Despite the economy rebounding, over one-third of organisations (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, one of the leading global advisory, broking, and solutions companies.
Employers are more conservative with their salary budgets as they look for longer-term stability in their employee base. Those organisations 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
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 the 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 areas, 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.
“Digitalisation has an effect on compensation, with tech roles such as those in AI, and 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, organisations 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,” he added.
Talent landscape
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 stabilised and become more manageable. Organisations 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 organisations struggling to regain their footing. Learning and development have been deprioritized, and issues such as leadership visibility, communication, operational challenges, and employee well-being have become more prominent. To address current market conditions and evolving employee needs, organisations 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 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 organisational goals, ultimately driving sustained growth, long-term success and competitiveness,” added Chantal.
