- 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% [1]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.”
About Mercer’s Total Remuneration Survey
The Total
Remuneration Survey, Mercer’s flagship annual compensation and benefits
benchmarking study, identifies current pay practices and benefits policies, as
well as budget, hiring and turnover trends for the year ahead. In addition, Mercer also conducts regular pulse
surveys throughout the year to keep up with the impact of the rapidly changing
business environment and compensation and workforce trends.
For
more data and insights from Mercer’s Philippines Total Remuneration Survey
2020, please see here.
About Mercer
Mercer builds brighter
futures by redefining the world of work, reshaping retirement and investment
outcomes, and unlocking real health and well-being. Mercer’s more than 25,000 employees are based in 44 countries and the
firm operates in over 130 countries. Mercer is a business of Marsh & McLennan (NYSE: MMC), the world’s leading professional services firm in the areas
of risk, strategy and people, with 75,000 colleagues and annualized revenue approaching $17 billion. Through its market-leading businesses including Marsh, Guy Carpenter and Oliver Wyman, Marsh & McLennan helps clients navigate an increasingly
dynamic and complex environment. For more information, visit
