However, this represents flattish growth.
Salary increase for employees in the Philippines averaged 6% in 2018 and is projected to remain the same for 2019 on the back of most employees choosing to stay with their current employers due to economic instability, according to the latest Salary Budget Planning report by global risk management and advisory firm Willis Towers Watson.
Economic challenges in the Philippines over the last few months have directly impacted salaries of the workforce, starting with the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Law which expanded the value-added tax (VAT) base and introduced an excise tax on sugar-sweetened beverages.
“With the Philippines’ inflation rate at 5.2%, employers are being deluged with inquiries and requests from their employees to review salary increase budgets so that they are able to afford and retain their lifestyle,” the report noted. “With the increasing prices for basic commodities … Filipinos are now carefully assessing how they can further stretch their current income.”
Companies will typically use the inflation rate percentage as a basis to determine the salary increase to be given to average performers or employees who fall short of their performance objectives, Vangie Daquilanea, Willis Towers Watson’s global data services head for the Philippines, Malaysia, Thailand, Cambodia and Myanmar explained in the report.
“With a budgeted salary increase at only about 1% higher than the inflation rate, there is henceforth very little room for employers to differentiate how they can reward the high performers and average performers in their companies,” Daquilanea added.
Meanwhile, human resource (HR) managers in the Philippines ranked increasing operational costs as the most critical and significant consequence to organisations on the back of economic and legislative changes. The changes were also found to have pushed employers to revisit their current compensation and benefits programs to stay ahead and be competitive in the market.
“Flexibility is the new mantra for these companies as they are looking onto flexible benefits with a simplified administration,” Daquilanea noted. “Having a flexible work arrangement program in place is also now proving to be a critical factor in retaining and attracting employees which is being driven by the worsening traffic conditions in Metro Manila.”
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