Employers rethink work, total rewards and redefine careers to win talent war
PHILIPPINES, January 25, 2024 — A compensation survey by WTW (NASDAQ: WTW), a leading global advisory, broking and solutions company, reports that employees in the Philippines working in industries such as BioPharma and Life Sciences, Financial Services, Shared Services & Outsourcing; received a more competitive annual base salary in 2023 compared to those in Real Estate, Construction & Engineering.
This is based on a market competitiveness index where the annual base salaries of jobs across industries were ranked against the base salary of industry-agnostic jobs from the General Industry. When benchmarked against the General Industry, companies in Banking and BioPharma and Life Sciences industries have exceeded expectations, offering annual base salaries that surpass the General Industry overall median.
For 2024, companies in the Philippines continue to project an overall median salary increase budget of 5.7%. The average salary increase has also continued to rise steadily over the last few years since the pandemic. Similar trends are largely observed across various industries in the country this year. However, inflationary pressures and concerns over a tight labor market continue to influence factors on salary increase budget planning.
| Industry in the Philippines | 2023 Actual Salary Increase | 2024 Projected Salary Increase |
|---|---|---|
| General Industry | 5.7 | 5.7 |
| Financial Services (Banking, Insurance and Financial Institutions) | 6.0 | 6.0 |
| Shared Services & Outsourcing | 5.6 | 6.0 |
| Real Estate, Construction & Engineering | 5.6 | 5.7 |
| Manufacturing | 5.5 | 5.7 |
| BioPharma and Life Sciences | 6.0 | 5.8 |
| Consumer Products and Retail Trade | 5.7 | 5.9 |
| Technology (Media, IT, Telco, Electronics) | 5.8 | 5.8 |
“Although inflation is slowing down from the heights of recent years, the labor market in the Philippines is shifting. Voluntary turnover and attrition continue to increase and reached 15.9% in 2023 compared to 14.2% in 2022. The typical reasons cited for leaving were better pay and growth opportunity, relocation/family migration and flexible work arrangement or work-life balance.
“This trend looks set to continue in 2024 and employers in the Philippines will continue to face significant talent challenges including the attraction and retention of key talent. Winning the talent race will require employers to stay focused on balancing the entire package of rewards they offer, both monetary and non-monetary, in order to remain competitive and align with employees’ needs and wants,” said Patrick Marquina, Head of Work & Rewards, Philippines, WTW.
“Winning the talent race will require employers to stay focused on balancing the entire package of rewards they offer to remain competitive and align with employees’ needs and wants,”
Patrick Marquina | Head of Work & Rewards, Philippines, WTW
The WTW survey also reveals that industries such as Tech, Media & Gaming and Shared Services & Outsourcing have the greatest number of millennials and Gen Z employees last year. The Gen Z workforce in the Philippines has grown rapidly at a 100% year-on-year increase from 10% in 2022 to 19.9% in 2023 in terms of percentage of the total workforce. Specifically in 2023, millennials and Gen Zs already make up 77% of the workforce, with Gen Xs at 22.3% and Baby Boomers at 0.7%. By 2025, WTW expects that millennials and Gen Z will form close to 80% of the workforce in the country.
With the significant workforce changes in the Philippines, employers are now being challenged to rethink their work models, optimize organizational structures and forecast people resources needed to operate. WTW research also found that employers are currently taking or planning to take action to address these, which include:
Digitalization: Two in five of employers (44%) are expecting and are prepared for greater use of technology and automation. Among those, over a-third (39%) are redesigning jobs or roles to reallocate work between employees, non-employees and new technologies; another one-third (39%) has already strengthened internal communication about change to employees and managers.
Working conditions: More than half are expecting and prepared for increased flexibility in working conditions (58%). Among those, over a-third (37%) have conducted employee listening activities to identify changes in employee preferences or measure the impact of changing work conditions. Another one-third (36%) is redesigning their employee experience to promote the shift to the new work culture.
Alternative talent sources: Only 14% of employers are expecting and are prepared for greater use of alternative talent sources. Among those, 44% have already made better use of new sources of talent; another 39% are redesigning their employee experience to align with new work and career models.
“Changes in working conditions, the mix of talent and technology, and sources of talent can give rise to a range of interrelated people, business and operational risks. Organisations that have effectively managed the risk accompanying work transformation are more likely to report outperforming their peers than those that have not when it comes to financial performance, employee retention and productivity,” added Patrick.
A total of over 500 companies participated in the Philippines Total Compensation Survey conducted in 2023, across industries. Respondents who participated in the survey, employ over 1 million employees in the Philippines. The Salary Budget Planning Report – December Edition was participated by 425 companies in the Philippines and fielded in Q4 2023.
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