Source: Media Outreach
Companies forecast a 5.6% overall increase in salaries for 2021, but more than half say they expect changes to salary increment levels.
Nearly seven in 10 companies have implemented a hiring freeze
14% of companies expect lower bonus payouts for 2021, with one in two stating it is too early to tell
MANILA, PHILIPPINES – Media OutReach – 1 December 2020 – Salaries in the Philippines are projected to increase in 2021 despite the economic fallout from the coronavirus pandemic. Companies in the Philippines are forecasting an average 5.6% overall increase in salaries for 2021, up from 5.3% this year.
This is according to the annual Philippines Total Remuneration Survey (TRS) 2020 by Mercer, a global consulting leader in talent, health, retirement, and investments. The survey polled 416 companies across multiple industries in the Philippines between April and June this year, with additional surveys conducted in July and August in light of the fast-changing market environment.
The projected salary increments come on the back of an uncertain economic outlook for the Philippines, with Gross Domestic Product (GDP) expected to contract by 8.3% this year. While growth is expected to rebound to 6.5% in 2021, downside risks such as a slower-than-expected global recovery that could weigh heavily on trade and investment, have resulted in caution among companies.
Floriza Molon, Mercer’s Career Business Leader for the Philippines said, “Due to the uncertainty, more than half of the companies have indicated that they will delay the increase of salaries or revise salary increment levels. With sustained pressure on businesses to keep costs down, we see that companies are taking a cautious approach with regards to salary budgets.”
Across industries surveyed, the Chemical industry is expected to see the biggest rebound in salary increments at 5.5% in 2021, up from 3.9% in 2020. The Consumer, Life Sciences, Energy as well as Retail and Wholesale industries also saw slight increases compared to last year.
Ms Molon added, “While the salary increase budget remains stable in spite of the pandemic, what we are seeing is that companies are increasingly prudent with their compensation policies as well as the allocation of the salary budget. Some of the considerations include how business-critical the roles are, the potential and performance of the employees, flight risk and availability of jobs in the market.”
Variable Bonuses for 2020 remained stable, but decreases expected in 2021
Overall, average budgeted bonuses for 2020 dipped slightly at 16%, compared to 17% in 2019. The Life Science industry saw the highest increase at 23% compared to 20% in 2019, while bonus payouts decreased in the Consumer, Logistics and Shared Services & Outsourcing industries.
Ms Molon said, “91% of companies provided bonuses in 2020, reflecting their strong performance in 2019. However, we foresee a decrease in bonus payout in 2021 due to the uncertain economic environment.”
Looking ahead, 14% of companies expect the bonus payout for 2021 to be less than the previous year, while 50% say it is too early to tell. Only 8% of companies expect budgeted bonuses to increase in 2021.
With the cautious business outlook, recruitment efforts are expected to slow in the year ahead. 69% of companies in the Philippines indicated that they have imposed a hiring freeze in 2020, with 10% reducing headcount due to the pandemic.
Embracing Flexible Working
The survey has also seen a shift to remote working arrangements among companies in the Philippines. 67% of the organization have implemented remote working arrangements in response to the COVID-19 outbreak with 58% projecting that employees will be more likely to use flexible working arrangement post-pandemic.
Teng Alday, Mercer’s CEO for the Philippines said, “Companies in the Philippines have successfully implemented flexible work arrangements amid the pandemic, with only 14% of companies stating a decrease in the level of productivity. We foresee more employers embracing flexible working arrangement which provides an opportunity for companies to review their compensation and total rewards packages more holistically to adopt variable pay and other reward initiatives such as work-from-home allowances to recognise and retain critical talent.
“As the financial impact of the pandemic continues to play out, companies are taking a cautious approach in light of cost pressures and the need to protect their core business. We encourage companies to adopt strategies that balance economics and empathy as employee engagement and retention will be critical in their road to recovery.”
– Published and distributed with permission of Media-Outreach.com.