Employers are more conservative with salary budgets as employee base stabilizes
PHILIPPINES, September 9, 2024 – Despite the economy rebounding, over one-third of organizations (34.6%) in the Philippines reported that their salary budgets for the 2024 cycle were lower than the previous year. The overall median pay rise for 2024 is at 5.6%, slightly lower compared to last year at 5.7%. That’s according to the latest Salary Budget Planning Report by WTW, (NASDAQ: WTW), a leading global advisory, broking, and solutions company.
Employers are more conservative with their salary budgets as they look to longer term stability in their employee base. Those organizations that lowered salary budgets cited inflationary pressures, concerns related to cost management and tighter labor market as well as weaker financial results as the leading causes. Overall salary budget increases are expected to remain flat at 5.6% in 2025 in the Philippines.
| Industry in the Philippines | 2024 Actual Salary Increase | 2025 Projected Salary Increase |
|---|---|---|
| General Industry | 5.6 | 5.6 |
|
Financial Services (Banking, Insurance and Financial Institutions) |
5.6 | 6.0 |
| Shared Services & Outsourcing | 5.5 | 5.5 |
| Construction | 5.5 | 6.0 |
| Manufacturing | 5.6 | 5.6 |
| BioPharma and Life Sciences | 5.8 | 5.5 |
| Consumer Products and Retail Trade | 5.7 | 5.5 |
| Technology (Media, IT, Telco, Electronics) | 5.5 | 5.6 |
Additionally, salaries for technology-related roles have increased by 10.28% from 2022 to 2023, reflecting a strong demand for critical talent. The highest-paid management roles are in Functional/Business Area, Information System (IS) and Cyber Security Development, and IT Architecture (Systems Design). For intermediate professionals, the top-paying positions are in Systems Software Development, Functional/Business Area, and Database Design and Analysis. To attract digital talent, companies are offering a 10% to 20% skills premium, targeting the 75th percentile for market positioning.
“Digitalization has an effect on compensation, with tech roles such as those in AI, machine learning, seeing double-digit salary growth in many markets. The transformation potential of AI has made it the most sought-after technology discipline in the global talent market. As such, organizations around the world are willing to invest heavily in skilled professionals who can drive innovation and growth in the AI space, giving companies the upper hand in today’s competitive business environment,” said Chantal Querubin, Rewards Data Intelligence Leader Philippines, WTW.
“As AI and other technologies become more prevalent, employers need to consider how they can leverage these for their business, and whether they ought to train their workforce for it or recruit digital talent to facilitate digital transformation.”
In the Philippines, the average voluntary attrition rate over the last 12 months stands at 12.5%, with involuntary attrition at 8.2%.
Looking ahead, 24.4% of companies plan to increase headcount in the next year, one of the highest rates in the region. This indicates a resumption in recruitment activities and sustained demand for talent, especially in the Business Services, Leisure, Banking, Technology, and Energy and Natural Resources sectors. Meanwhile, 6.1% of companies intend to reduce headcount, while 69.5% plan to maintain their current headcount.
While attrition remains high in certain areas, many employers in the Philippines are reporting that the intense wave of resignations and turnover has stabilized and become more manageable. Organizations are now focusing on retention strategies and workforce planning with greater confidence.
However, challenges reported in 2023, along with the loss of practices introduced during the pandemic, have left many organizations struggling to regain their footing. Learning and development have been deprioritized, and issues such as leadership visibility, communication, operational challenges, and employee wellbeing have become more prominent. To address current market conditions and evolving employee needs, organizations are taking significant steps. These include enhancing the overall employee experience, placing a stronger emphasis on diversity, equity, and inclusion, and expanding training opportunities.
Based on a WTW’s study, millennials and Gen Zs make up the majority of the workforce at 77%, followed by Gen Xs at 22.3%, and Baby Boomers at just 0.7% in 2023. When examining workforce attraction across these generations, several key factors emerge – pay and bonuses, job security, health benefits, and flexible working arrangements. “Having the right HR metrics is essential for employers to design programs to meet their workforce’s specific needs. Data-driven insights ensure strategies are aligned with organizational goals, ultimately driving sustained growth, long-term success and competitiveness,” added Chantal.
The Salary Budget Planning Report is compiled by WTW’s Rewards Data Intelligence practice. The survey was conducted between April and June 2024. Approximately 32,000 responses were received from companies across 168 countries worldwide. In Asia Pacific, 1,788 organizations responded including 440 companies from the Philippines.
The 2024 Global Benefits Attitudes Survey was conducted from January to March 2024. Respondents include 1,000 employees working at medium and large private sector companies in the Philippines, representing a broad range of industries.
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