minimum wage hikes in 2023 would further contribute to the upward trend in average wages for individuals earning above the minimum wage,” she added.

Ms. Velasquez said the wage increases should not “exacerbate” inflation and be balanced out by improving worker productivity.

“One key factor in achieving this balance is the improvement of worker productivity. As businesses recover from the impact of the pandemic and economic activities gradually increase, it is anticipated that Filipino workers will demonstrate higher productivity levels,” she said.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that implementing salary increases will not only allow businesses to be competitive but also allow the Philippines to catch up with its regional peers in terms of per capita income.

“Given the fact that the Philippines is still among the fastest-growing economies in Asia, it still has relatively lower per capita incomes and is yet to catch up with other neighboring countries,” he said.

“Essentially the demand-supply balance of talent is a major determinant for wage growth in view of local or overseas employment choices for local talents,” he added. — Justine Irish D. Tabile